US Housing Crash Continues. It's Still A Terrible Time To Buy

Where's spunky?

it's like they're trying to pencil in the recovery onto their busy calendars.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUSh9f1ytDTY&pos=2

A recovery in U.S. housing will have to wait at least until next year.

The outlook for the home market dimmed this week as residential construction and mortgage applications fell and loan delinquencies reached a record.

“I don’t think the housing crisis is over,” Mark Zandi, chief economist with Moody’s Economy.com, said in a telephone interview. “I think we’re going to see another leg down.”

it's like they're trying to pencil in the recovery onto their busy calendars.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUSh9f1ytDTY&pos=2

A recovery in U.S. housing will have to wait at least until next year.

The outlook for the home market dimmed this week as residential construction and mortgage applications fell and loan delinquencies reached a record.

“I don’t think the housing crisis is over,” Mark Zandi, chief economist with Moody’s Economy.com, said in a telephone interview. “I think we’re going to see another leg down.”

The http://patrick.net/housing/crash.html reading is simply fascinating. And for me (sideline sitter), very affirming.

I think I will visit that site every Saturday morning, before I smugly leaf through the NYT Real Estate section, chuckling at all the hyperbolic hype (ie "Bidding Wars Resume").

I like the way "buy versus rent" is framed as "borrow the money or borrow the house".

Who the hell is Patrick.net, and why the hell do we care what he puts in his blog?

Patrick Killelea has no background in real estate at all.

Amen Matt!any a hole with a computer can start a blog

Patrick Killelea was priced out of the Bay Area housing market and, as a result, started a blog. The house he was outbid on has since increased in value by $500,000 (through Patrick's own admission) and he is angry that he did not profit from the housing boom. The website is also an echo chamber for bears to all agree with themselves as anyone who disagress with them is banned (I know this first hand).

dolly has quite the background in real estate. and a dozen or so blackberries.

And frankly, I would trust Patrick over Dolly on real estate any day.

Prices have been creeping up around the city.
You morons need to really get out of your apartment.

This article is a link taken from therealdeal, a very reputable source of links to real estate news.

Mimi, thanks for the link. Really. Buyers/homeowners right now need our pity. Things will not look very rosy a year from now.
Bookmark this post, you'll see! You'll smile.

Are prices creeping up enough to overcome the negative carry? Thats a lotta creeping.

So Patrick took a pass on a Bay Area house. Buffett took a pass on tech stocks. Different, but the same...and actually, related.

all the bulls are waiting for GS to rescue them and the latest news from GS is that they don't even want thier employees throwing holiday parties.

http://www.google.com/hostednews/ap/article/ALeqM5gjx2d7Jygia4Kt8hWQWuicMSBDewD9C3D6G80

sadly ironic, the salvation army is laying off people. not so sadly ironic, GS employees taking out the trash.

A friend from college is a recently promoted MD at Goldman. He rents and plans to move to NJ soon. Sorry but many people at GS already own or are too smart to see this little dip as a buying opportunity. We really wont know till be know. What I don't appreciate are the liars out there claiming prices have risen. We dont even have enough data to make that statement with any basis.

GS is evil, not like the geniuses at Citi / BoA / Merrill / Bear / AIG / Freddie / Fannie, not to mention the great policy makers in Congress, and let's not at all look at the masses of American taxpayers speculating based on greed masked as as home purchase. Nope, let's blame the one set of people who decided not to go long housing with the belief that prices could only go up, and if it crashed they didn't care because they'd be out of there. Get another job / chance at the roulette wheel, turn in the keys to the bank, blame others and if you don't get reelected move on to lobby job. Let's blame the company who positioned themselves to handle a crash much better than anyone else and was able to withstand it well. Because that's who we don't want standing around: you know, the ones who tried to allocate capital well and push the invisible hand of the market towards something more reasonable by not having a huge levered long position in housing. Because this is America, Jack, and here we expect to all fail together. United we stand, divided we fall.

Who said GS is evil? They are all basically out for themselves, GS is just the best at it by far. Due to their success, they are poster child for the basically true rally cry that finance in the last 25 years has grabbed up too big a share of wealth vs. the value they create. They also sucessfully socialized their losses. I guess the government should have lent to business directly.

inonada, i don't know whether or not GS is evil (although i suspect they're not angels), i just thought it was funny that they are taking out the trash.

what GS is, however, is the worst PR engine in the country. my dog could do better PR than Blankfein.

Rhino, please post his name so we can skewer the little f--k in 3 years for not having bought while the rest of us lemmings jumped in with both feet. How dare he make better decisions than the rest of us?

Maybe I should give him Alpos name for his NJ house...He's prob looking a little upmarket from that. Hell listen, they are better. In instances where they 'cheated' if they did (I'm sure they did) they should be punished. However, like Chaos, they are sleepered into the highest levels of government.

Patrick made an excellent point:

"It is far better to pay a low price with a high interest rate than a high price with a low interest rate, even if the mortgage payment is the same either way.

1) Your property taxes will be lower with a low purchase price.
2) A low price gives you the ability to pay it all off instead of being a debt-slave forever.
3) Paying a high price now may trap you "under water"... you will not be able to refinance, and won't be able to sell without a loss."

Its the best point of all. Its also the most naggingly annoyingly prevelent misconception when stated the opposite way.

So, just to amplify previous posts, it's crucial to know who your source is and why they are promoting a certain point of view. A causal blog is not worth, except as bait here on SE I guess.

I happen to agree that prices are heading downward for the next 1 to 2 years, but I came to that position after investing some serious time reading and listening to experts who have analyzed current data, and looking at a lot of data myself, from the perspective of a real estate investor, which I am.

The thing is, any downturn is going to be U shaped somewhere and you want to buy either as it's heading down, or as it's heading up. Those are things you can plan on if you follow the data. To buy exactly at the bottom of the U is a matter of luck, not planning, because it can only be seen in hindsight. Seasoned, profitable investors understand all this.

Luck is for gamblers. Analysis and planning is for successful investors. If I had the money right now, and unfortunately I do not, I would be investing in real estate. It is not at all in my view "a terrible time to buy," it's actually a very good time to buy. And a lot of smart money is buying, as today's New York Times real estate section and other sources report.

I would add however that I am not a fan of large mortgages, and I have never, ever been a fan of large LTVs.

Regarding drujan's quoting of Patrick: Nope, sorry. Not enough information being taken into account here, and he's assuming some things that may or may not be true. There aren't any easy rules, you have to take the time to do the hard work of crunching it.

{Manhattan real estate agent.}

"I happen to agree that prices are heading downward for the next 1 to 2 years" = "If I had the money right now, I would be investing in real estate"

Does. not. compute!

But then, since the above is posited by a broker, of course "now is a good time to buy".

I got several emails from brokers last week jumping all over that NYT article about bidding wars. They're all trying to convince me the market is rebounding and I'd better get in now, now, now!! Sorry, not buying it (literally). Time to watch and wait.

fluter, it sounds like you're talking about a V, not a U. I expect a U and would expect to buy anywhere along that nice, flat, long-lasting horizontal near the bottom. [But I like your posts, and I'm glad you provide perspective!]

On a separate note, those who say "prices have risen" or "prices are rising" really mean to use that phrasing from religion, "prices are risen". And I won't knock their faith-based view of Manhattan real estate, if they're willing to admit that that's what it is.

Alan, your posts are a joy to read.

It'll be a U if we're very lucky. More likely scenario is a long period of sideways movement before things start to appreciate again.

Agree w/ evnyc; really enjoy alan's posts.

They'll be no V. I don't put much hope in a "U". The rest of the world - the EU, China - has taken Obama to task for the U.S. habit of creating and sustaining asset bubbles. For most of the 20th century, loosened credit and increased money supply manifested themselves as an increase in the general price level, i.e., inflation. But in the last 10-15 years, for some reason (emerging market labor? increased productivity due to technological advancement?), increased money supply in the U.S. led repeatedly to one thing: Asset bubbles. The Nasdaq in 1998-2000. Real estate after the tech bubble burst. Oil and commodity ETF's after the real estate bubble burst (remember how high OLO, RJN and other energy ETF's got even after it was obvious we were in a recession? Then remember how quickly they crashed?). The latest bubble may be gold: It has completely decoupled from a 40 yr correlation to 30 yr UST yields. So either gold has to fall or treasury yields have to rise big time...pretty unlikely given that we're emerging from a near-depression and there really isn't any inflation to be seen, even with the level of wasteful spending the gov't is maintaining. So, if there is now a gold bubble its likely because people just need to believe in the lastest get-rich-quick scheme -- god forbid they should work hard and save, like our grandparents did!

I think the era of fed-induced asset bubbles is likely behind us and they'll be no "U". More likely, an "L". Get used to it. And start saving again.

"1) Your property taxes will be lower with a low purchase price."

THat is 100% false. Your taxes can go up even when your value goes down. I know first hand. In 2004 my taxes were $8,000. Today they are $14,000. Is my house wrth more today than in 04? Nope. THis is precisely why you should not listen to people like Patrick who have NEVER owned a house.

it depends on where you live. and whether or not you contest your taxes and win.

you own a house, alpie, how's that working out for you? is your house worth more today than in '04? no? this is why you should never listen to alpie, who HAS owned a house. and a PT Cruiser.

A PT Cruiser and some shit box in a swamp. Hahahahahaha.

Patricks property tax reason for buying when rates are high was kind of BS....but the rest of his reasons were right. Key takeaway, the correct - yet counterintuive - takeaway is low rates make for the time not to buy.

I have never owned a PT Crusier for the 55th time.

ANd yu can contest your taxes, but it is very difficult to win.

jobs jobs jobs

as long as we loose 300-500,000 per WEEK nothing will move upward for long

it also means that NY State and City will have scary revenues shortages which will be tried to reduce by cutbacks (believe it when I seem them) and more likely higher taxes/fees wherever you can imagine.

Not a happy environment to be long Manhattan RE.

actually, el p, in many areas it's not that difficult. NYC forget it. but other areas it happens all the time. i've been too lazy and the locals around me think i'm f'ng insane.

i could have sworn you owned a PT Cruiser. well, it would suit you so you should consider it for your next purchase.

HT1, i agree. and i think our smug feelings of superiority regarding california may just come back to bite us in the ass. they've been going down the path for almost four years. we've just started, and yet.

http://www.nydailynews.com/news/politics/2009/11/20/2009-11-20_paterson_warns_of_.html

No, Alpie said he owns a soccermom-minivan. And stop giving him a hard time about it ... he needs it in New Jersey where he lives.

Alpo has children? Racist PS6-educated ignoramus.

No, Alpo does not have kids.

let's keep it that way alpo..... snip snip... be done with it...

PT cruiser?

I just wanna hear it for the 56th time...

$3.2 billion ain't so bad, when compared to California. Nor is $6.8. Don't get me wrong, it's no cakewalk, but California is the land of magical thinking where real estate always goes up and foreclosures only happen on TV - at least, if you're a politician. They just "closed" $60 billion with accounting gimmicks, and lo and behold another $21 billion hole opens a few months later. Fuzzy math, meet reality....

Maybe it'll be a catalyst to take on some of the more outrageous union benefits that are projected to sink the state in the near future. Or, knowing Albany, it'll turn into a complete sh*tshow.

"Prices have been creeping up around the city.
You morons need to really get out of your apartment."

Carol was a lying moron before the crash... but suddenly she thinks anyone is going to listen to her?

Stick to selling enchiladas out of a cart, sweetie...

I think Carol was the same one who thought it was outrageous to expect a broker to return your call...cause you know, they get so many.