Zack

A few posts with realtors recommending a person to buy on a short time horizon:

http://www.trulia.com/voices/Home_Buying/We_are_first_time_h…

http://www.trulia.com/voices/Home_Buying/Is_now_a_good_time_…

Trulia mods, something really needs to be done about the poster now named "Rudy's Daddy". I hope Ryan sent his posts threaten the president to the secret service. Its not his place, or ours, to decide who is credible. - Thu Jul 3 2008, 16:04

JR,
The article doesn't state accurately either way whether the man was taken advantage of. Was he promised by the realtor that he could refinance in a couple of years? Or that he'd be able to take out a home equity loan to do something in a couple of years? I'm not saying any of this happened, but we don't know. Either way, its doubtful he was taken advantage of, and much more likely, if anything, he was misled with statements about how its a good time to buy and housing always goes up and you can always refinance, etc etc and was too trusting. This type of reaction is obviously lunacy and if this was normal there would be a lot less CFPs and stock brokers in the world.

What's the purpose of the article? I'm not sure. Maybe that if you tell gun-toting NRA members in the middle of this country its a good time to buy, you better be right? - Wed Jul 2 2008, 08:03

Greg,
The article is rather lousy but I sorta expected that. It says: "Experts say timing the market correctly is almost impossible and that for a traditional homeowner -- who should be taking a long-term outlook approach -- timing is irrelevant."

Who are these experts?
--says Bonnie Abbott, a professional real estate consultant from Seattle.
--Stuart McAfee, a Realtor with Oakhurst Properties in the San Francisco Bay
--Lawrence Yun, chief economist for the NAR
--Patrick Killelea, a programmer from Menlo Park, Calif.

Of these 4 "experts", who would guess who gives real calculations and decides its not a GTTB? One hint, its not the new incarnation of the Iraqi Information Minister.

The title is inflammatory, but that's the news for you. Like just yesterday when MSNBC ran the headline "We caused this!" or something like that with a picture of a house underwater to the roof. Then the actual article talked about how the majority of experts believe the global warming has factored into some of our meteorological events. This one isn't so far off. In their examples, they completely ignore the difference in downpayment, which for a 250k house, isn't a huge amount, but for 900k houses like they have in NY area, or Chicago, 18k savings up front goes a long way. Plus they don't even consider the fact that the spread between the 10 year treasury and mortgage rates is STILL at a historical high, so there is plenty of room for rates to fall even in the fed raises rates, nor do they consider that you can refinance rates. Finally, they don't even consider the odds of each event. Does anyone want to bet me which we'll see first nationally, a 1% rise in rates or a 5% drop in home prices?

Finally, AJ's work earlier in the thread showed that timing the market for housing is very possible. You won't pick the exact bottom, but close enough that it doesn't matter, especially considering the you won't be catching the falling knife.

Ok, i'm going back into hibernation. - Tue Jul 1 2008, 16:04

And yet another account soon to be deleted for CAR's charter member. - Tue Jun 24 2008, 15:56

Reposted for Christine who doesn't have a "contact me" in her profile or I'd just send it to her:

If you're getting emails on every reply, which I also had to stop, do this to stop them:

go to: http://www.trulia.com/account/searches/
click on the tab "My Trulia Voices Alerts"
find this question in the list, and uncheck the "email alerts" checkbox.

That should stop you from getting alerted every time. Be aware, that if you do return and are answering again, by default Trulia puts a checkbox under the "Web References" area that says "Email me when answers to this question are posted", if you don't uncheck that, it will go back to alerting you on every message and you'll have to go uncheck it again in your profile. I haven't found a way to stop the checkbox from appearing on every answer.

Zack - Tue Jun 24 2008, 13:25

If it makes everyone feel better, its not just housing that is taking a beating. Corporate profits expected to be off by 10%: http://biz.yahoo.com/rb/080624/usa_earnings.html

The good places to have your money right now are few and far between. Bachelier tells me under my mattress and its looking better and better. - Tue Jun 24 2008, 12:24

**Reposted because I can't type coherently

Nancy and Charles,

If you're getting emails on every reply, which I also had to stop, do this to stop them:

go to: http://www.trulia.com/account/searches/
click on the tab "My Trulia Voices Alerts"
find this question in the list, and uncheck the "email alerts" checkbox.

That should stop you from getting alerted every time. Be aware, that if you do return and are answering again, by default Trulia puts a checkbox under the "Web References" area that says "Email me when answers to this question are posted", if you don't uncheck that, it will go back to alerting you on every message and you'll have to go uncheck it again in your profile. I haven't found a way to stop the checkbox from appearing on every answer.

Zack

I will also send this to both of you through your profiles also in case you're just mass ignoring the thread. - Sun Jun 22 2008, 18:49

Carl,
Your response got me thinking about the american dream thing, so i started a new question about it. I was going to avoid doing it because I've found that the quality of responses on this thread is much much higher than the usual question gets but I'm curious about the emotional aspects and many of the common posters on this thread tend to remove emotion from purchasing, which I believe is rare.

Anyway, I'd welcome all thoughts on it, link below.

Zack - Sun Jun 22 2008, 13:13

Carl, I have nothing against homeonwnership at all. I really don't. You know my feeling on it as an investment, but with gov't tax breaks, its not a terrible deal and you get all the intangibles Linda listed below. Its never been a dream of mine. I don't know of a single person that I'm friends with that dreams of owning a home. They feel is something you're supposed to do when you reach a certain age. I feel/felt the same way. I started asking people about buying and some had very good reasons and others had no reason other than they felt it was something they were supposed to do, like register with selective services or something.

My parents did not have a lot of money when I was young, by the time I reached teen years my dad had been promoted a number of times and my mother was back to work as all 3 of us were in school and relatively able to take care of ourselves. They did pretty well. They still have their same home but spend 8+ weeks each winter in Hawaii and 12 weeks in Puerto Rico and/or Costa Rica. So no, i've never seen a foreclosure process server.

"Now you compare local home prices over 10 years to the S&P average nationally to prove that a home is less profitable as an investment therefore don't buy one?" - I've done comparisons like this about 20x in this thread, and have stated a number of times that a house is a bad investment. Buy one when life decides you need space, or you want to join a neighborhood/school district permanently, or many other personal reasons, but just don't think of it as an investment. During normal times, I believe the intangibles you get are worth the premium you pay for them, but in the current declining/flat market, where it looks like we're going to be flat for a long time, those intangibles are very expensive, too expensive in my opinion.

"You are afraid democrats will tax you while they further ruin the values of real estate." - I'm nearly certain of this, its not a fear, it being practical to assume that my taxes will go up, the only question is how much. If the democrats get over 60% of the house also, they'll have free reign to pass whatever they want which will likely result in a large gov't homeownership bailout. If this is structured to really encourage first time buyers, I may benefit from it, but more likely it will be large amounts of taxpayer funds to prop up bubble prices all over the country. The only result of this is that they'll set a bottom and we'll have flat real estate prices for many years as inflation does its work. Either that or they'll inadvertantly price everyday people out of being able to afford homes all. Our gov't has shown time and time again that when they intercede to "fix" things on our behalf, generally all they do is cost a ton and turn out to fail. They could call their bailout No Homeowner Left Behind, it would be fitting.

I'm not trying to bait people, I really do not understand the concept of calling homeownership the american dream. I've spoken with many people my age about it, including friend that own SFHs. They cite the intangibles and settling down and knowing you can stay there for as long as you want, etc. I agree all of these things are positives to homeownership. When I bought my co-op I felt like more of an adult, but it didn't feel like a sense of accomplishment. Maybe for others it does and that's really what people mean. Carl, you deal with people making this purchase, please explain it to me. Do many of your clients feel a sense of accomplishment when they've closed? I'm not being sarcastic, I'm actually curious. I remember feeling relieved but mostly because it was over and I could close the book on the massively annoying steps of going through contract, inspections etc, and its exciting to move to a new location. Anyway, again, I'm not trying to bait people. I do think Victor is crazy, and I really don't understand why buying a home is considered the american dream. I'd be happy to hear from people why they believe it is and how they felt after purchasing.

Zack - Sun Jun 22 2008, 11:08

Victor, you've refuted nothing and proven nothing to anyone other than yourself, but I do give you credit, you've really seemed to convince yourself that you've proven someone wrong.

This is seriously funny:
"Reporting my posts which oppose yours resulting in a temporarily suspended account until I contacted trulia and they saw there was no reason for the suspension."

I've been on a few threads you've been on and have never reported any of your posts. The only person's posts I've reported is Slash/Go Cubs and his next 15 iterations and obvious spam like the financing offer on the california boards today. You probably don't believe me either way, but it doesn't matter. I find it hilarious that you're crazy ranting actually got you temporarily banned. I don't think even Richard from Philly has been temporarily banned. Nice work. - Fri Jun 20 2008, 12:57

Go Cubs latest account,
You'd think after having like 15 deleted accounts, you'd end the embarassment of continuously looking like a fool. Although since you've done it under 15 different names, maybe you're different personalities don't mind. You should less more time trying to time "botooms" and read earlier posts by AJ that show that timing the approximate bottom of the housing market, if very likely to be possible. Considering your usual posts contain either nonsense or hatemongering, I doubt you'll be able to understand it, but give it a try, maybe you'll surprise us all. - Wed Jun 18 2008, 18:53

"and seller's response was, let's wait, it is too soon. "

That's awesome. Honestly, I don't know how you guys deal with people most of the time. This actually intrigues me a little bit though. I know older, or stale listings tend to attract less attention, etc, and there is an old adage that the first offer is usually the best, although I'm not one ot believe much conventional wisdom, but I wonder if there is data compiled on SP/OP based on days on the market? Many days on the market also adds to the cost of carry for the house as the person who is trying to sell is paying for it while trying to sell, but in our area, compared to the prices houses go for, that's usually a minor amount. There seems like there is an optimal solution to the days on the market to reach peak price though, although it has so many other factors that it may not be useful. Interesting idea though, at least to me. - Wed Jun 11 2008, 17:00

JR, way to be useful. I replied again defining what was meant by meaningful data, a comma separated list, or something that can be analyzed. I don't want lockbox info, seller's name, etc, not important, rooms, bathrooms, sq ft, original price, etc, that's useful.

You said: "Oh my let's everyone rent because we might have to move suddenly." Brilliant. Since the original poster was claiming its ALWAYS better to buy vs rent, when I point out a case its not, I'm advocating always renting. Way to go, you're channelling your inner-Victor today. You tend to vary between being snide yet useful, and a troll, and if you checked the mirror today, your nose would be green and pointy. - Wed Jun 11 2008, 15:08

Paul,

I don't believe its a big conspiracy, and I've actually considered getting my license just to get MLS access. Its more that I'd like to be able to get the data in a nice .csv format, or something else that can easily be loaded into excel or a stats package to be analyzed. I've asked a few realtors we're using here for information, and I get sizeable reports via email, but its difficult to analyze since the data all has to be entered following that. Plus the columns in the report tend to vary which makes me believe they can be chosen by the realtor, which is a nice feature, and I would be more specific if I was willing to do the data entry.

I read the settlement thing and saw that it was more around everyone being listed, but I wasn't sure what doors that would open for someone like redfin etc to start producing the ability to run csv reports on specific queries. I realize its not covered specifically but I'm not sure if the NAR would object to someone trying to do this, and if they did, i believe this ruling could have have an effect. Of course its very possible i'm just imagining all this too. :) Either way, it wasn't may intention to make it sound like a conspiracy of hidden data.

Christine, I'm all for the power of positive thinking, but positive thinking doesn't make purchasing always a good idea. Actually, it doesn't do much other than sell self-help books.

Zack - Wed Jun 11 2008, 14:39

Thanks Nancy.

I'd love to be able to access our local MLS data in a meaningful way but currently its difficult and you need a license to even get access. The reports it spits out aren't real useful if you're looking at them as data to be entered and analyzed but I think the idx feed would probably help quite a bit. Not sure. With the recent settlement with the NAR and the DOJ I wonder if we'll see more opening of the MLS data and some companies coming in to provide more analysis on it.

Zack - Wed Jun 11 2008, 13:25

Nancy, is it possible to get List Price/Original Price out of the MLS? I'm curious about reductions being seen and days on the market. Also, is it possible to breakdown by # of bedrooms? The stats do look like the market is going up but if March was a month with almost all 3 BRs and May was all 4 BRs, etc. With ~140 items in the sample set, it doesn't take a lot of differences to cause decent fluctuations. I'm not claiming your stats don't support what you're saying, just asking for more details. Thanks for the info, we like stats.

Zack - Wed Jun 11 2008, 13:00

Christine,
Here is someone who might disagree with your premise that it is always better to buy than rent...

http://www.trulia.com/voices/Home_Selling/How_do_you_sell_a_… - Wed Jun 11 2008, 12:44

Just to help clarify, Nicholas mentioned Maryland is losing 2.5% per month, not Chicago. Chicago lost 4% last year. The funny thing is you'll now get a bunch of replies about how real estate is local, and stuff about The Loop in Chicago and other desirable areas. There will always be local areas where things are doing fine, this may be due to desire to live there never waning, but more likely its due to small sample sizes.

Christine, this statement is totally insane:

"IT will always be better to own than rent, even if it s a small condo - IT'S YOURS!".
and
"However, Zack, you get write offs ROI, tax deductions for the expenses & interest. How can you say that a person is better off renting?"

How can you claim globally its not? If a market is going to decline for a period of time, you are MUCH MUCH MUCH better off renting during that period of time than you are buying. There are a number of posts in this thread that point out the math, which shows that housing, as an investment is a poor one. It historically appreciates basically at the level of inflation which means all your doing is being forced to save money at the rate of inflation. Owning you do get writeoffs, maybe, depending on if your mortgage interest is enough to itemize. If you didn't itemize before, then you only get a partial writeoff. And the writeoff is on mortgage interest, so it sounds like its more advantageous for a buyer to have higher interest rates and a a lower purchase price, assuming the don't just take the standard deduction.

"Our market has improved and is not stagnant and I am hearing this from many in different LOCAL markets." -- almost everyone is claiming the same thing, yet the country as a whole keeps declining at a rapid rate. Something doesn't fit, either many different LOCAL markets are declining, or the government data the politicians are building a platform on is wrong.

There is a reason realtors used to do buy vs rent calculations. Because there is a ratio that determines when i makes sense to buy. If you bought in most of California, or Phoenix it definitely wasn't a better time to own than rent. I'm talking local markets too. The inland empire of california, put 40 local markets from there on a dartboard and throw a dart, odds are probably 100% that you've found one where it wasn't a better time to buy or rent.

From a purely financial standpoint, the buy vs rent decision is an equation, and that equation gives you an answer about which is better financially. To claim that it is always better to buy is obviously wrong.

Zack - Wed Jun 11 2008, 11:11

I've been lurking but think i've finally collected enough comments to join the fray again.

Thomas Hall, excellent post. I think many people confuse this point and I was/am one of them. Its a mistake to look at a realtor as a financial planner although I understand why many people are confused as they look at the realtor as their one-stop-shop for all info housing.

Chris Freeman, I'm glad you didn't get your wish about the thread dying. Very good post about the thoughts of realtors etc. I gave it a thumbs up. Early in my trulia posting days, there was a post by a realtor in florida calling for a moratorium on home building to ease the crisis. It was obviously a panic thought without much realism but he made a comment about how the home builders could just go and fix all the bridges that need to be fixed (after the minnesota collapse) etc, which implied it was simple for a home builder to just go do something else. Your comments are spot on with that, they build homes, they know how to build homes. The market the credit bubble and housing bubble created is one where they probably shouldn't be building many homes, but they can't just go home and twiddle their thumbs, so they still need to build homes. Same with realtors, they have to sell homes. And I agree, that most actually believe its a good time to buy because a bad time for everyone in the housing market just doesn't compute. Good post.

RealtyExec, AJ posted some data earlier about the explosion of Option ARMS coming. Here is a link I found from his posts: http://calculatedrisk.blogspot.com/2007/10/imf-mortgage-rese… The actual data was compiled by Credit-Suisse. I've seen it broken down by state also somwhere, I think, but didn't see a link for it. I believe there were other links posted around the same time but I just glanced through AJ's posts to find this one. Its back there though.

Christine Moscinski, whether we've hit the bottom or not matters some, but not a lot right now because this bottom looks like its going to be long and flat if we're there. You said, "Why not you become your own Landlord and pay yourself! It's all a state of mind..." Well, this is sorta true. In very large areas of the country, the rent/buy calculations are WAAAAY off. So you can buy, and become your own landlord, but the landlord in you then charges the tenant in you nearly twice as much as it would cost to rent, and you, the landlord, have to pay taxes now, and you, the landlord, have to pay maintenance, etc. If cost of renting = cost of buying, no one would rent, when the ratio is nearly 1:1, people rent or buy depending on where life takes them or if they can afford to buy. When its much more expensive to buy than it is to rent, paying yourself doesn't work because you charge yourself WAAAAAY over market value.

Zack - Wed Jun 11 2008, 07:30

The Bayou, its a bit weird, but basically the point is that the april numbers were their estimate, as was march, feb, jan etc, and later when the numbers came in, the last 6 months had all been overestimated so they were revised down. So the author is saying the increase is over revised down numbers and are likely to be revised down themselves. The point they really should make is that the 6.9% they rose were with a confidence interval of +/- 14%, so they're not even a good estimate.

Zack - Fri Jun 6 2008, 17:42

New news brings new posts. Carl continues to post on occasion and when he does, he has added value to the thread. I find his anecdotes interesting and they seem to jive with what other people on the site are posting on trulia voices.

Joep, if you would go back to read the early part of the thread, Ryan was very close to buying early on before the deal fell through and even through a number of posts, was still undecided. I was on the fence before this thread also and had made a 3 offers on houses, since going through the work to post accurately to some of the debates on this thread, we have stopped actively searching. People were here looking for intelligent discussion and in some of the thread, we got it, if you wade through about 800 drone posts.

Welcome back Slash/Go Cubs/Nomorehaterz. Still smarting for the NAR settlement that set you off on a tirade and another deleted account?

Zack - Thu Jun 5 2008, 15:16

Dave,
I completely agree the buyer sets the market. I'd even be willing to believe that if you could provide someone with the entire set of data for an individual house, including how that neighborhood will do for the next 2 years, how motivated the seller will be at any point, and where rates will go and how many buyers will enter the market in the next 2 years, you still couldn't predict the lowest possible value of that house. As Carl mentioned, too much emotion built into it. But what this data can do is give you a baseline range for what an average house in XYZ neighborhood with X bedrooms and Y bathrooms and ~Z sq ft will cost. There may not be an actual house on the market that fits the description, but if you have that baseline range, you can adjust for what other features are worth in the market, and to you as an individual. This is really all I'd like to be able to take away if there was better data available. I'd love for more granualar data, but its hard to come by. I'd be fine with median prices even if you could completely eliminate or only take new construction depending on what you're looking for. Comparing new construction to 10+ yr old existing homes really isn't fair.

I also agree that people can and do make a fortune investing in real estate from single family homes to commercial properties. Real estate can be a great investment, if you know what you're doing. The same is true of stocks, bonds, commodities or even writing useless self-help books (see Kiyosaki). The problem is average people have been led to believe that making tons of money and becoming rich in real estate is easy, just buy a house and you're done. Most people believe that you are throwing away money when you rent. These statements are just not true, and renting is a lot cheaper in most of the country right now and that's the point I've tried to make in this thread. There has been a lot of back and forth here so there have been a lot of tangents and flame wars, bu the main point of the thread is the data and expert opinions about where housing is going.

I responded to Victor in another thread that I've become convinced that a house is and always has been a rather poor investment, just a savings account that pays you inflation, but I will buy a house in the future because it will be a life decision I'm willing to pay a premium on. I have no problem paying that premium, especially when its at a much more reasonable rent to purchase level or income to price level, but right now, the premium is very high even in the most desireable areas around me.

Zack - Tue Jun 3 2008, 18:00

Victor, i gave you a contradiction earlier when you were leaving the first time that took me one post to find. Also, I post and comment on articles I find interesting regardless of point of view. I posted the article because I found it interesting, not because of who's side it was on.

"Every topic you've opposed me on, I've debunked your data and associated theories which always seem to be from an investors point of view. Despite the fact most people who purchase homes are not investors."
-- So people should just accept that they'll overspend by a substantial margin and then overpay for shelter for many years because they're not investors? The point of view doesn't matter, the facts are that for a large portion of the country, buying a home now is still very likely a large losing proposition.

I also gave up on arguing with you as its pointless and will go back to standing by that. I believe that anyone with a solid sense of reason will be not be confused. Reading your posts are at least semi-entertaining in an ADD-of-their-ritalin sort of way although they get old quickly. So I bid adeiu to you again.

Zack - Tue Jun 3 2008, 17:40

John appears to be Go Cubs/Slash's latest name. He can't stay away, its like crack.

Dave, if you want to know how much something has increased, isn't the most logical way to determine that is to take what it was bought at, what is sold at, and figure out the increase? Also you seem to imply that the C-S index and HPI index aren't set by what consumers are paying for real estate which is obviously false. Finally, I'm not sure who you're referring to as "armchair QBs" . Some of the most adamant anti-housing members on this thread have been me, AJ and Richard. I own right now, AJ has stated a few times that he owns right now and Richard has posted that he owns his current home and had bought and sold a home in SoCal in the past couple of years. Since you seem to be implying that someone has to be in the game to accurately discussing housing data, we've been in the game, and have found that it seems about time to call timeout.

Zack - Tue Jun 3 2008, 15:19

C-S index on chicago metro area John? I'll take that bet, you tell me the escrow account we'll each deposit into and winner get it. - Tue Jun 3 2008, 13:29

"but the yardstick for any market area is the median price" - this is only true for the media and the NAR. Anyone trying to make informed and real decisions such as, say, the FHA uses the HPI index. Anyone trying to really judge what is going on for large scale investment, such as wall street, uses C-S. There is a reason for this, they are the least biased of any indicator. Median home price is generally sh*t. I mean look earlier in this thread when someone posted the median stats for NYC for the past quarter with and without CPW15 and the Plaza conversions. Those two buildings skewed the median by something like 20%. - Tue Jun 3 2008, 12:57

A MarketWatch article about price to income levels coming back into line which bodes well for housing. - Tue Jun 3 2008, 06:33

"Use your best judgment when taking advice from others online with a good dose of common sense a little research on the advice giver and a grain of salt... "

-- Very true. I'd take it even further. Be very wary of accepting advice from someone who's livelihood depends on people taking that advice.

"I would advise reading any bloggers profile and comments they've made in other posts to get a reality check of where they're coming from."

What I've learned from reading the posts of Victor Kaminsky is that he contradicts himself depending on who he's answering, he seems to believe there is a conspiracy going on here if people don't believe the NAR company line, and that if someone disagrees with him and provides WIDELY ACCEPTED data that is published by independent and government agencies, its faulty. The government makes policy decisions and recommendations based on this data he considers "incomplete old data", but its faulty because it doesn't agree with his view. Finally, the most glaring point I've learned from reading all posts by Victor Kaminsky is that he consistently makes ridiculous arguments in obnoxious and flaming tones and pass them off as if they are so obviously true. This is what people do when they have nothing of substance to support their arguments. - Tue Jun 3 2008, 06:09

RealtyExec,
Thanks for the answer. Its likely the sample is skewed on a site like this because people wouldn't post questions here if they're not having any problems. Although the answers from many of the realtors answer that this is standard procedure for short sales and bank-owned properties. I do agree is probably due to problems like the system being overwhelmed and the banks being unprepared to sell properties. Like JR likes to say, the homes aren't really for sale, just listed as such since no one will pay or agree to the terms. I'm not actually involved in any short sale transactions, or looking for them as the NYC area hasn't had the same level of price drops so they're not as common. I'm only speaking from what I read on the trulia voices area. Thanks for clarifying and I agree that having good and accurate representation in a transaction like a short sell probably saves everyone lots of headaches.

Zack - Mon Jun 2 2008, 17:55

**Reposted changing "are motivated" to "aren't motivated" **

A few random comments....

Wow, someone citing Robert Kiyosaki. Next we'll get some expert non-fiction from James Frey. http://www.johntreed.com/Kiyosaki.html

Greg, you got a thumbs down from me too for reasons AJ stated. But basically, if you're post reads like a commercial by the NAR, you're getting a thumbs down from me.

The inventory analysis is a good thought. Is there a good way to get breakdowns of that? The newspapers have it frequently so its gotta be out there soon.

Realtyexec, one question for you. You mention the banks being very motivated sellers earlier, but whenever a surf around on these boards, there are probably 10 new posts a day about people trying to buy a foreclosure or a short sell and the banks don't respond for weeks to months, and if you have any questions, or try to get them to fix something, you're looking at even more weeks. While I believe the banks don't want to be holding this inventory, the large number of questions and responses to those questions on this site have shown that banks may not want to be holding houses, but they certainly aren't motivated to move them.

Zack - Mon Jun 2 2008, 13:33

Jed, please post your stats. RealtyExec is posting articles to support his feeling from seekingalpha which is generally a pretty good economic site. They seem a lot higher on housing than me, but at least there is substance and data there.

The only "stats" posted to support the opposite side we've seen have been some socialist papers from realtor.org and some median home price stats from very small areas, or where new construction has skewed the numbers. Please bring any and all stats you have to this discussion, the core of respondents want to see them.

"Many many people don't make decisions based on analysis, they make them on emotion and motivations from perception." - very true and a big part of why we had this bubble and a tactic many of our "pro" company liners have tried to inject into this thread. If we could remove this fact, the world would be a much better place.

"My point is that the people that have property will be better off than those that rent. If you want studies that prove that they can be found but I don't think you want them because they will not support your decision."

--Why? I want studies and I haven't made a decision in my area. Liz Hoffman provided some studies from realtor.org earlier in the thread that tried to support one of the newer NAR tag lines that a house is a builder of long-term wealth. The paper was an interesting read, but it was seriously biased in terms of what data they were using and what conclusions they were drawing. A house is a forced savings account that grows historically basically at the rate of inflation. Although you can now remove any of that forced equity with Home Equity loans etc so I believe it is very likely that the data currently being used to show people's net worth being heavily tied up in their home will begin eroding quickly as the irresponsible people are no longer forced to save with mortgage payments.

Zack

On a truly sad note, we just missed a sale in San Diego:
http://www.michaelcrews.com/IMAGES/flyers/BOGOF_flyer.pdf - Mon Jun 2 2008, 12:47

RealtyExec,
I liked the article and feel a lot like the person in the article, although i'm not moving. Having read that article, I can't understand why anyone without a very specfiic need to buy, would want to buy now. The quotes I could most relate to:

"I’m still not sure how good our timing was. Based on the backlog of houses on the market, I fully expect that our new house will be worth less in six months than it is today. I’m also not sure that we would have been willing to buy in Boston, New York or much of California, where the rent ratios remain above 20, according to data from Moody’s Economy.com. "

"In fact, if you’re now renting — almost anywhere — and do not need to move, I’d probably recommend that you wait to buy. The market is still coming your way. "

and finally...

"Most of the time, the decision whether to rent or buy should be based above all on life circumstances."

I completely agree that life circumstances drive the decision more than anything else, and if you buy smart, you'll probably do ok, but I consider myself a smart person and willing to do a lot of research, and I still have no idea what a smart real estate buy is, other than not over-leveraging myself.

I do read the articles you post so i'm glad for the information and I don't think you should take articles to the contrary as chest thumping. Its very easy to be here and predict housing declines, everyone outside the NAR economists are looking for continuous downturns although the fact we're still setting records in many markets for inventory should be discouraging.

Paul, very good insight. I had a conversation with a friend earlier about that exact column and were thinking considering the correction and inflation that that national number will probably settle around 140-145. I'll be watching with interest as I still think NY area is gonna slump a decent amount, especially when the recession takes hold.

Zack - Tue May 27 2008, 19:42

To clarify on this statement i made: "I'll miss the mortgage deduction, as its truly a 100% deduction for me, which is common in the NYC area but rare for the country as a whole..."

What I meant is that I will never take the standard deduction. My state income taxes are more than the standard deduction so I will always be itemizing and the mortgage deduction I get is fully realized. If you live in the midwest and make a decent living there and have a wife and kid, its very possible you will not be itemizing, or if you do, its only due to mortgage interest, which if you do, you either get no tax break, or only a break on the difference between your deductions and the standard deduction. In states that do not have income tax, the benefit is much smaller.

Zack - Fri May 23 2008, 09:33

Reposted because trulia cut off my answer...odd

Carl,
As a potential buyer of a new home and a seller of a co-op, I've started actively looking for townhouse and SFH rentals in our area. Westchester may be holding its value, sort of, but the taxes and closing costs in NY are so obscene it makes a flat market even more painful as it takes so much more growth to overcome the initial costs. Its likely we'll sell our co-op in 6-12 months and move into a rental at that time. I can rent entire houses with a commute within 5 mins of my current time for LESS than I pay now for a < 1000 sq ft co-op. I'll miss the mortgage deduction, as its truly a 100% deduction for me, which is common in the NYC area but rare for the country as a whole, but adding 20-30 mins to my commute while tripling my housing costs to purchase just doesn't make sense. Also since the rental will be short term, 1-3 years, I don't have to worry about school districts which helps more wtih the costs.

I'm worried about the economy as a whole. I'm also worried that democrats will take the 60% of congress and the presidency which will allow them free reign to pass any laws they want which will probably mean my taxes will go up a lot and the economy as a whole will suffer. On the plus side, I'm sure they'll do something massively ignorant like prop up the bubble prices and then wonder why homeownership keeps falling beneath long term percentages.

Zack - Fri May 23 2008, 09:16

Thanks for the articles RealtyExec. Stupid question, but what is a REO? Real estate offering?

I like seekingalpha and i'm a bit surprised they didn't mention that the housing starts data was not statistically significant meaning that the the number fell within the error range.

You said, "I'm not saying we reached bottom, but a bottom does not have to be a deeper drop. It could be a flat stagnant line that takes awhile to rise again." I completely agree with this and looking more and more at sales in high income areas, I'm becoming more convinced that this is actually what we'll have with inflation and rising wages and rents closing their unsustainable gaps with housing with time.

Zack - Wed May 21 2008, 06:44

Forgot the actual graph..

Here is a graph of resets on option arms AJ posted earlier:

http://www.bubbleinfo.com/statistics-2007/2007/3/15/arm-rese… - Tue May 20 2008, 10:25

Dave,
I agree completely that sellers will nearly never adjust price to what the buyer can afford, for a specific buyer. But when the choice comes to being adjusting the price, or not selling the house, they don't really have a choice.

You're point about price vs rates for qualifying buyers is a good one and one I hadn't considered. I've always just thought of putting 20% down and qualification should be fine, but considering a large number of buyers put down substantially less, this is a good point. I wonder if there is good data on what downpayment people put down in specific areas. As obviously this can have a big effect. I've seen speculation in a number of articles including the one i posted earlier that Manhattan is holding its value because of the number of co-ops and their stringent financing requirements so you have so little distressed properties, but I wonder if there is hard data behind it. I know manhattan is mostly co-ops and I know they have stringent financial requirements, so the idea seems very reasonable to me, I'm just curious if its more quantifiable. That is a good point though and one I hadn't really considered before.

I said in my previous post: "interest is tax deductible, purchase price is not, so low rates is an advantage if house prices don't jump up to make up the difference, currently they have, so its not such an advantage."

I should've been cleared because this relationship is not going to be 1:1. A 1% rise in rates will not immediately cause a 10% decline in prices, although if you went purely on monthly payments, it should. There will be an affect, but it will obviously be gradual and it won't be a 1:1 change. I'm curious in existing models, what time they assume for the affect to be complete and how much decline they plan in real terms.

Anyway, welcome to the thread. I re-read my first reply like 5x to try to avoid having an aggressive tone and think i succeeded with the repost, if not, don't take it as such.

Zack - Tue May 20 2008, 10:19

Reposted and edited for tone:

To add to what Bayou said,

Also, interest is tax deductible, purchase price is not, so low rates is an advantage if house prices don't jump up to make up the difference, currently they have, so its not such an advantage. Plus, you can refinance rates, not a purchase price. That is offset by the fact that a higher purchase price, growing at inflation is a better numerical return, but this is also a risk if the market continues down.

You said, "Do any of you really believe that in 3 years you'll be able to purchase real estate for a lower price and at a more advantageous interest rate than you can today? ... If your answer is yes to either question, you are sadly mistaken."

This is a bold statement. First, we have to define advantageous interest rate? If house prices decline as rates rise, and advantageous interest rate would be a higher rate as your monthly payment would be the same but be more deductible. You could quantify this in a number of areas by setting up something similar to the equity insurance Richard talked about below. Take something X years ago, find the purchase price, downpayment, closing costs, etc. Find the opportunity cost of that money, and the difference in home equity now, and the difference in payments between now and then. Then the policy will pay off if the equity is less than now then you'd have if you'd have rented for 3 years.
1) The difference between the downpayment made initially and the one made today (gain/lost home equity, very possibly 0 )
2) The opportunity cost lost on the downpayment and cost of closing. We could use the prevailing CDs rates for a 36 month CD at the time of purchase.
3) the difference in monthly payments for the life of the loan. (also very possibly 0)

I believe a produt like this would actually have and provide a lot of value. I'd rather see the FHA do something like this than take on a large set of horrific loans and figuring out the proper rates would create a number of models that would be very good for figuring out future housing prices.

You also said, "Do any of you really believe that one magic day in the future, someone will declare "we've hit bottom - buy now"?"

I do believe that this is possible. Home moves are very gradual and very correlated to the previous months moves. It is impossible to pick the exact lowest point of the market, but with housing moves being gradual and rather predictable, I believe it is possible to get within 1-2% of the bottom of the market, which is plenty good for any buyer. I'd even argue that for a single property, getting the lowest possible price is as much a product of emotion as it is of the comparables. Did the seller fight with his wife today and now would just say "f-it" over a 2k difference because they're p*ssed off and don't want to think about it. Or maybe the opposite, they're mad and want to stick to that offer. I don't believe any of this is quantifiable, which is why talking about an absolute bottom is a myth, but within a few pctg pts of the bottom appears to be attainable.

I'm curious as to what you're basing your belief that this thought is "sadly mistaken". The first reckoning is here now and a 2nd is coming. Here is a graph of resets on option arms AJ posted earlier: Subprime has mostly passed but 100% LTV is coming to home to roost very soon and in places where prices have been decimated, there is a large risk for more people being forced out without being able to refinance and others just walking away.

So to answer your simple question, I think Yes, and would like to know why you believe me to be mistaken?

Zack - Tue May 20 2008, 10:19

General WSJ article about some urban areas many of the posters on this thread are from. Chicago, SF, NY all covered.

http://online.wsj.com/article/SB121122333682304367.html?mod=… - Tue May 20 2008, 06:50

Caren,
I find no fault with you. We agree. AJ was doing that as a counter example to Sandra about her parents house. So his reply was sarcastic proof. I didn't realize you hadn't noticed that initially. So we agree and our back and forth with pointless examples proves it I think.

Zack - Mon May 19 2008, 07:38

Caren,
I'm a bit confused why you're asking for a warm welcome when you're posts seem to be advocating that picking by using a single example, you can make a judgement on an entire asset class. You're first post in the thread was to debunk AJ's example, repeated by Chandler, of using a single stock as an example. I read this as you supporting Sandra's position for doing the same with houses. Being a "Real Estate Pro" doesn't guarantee you a cold shoulder on this thread just as "Just looking" doesn't mean you'll be welcomed with open arms.

You said, "Ok, if you had bought practically ANY house in 1986 (that is when you gave us the stat for MS) and sold it in 2005, or today you would have done very well. Next brain teaser? "

No need to be obnoxious about this, if you had bought any broad based indices in the stock market in 1986 and sold it in 2005, you'd also have done very well. This isn't a brain teaser, its a point that saying "I made X on my house" or "My parents made X on their house" is a very weak argument. Within the first 10 replies to this thread, this same back and forth happened. Jerry from Phoenix comment that since someone in Los Gatos CA had a good return on their house, housing was good. I replied that my parents built their house in 1986 for ~150k and would sell it today, 20 years later, for less than that. So its not a brain teaser, the point is making an argument with a valid sample.

In your original post, you asked what the return on Enron would be. I can tell you it'd be a lot better than someone who closed on their house on 8/22/2005 in New Orleans. At least Enron didn't come with the added potential of death.

Can't we all agree that using a single example as "proof" isn't proof and move on?

Zack - Mon May 19 2008, 06:51

Victor,

I give up. You believe that the case-shiller index data is made up and the fact that housing moves gradually is a far fetched conclusion. Ok.

As they say, "Never argue with stupid people. They just drag you down to their level and beat you with experience."

Good luck to you, and in my opinion, its a good thing you're not here to drum up business.

Zack - Sun May 18 2008, 14:38

Reposted with link from FT about ottomans and their debt and a commentary on the US. I actually understated the numbers. link:
http://search.ft.com/ftArticle?queryText=An+Ottoman+warning+…

Bill,

I didn't take your post as an attack, although it did seem to have a bit of a testy tone, but I tend to post in testy tones unintentionally a lot, so I take no offense.

Do I believe anonymous interent postings, not at all which is why I ask people for the data when they say something I find interesting or unbelievable, so I can draw my own conclusions.

You said, "By inference, you think you know more than the average person, which is the reason you are trying to help them. Is there any self-interest there? Or am I way off? "

Again I find this view very pessimistic and i'm a huge pessimist, but sure, it could be self interest. I think I know more than the average person. Honestly, I'd wager my entire net worth on it if it were measurable. But posting here trying to prove it doesn't provide me with any satisfaction. Sometimes its stress relief when i'm really obnoxious, most times its like p*ssing into the wind. Honestly, I believe that the real estate bubble has made homeownership, aka someone else's "American Dream" less affordable for the average person and costs people much much more than they can afford. The rule of thumb when my parents were house shopping was 2.5x your salary, now for enormous sections the country, you couldn't get mobile home for 2.5x the average salary. In my area, you couldn't get the land on which to park a car for 2.5x the average salary. I believe this and our consumerist society are rapidly putting this country into so much debt that we'll turn into the ottomans who near the end of their empire, over 25% of their annual budget was spent debt servicing, or paying interest on debt. If I'm selfish, its because I have a young daughter and I'm afraid of the way this country is going and what type of a world she'll graduate college into. If posting here and trying to spread knowledge helps in anyway, and thinking it might is a hopelessly optimistic thought, then its worth it. Besides, there isn't any baseball on right now so what else am I gonna do.

Zack - Sat May 17 2008, 22:20

Bill,

Could you provide some data for point 1) in your latest response. The vast majority of stocks and sectors climb/drop over weeks and months, not just a handful of days. Even with the highly increased volatility we've seen recently, this is still true.

You said, "this has a small correlation in real estate, because while real estate prices change much more slowly, you will still know when you hit bottom after the market begins to recover (so you will miss the bottom, by definition)"

which I 100% agree with. But doesn't this also mean that because real estate moves so much more slowly that even if you miss the bottom, you'll barely miss and and get in within 1-2% of the bottom, which is fine. If I could do that with the stock market, I'd have more money than Warren Buffett already.

You also said, "Remember hindsight is always 20/20, and a person who assumes extremes in either direction is not making sense. I remember wall street bears saying the stock market would go to dow 1k after it fell from 12k to 7500. Why didn't it happen?"

Which I completely agree with also. One extreme is saying houses will fall 75-80% back to 1998 levels, the other is saying we've hit the bottom and now we'll grow at the normal historical rate of inflation right now. Somewhere in the middle is almost certainly right and the middle of that is a very bearish look at housing.

Finally, the vast majority of the realtors that have responded in this thread have providing nothing more than the NAR company line that now is a good time to buy. I named a few in a previous post that added a lot of value to this thread, some others have been downright deceitful in the posts. I don't believe it is unjustified to be hard on them without getting a license. I don't think anyone in this thread is a permanent housing bear. The tax incentives the gov't gives you and the dividend homeownership plus the intangibles like security and becoming part of a community for a family are all very good benefits. But you have to weigh those intangibles vs the financial cost, which in normal markets, with housing increasing with inflation, they're very worthwhile, but in a rapidly declining market like a huge portion of this country has right now, those intangibles are extremely expensive.

Zack - Sat May 17 2008, 21:57

Victor,

One last thing. if you think this site is rough on realtors now, you'll be really amazed when Richard returns. Ask RealtyExec. He made an embellishment in a post claiming that someone with bad credit could get the same rate through the FHA as someone with we great credit, which is only possibly true in a very small circumstance (having too few credit entries) and he was pounced on and mercilessly ripped for it.

Since your previous answers in other threads say this:

"This site is ridiculously full of spam in the blogs, trust me! I'm a realtor and can tell you honestly these blogs are just full of plugs from realtors instead of giving you the best possible answers to your questions. They seem to be followed up with, you can get that info your looking for here... at my website ;-) "

link: http://www.trulia.com/voices/Foreclosure/We_are_first_time_h…

and now you're claiming this:

"I can understand why realtors frequent these blogs: They offer help and assistance to the public in hopes of being recognized embracing new forms of media and public contact as a knowledgeable helpful professionals whom others can count on for assistance when they are READY to purchase or sell a home at a time they feel is right for them."

in this thread. You may want to get your ducks in a row before continuing to post personal attacks at the pro-data crowd in this thread.

Zack - Sat May 17 2008, 21:45

Victor,

I'm still turning over my non-rude leaf, but you're antagonizing people in this thread without making any facts. In your response to Chandler, you question his motives, but if you read his past posts, his motives seems to be nothing more than knowledge. He does not benefit from keeping sales up. You're also confusing a stock trader mentality with a rational investor mentality. People should act in their own financial interests and for a huge part of the country right now, buying a house is not in their financial interest. You argued in another post that you absolutely can't time the market and asked for my crystal ball. Now you're saying this:

-- Start quote --
"Someone mentioned that real estate has been a bad investment for the last 120 years because it has been trading at .04% above the inflation rate!!! That sounds like a good investment to me historically speaking if it can hold that position for 120 years!!! How long do you think you will live? Do I even need to go further with these answers?"
-- end quote --

Yes, you must go further. You've said you can't time the market, and we won't live 120 years, when should we buy and sell to get a good return? In a period longer than any of us will live, the average return is .04% over inflation, so the only way to make real money is to properly time the market.

You comment that you have "proven several you guys wrong many times of the last few days alone". Could you show some of us where you've proven some of us wrong. I assume you mean me since you're referring to it in every way in the thread about New Brunswick, NJ. I explained why I've used that data in the C-S index and briefly about why using random cherry picked articles that use median home prices is not proof, its not even valid data. You also linked to this thread: http://www.trulia.com/voices/Market_Conditions/Do_people_rea… as proof of "us" being proved wrong, when from what I can see, the original poster was very accurately refuted and refusing to believe that the C-S index is valid when the government and the world's financial industry believes it to be the most accurate indicator we have is either amazing arrogance or ignorance.

You comment why you understand why realtors frequent these blogs, but from the massive sample size in this thread alone, you thoughts that they are helping the public appear incorrect. They're hear to repeat the NAR company line and drum up business.

Finally, you said "home ownership in general trying to prove to the public the stock market is a better investment if you can imagine that roller coaster being a predictable good investment. lol.... NOW THAT IS FUNNY!!!" I'm curious why this is funny? Historical data shows that the stock market has beat inflation by about 7% since 1950, housing has beaten it by < 1%. Are you disputing that this data is accurate or that historical data has not bearing on what we should anticipate in the future?

I'm not sure why you're now taking to personally attacking people who disagree with you and if you have an real facts to provide, they are more than welcome in this thread. This thread has frequently degenerated into arguments but the core purpose of it is to collect data from both sides. The pro-housing data so far has been a bit scarce but there has been some by some very helpful realtor posters like Paul Francis, RealtyExec and Carl has come on strong after a rough start. If you'd like to provide data to add to the quality of this thread, please do.

Cheng usually posts total nonsense but one thing he did say that was true in response to you attacking him, is that many people read this site and acting unprofessionally and posting personal attacks under your real name if probably not the best way to make an impression.

Thanks,
Zack - Sat May 17 2008, 21:11

Bill,

I don't really understand your 3 points. The first 2 are just guesses that can never be proven and the 3rd is a very pessimistic way to look at the world. Is attempting to educate people an ulterior motive? You must not believe that the open source community or even wikipedia works. There are people who spent extraordinary amounts of time editing and debating on those sites with nothing to be gained but a better free encyclopedia or better shared source code.

The try living in a stock argument I don't understand. You don't have to own where you live. John's post below mentions that according to the US Census we are at an all time high in home vacancies, finding a rental should be trivial. I have no idea what successful investors own their homes and which do not. Does it matter? For a successful investor, a home purchase is generally a very small purchase in terms of their net worth. The people who really need to be informed are the average joes who could lose their entire savings in a 5-10% decline in their house. And overpaying now will mean that over their lifetime their extra cost on their payments will slowly suck away their wealth all for making a single mistake right now.

As for not liking realtors, I think realtors add value, just the commissions they're paid are extremely high and a reason why housing is a bad investment. The friction in the market is just obscene. The ones that come here an post its a good time to buy and nothing else are the problem. They're not adding value and are actually encouraging people that live in 80-90% of the country to make an egregious financial mistake. I work as a software developer on wall street and you could argue that my job is pointless and adds no value. I have no problem with that belief, but at the end of the day I'm not encouraging the average person to commit financial suicide.

Zack - Sat May 17 2008, 21:05

Carl,
You posted some stuff about absorption rates in your area before which had me thinking. Is the absorption rate increasing and decreasing and is this due to fewer purchases happening, fewer houses being listed, a combo etc? It seems in well-to-do areas, listings seem to be down quite a bit also as people who don't have to sell in these areas are not.

Also, I think we've been getting repetitive for quite a long time in this thread, but the new articles are helpful and when the first page gets spammed with company liners, they have to be refuted or at least implored to read the earlier posts.

Zack - Sat May 17 2008, 19:05

Reposted to be less rude (for Bella Vista):

Sandra, your example of picking a single house with single dates to prove housing is a good investment is weak. There is plenty of data earlier in the thread showing long term housing trends vs inflation, etc. Please go back and read the beginning of the thread. Also, if your parents would've really lost 20% in one year if they had sold in '88 instead, they were really lucky.

I'm an american, my parents are american and owning a home wasn't a dream to either of us. I'm pretty sure its not a dream of many of generation Y. Not spending twice as much on shelter while holding a depreciating asset that makes you no money in real terms, that's my american dream, because it will let me retire early.

Zack - Sat May 17 2008, 06:08

Bella Vista, you're probably right.

But as someone who has been here since the beginning of this thread, its frustrating and insulting when someone comes in, responds with their examples without bothering to read at least the beginning of the thread. There are probably 700 responses of the 900 here that are nothing more than repeating the NAR mantra that "Now is a good time to buy". - Sat May 17 2008, 05:57

Reposted with fixed link

Some Chicago centric news...

http://www.chicagotribune.com/classified/realestate/chi-wed-…

Scary about that is 6000 are hitting the market and 201 were sold in Q1. I know Q1 is a slow season but call it 1k per year with 200 in Q1/4 and 300 in Q2/3, that means 6 years of condos are hitting the market now.

Bill, what does this mean: "it is a great opportunity to actually buy your equity up front.."? If you "buy equity" now, which I assume you mean your downpayment, and your house declines 10%, you're getting killed. There are a number of examples early in this thread on how extreme it is to overpay by 10% over the lifetime of a purchase. - Fri May 16 2008, 10:24

Elvis' point is correct also. It is unfair to individual realtors, especially good ones that work hard to make sure their clients are well informed about the decision they are making. Pointing at the mortgage broker IMO is incorrect because their job is to secure you a loan with the best terms, nothing more. Joe sixpack doesn't ask his mortgage broker if its a good time to buy, and if a house is a bargain, etc. They ask their realtors. In an ideal world, every realtor would respond that they are not financial planners and couldn't tell you about how housing prices will go in the near or far future, etc, but the NAR ad campaign has taken the position strongly that they give sound financial advice and people should listen. "Now is a good time to buy and sell a home." By doing this, its members will be asked to answer for this from thinking people like Chandler who want to know why "Now is a good time to buy and sell a home."

Zack - Wed May 14 2008, 06:39

J R said, "Oh, now THERE"S a twist for you."

There is no twist at all. On that other planet that others have said you live on, apparently it equates working for someone and working for yourself. Chandler is claiming correctly that many many realtors on this thread have given financial advice and offered their services and expertise. Services for which they are paid a commission. A realtor is paid a commission by their client either directly or through the seller, to look out for their client's best interests. By putting on blinders and just repeating the NAR company line, "Real estate is local." or "Its a good time to buy." the realtor is claiming to act in their client's best interest, but is only acting in their own.

In the below examples of constantly flipping houses until you can't make money, and then walking away, the buyer is risking his/her own capital, credit score, reputation, etc for personal gain. They are not being paid by someone else and then shirking that responsibility because they don't want to. The banks and lenders that write the mortgages are acting selfishly trying to get returns on their dollars, or upfront fees for their writings. An individual who believes they are writing stupid contracts and takes advantage of that is no more immoral than anyone who files bankruptcy instead of opting for debtor's prison. - Wed May 14 2008, 06:29

And 2 hours later, he returns with more useful articles. You've been here for weeks with about 10 different personas and have yet to provide anything useful to this thread other than fodder for others to poke fun at. Isn't it time for you to create 10 new accounts to give thumbs downs? Oh wait, you wouldn't have time to do that with all the sales you've been racking up in our white hot market. - Tue May 13 2008, 12:22

Elvis, you said, "Is there any room in your arguments for "personal responsibility", or is everything the fault of Realtors and NAR?"

Personal reponsibility! Whoever heard of such a concept! Although our nanny state making it harder to believe in and its getting worse every democrat elected. Not that the republicans are better with their warmongering and bible thumping. I'm not really sure how we ended up in a 2 party system with 2 horrible choices but we have.

If we could find a way to truly bring back personal responsibility, I think the entire country would be so much better off. What can you really do? Vote Ron Paul I guess and hope for a massive enlightening.

As for my take, its hard to point at an individual realtor and say "You're evil", because they're generally not. I'm on realtor #5 in personal dealings and 4 of the 5 were quick to try to get us to see houses well out of our stated range because they "just knew we'd love them". For me, buying a home is much more financial than emotional so it doesn't work, but I know I'm in the minority of that so while its a minor evil, my tiny sample is showing 4 of out 5 will try to upsell you. One was borderline fraudulent in arguments which was really awful, and she's won awards in my area for sales for years running. But I think most of it is just personal gain of people who don't know better. I've said before, the barrier for entry for realtors is so low that anyone can jump in and the bubble would bring in the worst with no concern or ability to understand what could happen when they pressured people to move up in prices. So I don't really hold individual realtors to have too much responsibility. A car salesman wants you to buy the most car you will, its what sales people do, and if you consider as much when going in, you get what you expect. That said, I do think the NAR is and continues to be culpable. Their forecasts, claims and "facts" that are still being touted claim a house is a good investment, which it almost never is, and their continually rosy projects are taken about as seriously as the Iraqi Information Minister's updates on the Iraq War by people who really follow. The problem is, they spend money advertising all over TLC, Discovery, HGTV and on the national network touting their facts, and there is no single group with a vested interest in disputing them so the masses get one side and are too dumb/lazy to check the facts. So while personal responsibility would be ideal, with the society we have currently, the NAR deserves as much blame as anyone.

Zack - Mon May 12 2008, 15:48

J R, I bought a co-op in 2004 which while not being an epic disaster worthy of my humor, it certainly hasn't been a "key to building wealth". Quite the opposite in fact. Its been a drain on my wealth. I don't feel bad for anyone in this mess, and I believe the culpability lies with many of the players, the government, the banks writing these loans, and institutional investors clamoring for new products with higher yields and "low" risk. Ooops. But for the individual trying to decide to whether to buy a house or keep renting, no single entity is more cupable than the NAR and its completely misleading ad campaigns.

Random article that would be a disaster if this occured...
http://realestate.msn.com/Buying/Article_slate.aspx?cp-docum…

Zack - Mon May 12 2008, 11:04

JR said: "The diffference between former slumps and this one is the internet. It just gives people who feel left out from homeownership and don't believe they'll ever be able to get a job that enables them to own their own home, an opportunity to broadcast their shadenfreud all over the world! :)"

This is true, although I wouldn't say "be able to get a job that enables them", because in many bubbled and high cost places, 80-90% of the jobs won't get you a home. I'm pretty laissez-faire personally, but I do think people have a legitimate complaint and have no problem with them laughing at others misery if they've been priced out of the market by bubbles fueled by NAR marketing and destructive gov't loan programs. - Mon May 12 2008, 07:04

Realtyexec,
That bill has almost no chance of passing the senate, and if it does, Bush has already promised to veto it, and there isn't near the level of support to override the veto. This is also a horrible idea. The fundamental problem right now is that everyday people cannot afford to buy homes in a sizeable portion of the country. Propping up the bubbled prices with tax payer dollars and bull$h1t bonds only causes this problem to be postponed to reward the people who were trying to make a jump into the housing rush and didn't find any gold.

Zack - Thu May 8 2008, 20:28

Slash/Rob Banks,
You were close, my middle name is actually A.C. Slater. You're just jealous that I got the girls in Saved by the Bell and you were home schooled.

I'm curious, how many real estate offices are their in Chicago? I went to yp.yahoo.com, put in location Chicago, IL and chose the category Real Estate then subcategory, Real Estate Agents. On this list, just in the yellowpages, there are 2805 entries. So you're saying that your data from your 1 office of what appears to be a couple of thousands is representative of Chicago as a whole? I'd try to explain why this is not the case but you've proven in your Rob Banks posts you're not capable of understanding, so I'll save us both the time.

Yahoo YP link:
http://yp.yahoo.com/py/ypResults.py?&city=Chicago&state=IL&u… - Thu May 8 2008, 12:35

JR: "I've got another great way for you to spend your time since you're so concerned about other people in 5/10/15 years: fight the tobacco companies."

Depending on what you want to accomplish, we may want to encourage them. If you're interested in saving the country money on healthcare, we should encourage everyone to smoke. Cancer kills people quickly. Alzheimer's, parkinson's and other diseases that require years and years of long term care are massively more expensive for our healthcare budget. here is a link talking about it: http://www.breitbart.com/article.php?id=D8UJRCV80&show_article=1

Chris: "Rest assured, I find your posts worthless too!"

If you're being serious, this statement says a lot more about you to the thinking members on this thread. My posts on this thread alone have provided data, links to government studies, graphs of real appreciation of housing, futures prices of C-S indices, graphs of the spread between the 10 yr treasury yield and current mortgage rates, and a correction to false information still be disseminated about 10% drop in prices is 1/2 pt rise in rates. If all this is worthless, either you know everything there is to know, or too little to know you don't.

Zack - Thu May 8 2008, 12:20

Louis, read the begining of the thread and you'll know what I want. Also read the entire thread, and you'll see why every one of your points has been accurately refuted by others with historical data. Your tone is obnoxious and even worse, you're wrong on every point you make except one. The case is closed, the jury finds you stupid.

Zack - Thu May 8 2008, 11:19

Realtyexec,

Is this really true?

"This is not the case a client can still qualify right now on a 500K loan amount with a 580-600 credit score 1 year out of a bankruptcy and not even have to be a citizen with only 3% down and that 3% can be a gift. Also there 30 year fixed rate would be the same rate a person with a 800 fico would receive through FHA. So your statement is not entirely true. In your case the minimum they would have to put down would be around 8K and have a 580 FICO."

I mean, if it is, someone gifted money that is a huge credit risk would get the same as someone who is virtually no credit risk with 20% down. This is LUDICROUS! How can any reasonable person not be horribly offended by this? You know how they can afford the exorbitant default rate? With our tax dollars. The government's push increasing homeownership was declared by George W. Bush to be a victory of his administration in 2004, and like all his other "victories", it was pyrrhic at best.

Why would you bother trying to save, and try to be responsible? Pay your bills on time? why bother? The FHA's got your back. ugh. - Thu May 8 2008, 10:19

"This is not the case a client can still qualify right now on a 500K loan amount with a 580-600 credit score 1 year out of a bankruptcy and not even have to be a citizen with only 3% down and that 3% can be a gift. Also there 30 year fixed rate would be the same rate a person with a 800 fico would receive through FHA. So your statement is not entirely true. In your case the minimum they would have to put down would be around 8K and have a 580 FICO."

Short Fannie Mae. Lots of it. - Thu May 8 2008, 10:14

80% of the answers in this thread are either full blown inappropriate or border on it. That other 20% make this worthwhile. The last two days have seen about 150 new posts now and probably 5 have real value, another 15-20 are rebuttals of obviously flawed statements that are being rehashed again, and the rest of either flame wars or company line BS. The real value posts are why it makes sense, for me, to keep coming back and reading through the flame wars and "Real estate is local ... buy now" drone posts and will continue to do so.

By far the most worthless posts in this thread have been from Slash/Rob Banks/etc and Chris Freeman. If you don't want to read the thread, don't, posting that it should be killed is moronic. The uninformed redirect/conspiracy theory bit is getting old also. You still have answered me Slash/Rob Banks... how firm is your belief in Intelligent Design? I'm guessing you donate to the creation museum. I'm a bit surprised by Chris since he tends to provide useful responses when I read through other random posts. - Thu May 8 2008, 08:13

"That explains alot Ryan is moving here to become a liar oooops lawyer, same difference. "

Now that's rich. Pot, meet kettle, kettle, this is pot.

I'd be very surprised if Slash isn't Rob Banks or whatever acronyms he's gone by. - Wed May 7 2008, 19:04

Dann,
Could you post the link? I went looking for it on WSJ but couldn't find it. I'd be surprised if the april data was available to take that position, but i'm up for a wsj read. - Wed May 7 2008, 19:02

Thanks Charles, do you have a link to the report? - Wed May 7 2008, 10:33

Charles, you wrote, " believe that we will see improvement (maybe not mind-blowing) in both sales volume and pricing over the next several months, and 2009 will see significant improvement. Just my opinion, but there is data to support that viewpoint."

Could you provide the data? That's what this thread is really about, collecting the information to make informed decisions. - Wed May 7 2008, 10:15

The realtytimes article below is utter crap. All it does is take pot shots at the flawed, yet best index we have and then mentions that the NAR has different results. The Iraqi Information Minister would proud. The wsj article on the other hand is a good read and I'm glad to have read it.

An interesting link from the NAR I found while searching for that time article in my previous answer: http://www.realtor.org/rmotoolkits.nsf/pages/buyer12?OpenDocument

"5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years."

If the average homeowner stays in a home for four years, it is irresponsible to the point of near criminality to suggest to buy in the majority of metro markets now. Yet every day I see more ads about how now is a great time to buy.

Finally, out of curiousity Carl, what link was infected and how was it infected? The nytimes blog? I also clicked on this without problems but I find is highly unlikely that the website of the nytimes is spreading spyware or malware. - Wed May 7 2008, 06:46

Ryan,
I received the same article, its from a time article a while back. I also saw the same thing being touted by Barbara Corcoran of the Corcoran Group on the Today show. The best part about this, is its FALSE!

"Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. monthly principal and interest come to $944.31. Let's say that in 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6%, your monthly payment would be $944.94 and you'd have saved NOTHING. Meaning while, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be. "

The original article has been corrected on the time website, but the false information continues to spread. The math is just plain wrong, rates would have to go up a FULL point, to 6.5% to make the payments equal, which is a huge jump. Plus, as has been rehashed over and over, you can refinance rates, you can't refinance a purchase price. Plus a higher purchase price means higher closing costs/commissions, likely higher appraisals on taxes and a likely higher maintenance costs.

Here is msnbc still disseminating false information. At least the still image of Barbara looks like she's drunk, that could explain it. http://www.msnbc.msn.com/id/23726652/

and here is the original article: http://www.time.com/time/magazine/article/0,9171,1713483,00.html see the footnote at the bottom. - Wed May 7 2008, 06:37

Random article I liked linked below. Its pretty rare I read or like anything in The New Republic but I think this was spot on with the irresponsibility of the government with its push into homeownership. As with much of what our government tries to do, they're generally either totally inept or fail to realize any side effects of their myopic policies. Any government bailout to help prop up the bubble prices only make true homeownership, and its social benefits further from the reach of the average joe. - Fri May 2 2008, 06:34

Paul, if i ever move to vegas, you've got an absolute lock on my business. Great article. This was my favorite quote:

"The effective borrowing costs for a lot of people are rising, not falling, despite the Fed cuts. The rising spreads are more than offsetting it."

This is basically what I've been trying to say in response to people claiming that rates are gonna spike. Even if the fed did decide to start raising the prime rate again, which IMO is unlikely until the credit crunch disappears, we have huge speads to work through. Last time I checked on Bankrate, spreads between the 10 year treasury yield and the 30 year fixed rate were 100 basis pts higher than they'd been in the last 10 years.

Zack - Thu May 1 2008, 14:18

Dick,
I believe a number of realtors hang out on activerain which may be more what you're looking for. As for being "bashed by nothings with an agenda", having been involved with this thread from the very beginning, I can tell most of quality posts are from people without an agenda, but just want some facts. There are about 200 posts saying "BUY NOW! RATES ARE LOW! blah blah" or one other of the NAR company lines by people who's livelihood depends on sales volume. So who would you consider having the agenda?

I'm actually curious, what agenda would someone who came to this thread, provided documents from gov't studies, real index data, and other links to data supporting their position have? The majority of meat in this post is from well thought out posts that are not just looking to realtor bash, and a vast majority of the realtor bashing in this thread has been in direct response to a "Real Estate Pro" posting something meaningless and mindless without reading any of the messages early in the thread.

Anyway, if you're looking for realtor discussion, check outhttp:// www.activerain.com. I believe its moderated to remove much of the "call me!" posts that are on here.

Zack - Wed Apr 30 2008, 15:36

"caralyn, You said those with not great credit and no secondary market wont be able to buy a hiouse. Isnt that what fha is trying to fix?"

The better question would be, why are we even trying to fix this? If you have bad credit, why would we want somethign to loan you hundreds of thousands of dollars when you've proven with past behavior that you're unreliable in paying it back? - Wed Apr 30 2008, 08:40

Dann, what stat are you looking at saying chicago is up on trulia stats for the 4/23? I see that Listing prices are up 4.7%, median sales price was up 1.3% and price/sq ft was down 4.4%. Looking at the heat map, did a new building open up on in the Loop area? In 60604 zip code, median price is up 126%. This is obvious an outlier, likely due to a new building opening or other new construction. If these sales are removed, I'd be shocked if the median sales price for the city was still positive.

People like me and wall st, and the fed, and basically everyone that wants an objective view like the case schiller index because it takes a lot of steps to remove the anomolies like new buildings opening, etc that greatly skew Median and avg sales prices, especially at a neighborhood level. It is limited due to the size it covers, and it would be ideal to be able to get a lower breakdown even if they wouldn't be statistically significant since most everything you're citing here also has a statistically insignificant number of transactions. Limited or not, there is no other better way of checking housing trends in a metro area. - Tue Apr 29 2008, 09:54

Dann,
I don't understand why you'd want to remove foreclosures from the data? They don't taint the data, they are real sales that have a real effect on comparables and drag down all the other properties in their area. You seem to believe this problem is temporary when in the next 2 years, hundreds of billions of dollars in ARMs will reset again. We may be at the peak of foreclosures, but we may not, and until this inventory or foreclosures and short-sells is cleared, not only is it prudent to count them, its absolutely necessary. Your example makes it sound as if all foreclosures and just dumped immediately for huge losses by the bank. They want to recover what they can, but they are sold at what the market will pay for a highly motivated seller, which is very important data. If a highly motivated seller has to sell his supposedly $100k house for 20k to get rid of it in a month, then its not worth $100k.

Speaking for me personally, its not that I don't want to believe positive data, our local realtor has recently provided me with some that is making me rethink a couple of places, but that no one here is really providing much of it. And there are probably 150 responses that just keep repeating the mantra of the NAR, that now is a great time to buy. For the vast majority of the country