First American LoanPerformance says California is again the nation’s worst housing market with prices falling at a 27.3% annual rate as of late June. California has held this dubious distinction since May ‘07.
Following California in June price tumbles: Nevada (-19.96%); Florida (-19.38%); Arizona (-16.14%); Rhode Island (-12.05%) and Pennsylvania (-11.21%.) Overall, FALP pegs the national price down 11.2%
National best was New Mexico, up 8.8%, and Texas, +6.2%. But only 8 of the 50 states and District of Columbia showed price gains in the year, according to FALP’s math that tracks “paired sales” — gains or losses on individual homes. (To read more, CLICK HERE!)
Other news …
Well we must be at the bottom! It’s a good time to buy! Don’t be priced out! Real estate only goes up!
………… shockg / thoughtful et al………… you aint seen nothing yet kid……..
One leg down, only two more to go.
A contributing factor here is southern California is that there is simply TOO MUCH CHEAP LABOR so consequently salaries will continue to be a record lows.
Good video NationalBubble.com
“America has never been stronger”
that’s why we are selling Budweiser, Citi Bank and Merrill Lynch” to foreigners because we are so strong!
Natl Bubble-
Outside of the fantasy that we aren’t in a recession, I actually agree with Phil Gramm. Our nation is dominated by “whiners”. I’m as guilty of that as anyone.
I think it has to do with the Constitution and the First Amendment which guarantees a right to “free speech”. It appears that Mr. Gramm may or may not have read the Constitution.
I don’t think the framers created the First Amendment for those citizens intent on praising the country endlessly. Rather I think it was for those of us to be able to “whine” at will:
“My Country right or wrong. If she be right, let me help keep her right. If she be wrong, let me help make her right.”
(Most of you probably haven’t seen the latter part of that quote, which, as usual, is the most important part of the quote.)
One of the things that allows this Country to stay on top is our ability to debate so freely, thus allowing market forces more independence to everyone’s benefit, or to the least detriment.
I’d say down 30% IS IN THE BAG. Where had Gary Watts been? Busy eating crow with the other realtors?
Bill-
For those who don’t remember their macro econ classes and John Maynard Keynes…
The great Depression was initiated by the margin buying of stocks, not unlike the margin buying (sub-prime 100% LTV) of homes. It then was exacerbated by banks that stopped lending.
So the velocity of money slowed. This caused massive unemployment, which meant people had no money to buy things. Since people weren’t buying, manufacturers reduced production, laying more people off, who then had less money to buy, etc, etc. The country then settled into this slower velocity of money.
It was John Maynard Keynes who observed that the country could stay at this high unemployment (up to 20% at points, and remember, women weren’t working much then) because there was no “exogenous variable” to accelerate it back up to where it was before (a $1 moving through the economy 8x/yr instead of 6x/yr).
It would take a second World War and the country to hire all those unemployed workers, along with Kaiser Steel, to build ships and airplanes and tanks and dams, etc, etc.
Fast forward to today when the Fed is now talking about “tightening lending standards”.
Sound familiar?
Bernanke needs to revisit his Econ 1A class. He’s having a tough go at navigating this mess.
Of course, “brilliant George” may think going to war with Iran is the same thing. He too has some issues with understanding the nuances of history.
At what point will the true absence of the permabulls signal the bottom?
Someone want to come up with a “market timing index” based upon the posters of this blog?
Maybe a combined index…the permabulls have all slit their wrists and the 50% of the bears start to become bullish.
Ok…that’s it.
Yawn. Rally tomorrow.
That’s an average figure. The huge price drops are inland, desert areas, etc. The beach cities are no where near that figure.
………….. LOL……….. what are you calling a rally these days……… up 75 points…… followed by a 200 point loss on tuesday LOL…………. maybe not black monday………. but then again………. maybe it is…….
This knocked out gain last year of 37%!!!!!
PARTY IN THE STREETS BABY!!!
THE LOONIES ARE GOING HOME…GET THEM OUT OF OUR HOMES!!!
I love this stuff.
The government could never allow the financing of loans in trouble and flip the bill to taxpayers…why? because we will become very vocal and will not allow it.
current the losers are the ones making noise…if we get any closer to this nonsense then it will be our turn to speak.
setting a precedent that we bail out people for making bad decisions sets a foundation for a system that has failed and can never succeed.
we will be in the process of a new system of government, one that is not american in any way.
THE GREATEST FREEDOM IN AMERICA
IS THE FREEDOM TO FAIL.
NOW GO AWAY AND FAIL
And leave me out of it!!!!!
Dig Doug-
I agree! I’ve already put my Congressional reps on notice that those who voted for the bailout I will be voting against this November…no kidding! I don’t care who they are. That was a horrendously bad decision.
I noticed that when I pointed out to Realtor Dave that of the loans that get refinanced that 29% of those (call in 3-in-10) still go belly up, that the banks would be dumping 100% of those 3-in-10 on Fannie and Freddie, that the losses on those wouldn’t be 29% but rather 80%-90%, if not even 100%, that the peanut gallery supporting the bailout, saying the gov’t wouldn’t really lose money, went surprisingly quiet, only the sound of crickets after that.
I sure wish I could be that stupid on my job and make those kinds of bad decisions and then get rewarded for it. How in Heaven’s Name do I get a job like that?
…………….. i see nothing but ignorance in regards to bailouts on this blog……….. this bail out means jacksh$t to help OC housing………… all these bailouts are designed to do is save big banking and big money……….. they are not taking away your opporunity to buy a home at an affordable price (20% lower than current pricing)……..do you understand that loans are going to be even harder to get?…………… in addition these bailouts destroy our currency further and make everything more expensive……giving people less money to spend on housing…………. these bailouts make it harder for corporate america to gain financing…… and lead to unemployment……..
so let me recap for you…………….
+ credit markets are going to get even tighter
+ companies will need to layoff employees (people who think they might lose their job, do not think about buying a house)
+ the value of our currency is being destoryed…. increasing the cost of goods with global demand (oil and food)
…….. does it suck that our country is going to hell in a handbasket? you bet it does………. but understand what these bailouts do…….. they CRUSH the housing market in the OC…….
Can anyone explain to me the logic behind Thoughtful, etc. routinely changing his/her nickname here? Now he/she is going by Provider but is still using the same syntax, sentence construction and lingo as Thoughtful and the others did. Why bother? Just be a man, or a woman, and stick with your handle if you are going to stay on the blog.
Now that I got that off my chest, I wonder how much the stock market will be down this upcoming week? Another 100 points? 250 points? More?
And when the lines form at all of the IndyMac branches in the morning, which bank goes next? Countrywide/BofA? WaMu? There will be more bank failures to be sure, but I wonder how long the big ones can hold out for? Can they make it past Christmas, or do they go down in the Fall? Maybe by Labor Day?
Hey Mav, I hope you plan on buying your next flip with cash. Not only will the first-time buyers find it harder to get a loan, but so will the “investors” on this blog. Keep cheering for massive economic destruction!
…………….. flipping a house LOL………. you are kidding right?…….
….. but I had the cash to buy in 2006 without the funny money………….. clown shockg……..
So how is this corn/ethanol venture going for us all? It sux huh…you bet it does…we have high food prices, in part, due to this ridiculous notion that corn and soy will power our vehicles. BTW Marcia, the reason all politicians suck at managing the economics of our country is simple: IT IS NOT THEIR MONEY. Therefore, they are careless. They view it as monopoly money…try this try that…new game.
……… mulliganville…. their are 2 solutions to the energy crisis:
1. tell china to start riding bicycles again
2. raise the fed rate to double digits
i am comfortable with either soultion…..
mav…i would love to see the energy crisis averted…but it appears to be here to stay. Wall st is stuck in no mans land…a ship lost at sea if you will. we need to drill everywhere we can to minimize our dependency on foreign oil nations…or we can simply go after another middle eastern country for oil…i mean, it makes sense right? since we are that type of country…invading sovereign nations for their own resources, mexico and canada are next. it will be much easier too since they are each essentially inept at defending themselves. i think our coast guard could accomplish the mission.
mulliganville…… drill all you want…..
that is like slaughtering a bunch of pigs because…… sausage prices are too high………. the sausage factories only have so much capacity…. and their are only so many pigs on this earth…
i hope i dumbed it down enough for you…….
please replace sausage factories with refineries…… go build one you fool…..
………… now…. increase the fed rate…….. and see what happens to oil prices……..
Mulli, please, US production will never exceed 5 mbpd ever again, no matter how much we drill. The only solution is driving MUCH smaller cars, preferably hybrids.
The answer is very clear for all to see, we just don’t want to. REALITY BITES!!!
How is 27.3% down making our housing market the “worst”? Prices rapidly falling where they should be and becoming affordable is great news. The sooner it happens, the sooner people can start buying again. Obviously, this will take some time to play out, but come on now!
MP and mav…smaller cars will only dent the situational demand. mav, i get it…no need to dumb it down. but since the dems have precluded us from said drilling…and have been the anti drill force for a decade at least, today, we could be selling some of this oil to others…instead of having china and russia drilling off our own damn shores…our govt is brilliant.
oil is over. Throwing money at a resource that is finite is extremely foolish. Attacking soverign nations because we are too lazy, too greedy or too ignorant to find alternatives is also foolish.
The key is to consume less, drive less, use less, walk more, build communities that require less driving. Build mag-lev trains on the freeways instead of widining them.
Drilling oil and building refineries will take years, as will most alternative solutions. Using the R & D money on alternative sources makes much more sense.
In the short term, battery technology is the key. Plug in Hybrids, putting solar panels on as many homes as possible, Wind farms, etc…are better answers.
As of right now, there are conversion kits for Prius’ the estimated cost of electricity is roughly $1 to go 30 miles. Compare this to most SUV’s that get 15 to the gallon of $4.50 gas at best.
The solutions are right in front of us…chasing the old way of doing things is what has caused this problem in the first place. If we would have stuck to the mandates that were created in the 70’s and again before Bushy was Pres. It is in our hands to change things, not the governments. We have to decide we want things to be better.
As far as the original article here. It seems that all the problems with the economy and housing will only continue. It will likely get far worse before it gets better.
Just a fact of life. As lending tightens few people can buy and prices will fall to where they should be.
It is a great day for Crapitalists.
Marcia,
Keynes (and you) are a little off with regards to the cause of the Depression. It was much more simple that what you describe. It was about credit/debt growth. Period.
If credit/debt expansion is not being used to invest in capital goods, then it really does not matte what is used for. There is simply only so much credit/debt that can be supported. The accumulated debt balance has a servicing cost. If the credit growth required to maintain growth is increasing debt service expense fast than the economy grows, then the writing is on the wall. Collapse is assured. It was assured by 1927…and in today it was assured by 2003 or so. The FED only made it worse by encouraging a final orgy of debt from 2003 to 2007.
The 20’s were similar to 1995-2007 in that huge credit growth occured. In 1929, Debt as a % of GDP peaked at 270%. It never again, from 1929 through the early 90’s exceeded 200% again. In the late 90’s we surpassed 270% again. By 2007 we were at 350% (!), and the great collapse started. The Depression was a credit default at heart. This coming Depression II is also a credit default at heart.
Samson,
Batteries? Do you have an engineering or science background? I would guess not. Don’t believe the claims about electrical motive practicalities unless you have done the numbers your self.
I suggest you take a logging GPS and put it in your car. Track the speed of the vehicle…say a data point every 5 seconds for a day. Differentiate the data series and filter all the negative accelerations. Close the gaps in the series. Take this data series, multiply the accleration at every point by mass, and velocity at that point in time. Finally, integrate this series for the 24 hour period. This will give you total power consumed.
What you will find is that the power consumed dwarfs what can be transferred from your house to any sort of battery. In fact, you will find that your car consumes more power in a day than your house in a month. So to do what you say, the electrical infrastructure would need to be massively in crease.
Basically, your idea is a pipe dream. It can be done with a lightweight car if you are the only person doing it. But to transofrm the entire basis of locomotion, and scale it is simply impossible.
“The solutions are right in front of us…”
Uh…no they are not. The only solution is to kill 4-5 billion people. But people can not fathom that, so they latch on to nonsensical pipe dreams (such as ethanol / fuel cells / battery powered cars) to keep their fears at bay.
You are correct that the world is going to get larger, and cities will once again grow. The suburban movement started post WWII will reverse. The suburbs will become a barren wasteland in the next 30 years as people move back to the cities. Then when that finally collapses in chaos, we move back to a hybrid agrarian technological society after much chaos. The US as acountry will not survive this I believe.
The one thing that can save us from this? The physicists at MIT/ CERN / Princeton working on fusion reactors. THAT would give us enough electrical power to really solve some of these issues.
Brant, honey, why are you wasting energy and resources and increasing your carbon footprint by posting on newspaper blogs in the middle of the night?
If you really believe the hilarious drivel you spout, you’d turn off the computer and the electricity and use the night hours to sleep like our ancient ancestors did.
Someone here wanted a Market Timing tool to forecast a bottom to the market. What follows is a rule of thumb calculator and should be entered onto an Excel program. those of you that are Excel empowered should be able to get it to function.
MONTHS TO THE BOTTOM
Household Income: $72,600 Median
Underwriting Ratio: 36% Allowable for Housing
Annual Housing: $26,136
Monthly Housing: $2,178
Loan Constant: 0.005735 Based on FNMA 30 year Fixed Rate Loan, see Bankrate.com for rate
Supportable Loan: $379,773
Down Payment: $75,955 Assume 20% including move-up’s
Supportable Demand: $455,728
Median Price: $500,000
Differrential: $44,272
Percentage: 9%
Change Rate Up or Down: -2.9% Varies by Location, make sure to use Current change rates, not Historic
Months to the Bottom: 3
BrantW-
Thank you for pointing out that the Depression was credit driven. The example was folks borrowing on margin (credit) to buy escalating stocks.
I liked your example of how the credit % went past 270% BEFORE 2004. I was always fascinated that Greenspan, knowing Bush’s intention on huge deficit spending, continued to lower rates, when Greenspan himself claimed that the deficits were inflationary. I guess he was just too good a Republican in the end to do the right thing. Had he held interest rates where they should’ve been, the Country would’ve gone into recession sooner, and the President would’ve been forced to stop his wild spending.
Seeking Alfalfa-
Good one…it’s been so long since we could look to the fundamentals that it’s nice to see what they look like again.
What about the overshoot? Assume a 10%-20% overshoot (call it 15% for giggles) where does that put us?
Got my E85 car with great shocks, now just need a gas station. I’m ready for the bumpy grand finale! Biomedical anyone?
Provider = Thoughtful, i assume. confusing at best, crazy at worst.
A contributing factor here is southern California is that there is simply TOO MUCH CHEAP LABOR so consequently salaries will continue to be a record lows.
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DEPORT DEPORT DEPORT
I actually agree with you Brant. I think the far flung suburbs are going to be in trouble. Creating more “down towns” is key to the future survival. Getting to a point where you can live, work and shop in a very close proximity is going to become more and more important. I know many people that think we will be living much like people lived in the early 1900’s. I think much of the suburban housing stock may need to be converted to farm land to grow food to support a society that is changing. Now, none of this may ever happen depending on what changes take place in alternative energy. It seems that are backs are slowly being pushed up against a wall and people are finally looking to solutions.
My point on battery and other technologies, is that it is a quicker fix in the short term. It is not a long term solution, unless we find ways to create electricity that doesn’t require oil or coal. Creating enough electricity to do so is another issue all together. I’m not nearly as doom and gloom as some that think Oil is dead. I trust in the ingenuity of the American people and others to find ways to resolve these problems.
seeking alfalfa: I was udner the impression that long-term median home prices are linked to individual median incomes at a ratio of 2.5 to 3.0. I dont’ see how a household earning $72.6k could afford a $455k house. First of all, who the hell has $75k for a downpayment? Wages are not rising while prices are skyrocketing. Your calculations leave the buyer with about $544 per week.
Please clarify what median you are referring to and what market? Because the national median price is about $196k while median income is about $48k.
My best guess for prices is that based on lending standards, negative savings, huge inventory, the recession, and median income, the US median house price will tend to the low end of the historic ratio, close to 2.4 times income.
Prices will have bottomed when the median US house price is below $120k. In real terms, we have another 30% to go.
Burn, baby, burn!