I saw this awhile back and forgot to post here:

http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html

http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

Now, updated for 2009:

http://www.businessinsider.com/the-housing-chart-thats-worth-1000-words-2009-2

http://static.10gen.com/businessinsider/~~/f?id=49a02ccc796c7afa009b4708&maxX=620&maxY=474

Of all that, I found it most interesting that housing prices were fairly flat during the Roaring 20s.

Of all that, I found it most interesting that housing prices were fairly flat during the Roaring 20s.

Because it wasn't an economy based on falsely inflated real estate prices it was an economy based on other speculation.

Since we are talking mortgages in so many places, figured this was as good as any to post this, published in today's paper.

http://www.twincities.com/ci_11862882?nclick_check=1


People are now taking out mortgages and defaulting without making a single payment, apparently. This should make lenders much more confident in their lending practices.


"More than 9,200 of the loans insured by the FHA in the past two years have gone into default after no or only one payment, according to the Post analysis"

Many industry analysts attribute the jump in these instant defaults to factors including the weak economy, lax scrutiny of prospective borrowers, and most notably, foul play among unscrupulous lenders looking to make a quick buck.

I'd place the lax scrutiny in the unscrupulous lender category.

Because it wasn't an economy based on falsely inflated real estate prices it was an economy based on other speculation.

Sure, but all those people making fake money still needed real houses. That demand usually drives prices up.

To answer the question "Are housing prices near the bottom or not? (http://ayonae.com/are-housing-prices-near-the-bottom-or-not-p163701.html#post163701)" IMO no...not even close.

Jobs have to stabilize

Loans have to start going out

Those two things happen and the housing market will start swinging back up. The only good thing is that its going to come back pretty fast imo. There are a backlog of people at that point where they want to buy a home and a backlog of homes to be sold. The key is getting both to the point where it intersects.

We need to stop the bleeding at the banks first.. and I think the worst part of that is over. I think the banks should be on better, firmer footing by the middle/end of summer.

The houses were way more than they should have been. So hopefully even when the market eventually starts to swing up, they don't go berserk again.

I hope this might reflect the typical situation of a typical American who might buy a house but has reservations.

I have a job. Its stable with benifits and a decent take home. I don't carry alot of debt and my credit is decent BUT....

- My retirement account is now worth less than nothing.

- My country's government can't agree on how to squander my tax money, of which either situation by itself would cast alot of doubt on the future.
- I don't want to buy a house until my credit finds stability. I have two credit lines I use occasionally and their limits got slashed down 75% of the old cap. Even if my credit is "good", there just is nothing there to build confidence that I can get a mortgage without "steller" credit or taking a bath on the interest rate. I would rather stay in a decent apartment in town and have them mow the grass and do the maintenance than live in a run down trailer in the sticks and have to commute an hour+ just so I can say I own my own home.

-I don't want to buy a house and have things continue to plunge, owe more than its worth and saddle that with uncertain future employment prospects. A house is not supposed to make you homeless.

Bottom line is there is NO flexibility but alot of uncertainity. If I am going to get pinned down in one place, I want there to be a bit of a cushion if things go sour. Right now, in town apartment life continues to look better and better on the long haul, even if I can't have a dog, bar-B-Q or have a spot for my unborn kids to run around other than the city park. Adapt and over come.

If I was going to buy anything, it would be just a parcel of land or a fixer-upper house for peanuts (think 3k foreclosure that was never that great to begin with)I can either bulldose flat later or fix up over time. Otherwise I think I might afford an old red brick ranch in an older neighborhood of the older suburbs of Atlanta (Stone Mountain or Marietta maybe) with a one stall garage and a dead lawn, 1970s appliances, 1960s heating, outlets with no ground prongs etc. Perhaps it had a former life as a meth den...

Fuck it. Might as well wait.

The decision to buy is an easy one.

If you have stable flow of income, and everything else looks good. By that I mean you wouldnt have to stretch yourself to make your payment... I think everyone knows people that "bought too much house" and wound up working like dogs to hit those monthlies... then buy.

Long term, the value of your house will go up. I mean if your idea is to buy something shitty, put in recessed lighting and then sell it for +100000 more than what you paid for it in 3 years, then no... not the right time. But if you buy something you feel you are going to be in for 15+ years, then go for it. Timing really doesnt matter in that scenario.

Long term, the value of your house will go up. I mean if your idea is to buy something shitty, put in recessed lighting and then sell it for +100000 more than what you paid for it in 3 years, then no... not the right time. But if you buy something you feel you are going to be in for 15+ years, then go for it. Timing really doesnt matter in that scenario.

It could fall much farther. In addition to the lack of liquidity (and lack of underlying solvency), we have a historic oversupply of houses. No matter what sunshine realtors blow up our asses, it's going to take a long time to bring supply and demand back into equilibrium.

Excluding booms and busts, the inflation adjusted housing values only rose about 10% in the century ending as this current boom began. If values fall back to the previous trend, they have ~75% to go yet, and shouldn't necessarily be expected to spike back up to boom levels again/ever.

The conventional wisdom that a house is always a good investment isn't a given. A good inflation hedge, maybe.

I'm a firm believer that if you purchase a house now, generally speaking, you can expect to lose your ass.

I read some where if all house building stopped TODAY, it would take almost 3 years to purge existing homes off the market.

Long term, the value of your house will go up.

No, it won't. The price of the house may go up or down, but the value over time has been shown to regress strongly towards a near 1:1 correlation with GDP. You're a victim of the credit-fiasco inspired insanity of the last few years that housing is magical, risk-free air-conditioned retirement investment. It's not, and has never been.

So anyone speculate what a modest house would go for in a "normal" area in about 2-3 years from now? I am not talking LA/NYC/Washington DC area here. Atlanta or Seattle area. Modest house I am talking what I said earlier. Something around 40-50 years old. Needs work but not a basket case. 1 car garage or just a two carport. small yard. maybe 1200 sft tops (2-3 bed room, 1 full bath and 1 half bath), 1 story ranch. Not in a DMZ. I am guessing 120-180k area?

Holy shit. I googled east cobb and got back almost 2k houses listed with ONE BROKER in the 100k to 200k range. Alot might go for under 100k easy and these are decent houses in good neighborhoods. Makes me wish I was not in China. With my VA first time buyer status I can get one of these pads easy.

Yeah, but if you moved to East Cobb, you'd have to deal with the people who live in East Cobb. Might not be worth it at any price!

I'm currently purchasing a house, not because I expect it to appreciate anytime soon, but rather because it will provide me with much more and more comfortable space for slightly less than I am currently paying in rent, is closer to my place of work, and is likely to *devalue* less than my retirement accounts currently are given that San Antonio is a relatively stable market (we weren't that overvalued to begin with, and my house in escrow is 80 years old and close to downtown). Am I still nervous about it? Extremely - it's a huge commitment. But I'm not that concerned about whether the price goes up or down anytime soon either, as I'm not likely to be going anywhere (I'm in the dubiously fortunate position of being likely to more, not less, work as the recession deepens). I'd agree that housing prices (in some markets more than others) have a long way to fall yet, but comparing what I am getting this year for what I purchased in 1991 on a square footage/amenities/condition basis, the base inflation rate, and what rents currently sit at here I feel like I'm getting fair value for money even given current circumstances. Only time will tell, I suppose...

Regards,
Nydia

I think now is a fine time to buy a house if you are looking....

When you buy a home, you are also buying land. They aren't making any more of that stuff. Birth rates arent declining. Assuming you buy in a good area, its going to increase in value over the long term. Now yea, maybe they build a trash incinerator down the street, but for the most part, there has never been in all of the history of man, a better overall investment than Land.

People are now taking out mortgages and defaulting without making a single payment, apparently. First payment default (FPD) isn't new, but it has been a significant thing in the bubble markets like CA and NV. One blogger who was monitoring defaults in Southern CA picked up that a number of these FPD were on properties that had been flipped from buyer to buyer. His conclusion was that the properties had been sold at a mark up to each member of the group, and that the final purchaser was someone who didn't exist except on paper.

Are housing prices near bottom? No. They've got a lot of bubble price to lose. In general, housing has kept up with median wages, until the recent bubble when they got out of line with their historical ratio. To return to the historical ratio, housing needs to drop at least 1/3 from it's peak (or wages need to rise 50%).

When you buy a home, you are also buying land. They aren't making any more of that stuff. Birth rates arent declining. Assuming you buy in a good area, its going to increase in value over the long term. Now yea, maybe they build a trash incinerator down the street, but for the most part, there has never been in all of the history of man, a better overall investment than Land.

Land isn't all that expensive unless you want some of the highly desired pieces of it.

Regardless, the cost of the land is included in those numbers. Between 1890 and 1990, the world population quadrupled. Even though there was that much less land for us all to share, the price of a house on land in the US went up ~10%, adjusted for inflation.

Slightly off topic, but possibly a direct correlation, I read in today's paper that loan defaults in the state of Minnesota are up 133% over two years ago, and this does not include foreclosures. It is not too hard to picture some of these folks maxing out their cash cards trying to make their mortgage payments, only to find themselves out of work with no way to pay either the mortgage or the credit they have milked.

I really am looking forward to seeing some of these realtors and mortgage lenders getting charged in criminal court. They inflated the market, and now justly deserve some consequences for their actions.

When you buy a home, you are also buying land. They aren't making any more of that stuff. Birth rates arent declining. Assuming you buy in a good area, its going to increase in value over the long term. Now yea, maybe they build a trash incinerator down the street, but for the most part, there has never been in all of the history of man, a better overall investment than Land.

That sounds better from Lex Luthor.

Home values (not prices) are almost totally uncorrelated with population except in extremely high desirability areas. If that were at all true the adjusted values would have skyrocketed since 1890, when the US population has more than quintupled; furthermore housing prices in cities should be somehow proportional to urban density, and yet they are not. It is even demonstrable that when desirability of an area increases past a certain point, homes and land parcels get smaller -- so yes, the land many increase in value but the "investment estate," if you will, does not implicitly.

There is also the observable corollary of land decreasing in value as local density drops, which has happened all over the world throughout human history to areas nominally considered of good worth.

We've run out of arable land, water, energy, and privacy long before we ran out of places to live.

Yeah, but if you moved to East Cobb, you'd have to deal with the people who live in East Cobb. Might not be worth it at any price!


I have some good friends who live there around the Holt road area which is an older but still decent area. Yes there are alot of twits there but its tolerable. It all depends on where I end up working when I get out of the service.


We've run out of arable land, water, energy, and privacy long before we ran out of places to live.

Take a plane trip most anywhere on the planet and the majority of what you see is a whole lot of open vast empty nothing. There is plenty of land but people only want to live on a very small percentage of it. With the global push towards urbanization, since large cities are by far the most efficient use of public resources and the most effect medium for exchange of ideas, this is even more pronounced. China has to maintain a +8% GDP to be able to create enough jobs to move the majority of their population into the major urban areas. Granted they live in humble apartments and flats that are very compact with few possessions, they are still living 1000% better than in the rural areas.

There was an article I read on the plane ride over here from "The Atlantic" that predicts that home ownership will probably decline to pre-WWII levels where the majority of US Citizens were urban (but not suburban) and rented apartments and flats in the cities. Few owned cars and worked and lived only a few blocks distance. Only the upper crust and the farmer owned their home at that time. The reason for that today? Flexibility. The nature of the economy and the work place in that its so chaotic that you can't expect to stay at the same job or even in the same field in 5 years time. When you have to change jobs and move, a house full of stuff can be a huge burden. This would lead to the suburbs being what it is in most other parts of the world: slums. Also, the cost of fuel and other commodities can be offset in urban areas. The trade off is less privacy and space but even that can be offset by good urban planing and quality construction. There is no reason you should have to listen to the loud parties, loud sex and loud fights from your neighbors if the building was built to keep the noise contained.

They were discussing home prices on the radio the other morning, and stated that the average home inside Detroit City proper could be purchased for less than 10k.

Apparently, there is not a high demand from those upwardly mobile folks to settle down in Detroit.

That sounds better from Lex Luthor.



LOL...buy up desert land in arizona and sink california so you will own ocean front property...lol...something tells me that it has probably been studied by some bankers as to thee feasability.

Christopher Walken thought it was a good idea back in the 80's.