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Calm Down On The Housing Thing
The Uncommon Sense Blog ^ | 2/27/08 | Dan Taylor

Posted on 02/27/2008 1:04:29 PM PST by slackattack19

If I read one more article on the depressed housing market I'm going to overdose on Zoloft in an abandoned builders model home and wait for the repo guys to find me and call 911. Enough of the housing market news already. There's lots more going on than meets the eye here. Some huge dangers but some equally huge opportunities. Here's what I mean:

1. THERE ARE TOO MANY HOUSES FOR SALE- No kidding. Really? Not so fast here. Except for some truly overbuilt markets we have about a 9-12 month supply of housing inventory versus the normal 6 months. It's the same situation that car dealers face in each new model year. About August the new models come out. The old ones are still on the lots. Too many cars and not enough space. Some get discounted. All eventually get sold...

(Excerpt) Read more at theuncommonsenseblog.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: economy; housing; housingbubble; housingmarket; mediahysteria; realestate
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To: 2banana

In some regions of California, we’d have to see housing prices decline by 50% to reach a level of 2.8X household gross incomes.

I agree with your BS flag. Too many people simply haven’t crunched the numbers and they’re deluding themselves here. The housing run-up was fueled by rampant speculation and easy credit, and the easy credit is going away. It won’t be coming back.


21 posted on 02/27/2008 2:17:04 PM PST by NVDave
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To: 2banana

It would need to drop much more than that just to get back to a normal growth amount, all the speculation and bad paper added fake value!


22 posted on 02/27/2008 2:17:47 PM PST by org.whodat (What's the difference between a Democrat and a republican????)
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To: steve86
House inventory is the same situation as a car lot. I quit reading there

That statement had liberal arts degree written all over it. :^)

23 posted on 02/27/2008 2:20:13 PM PST by org.whodat (What's the difference between a Democrat and a republican????)
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To: 2banana

“”” PS - what are historical norms?

1. 100 x monthly rent = cost of the house
2. 2.5-3.0 x yearly gross income = cost of the house
3. 40% (MAX) monthly take home pay should equal cost of monthly carrying costs of the house (PI, taxes, utilities, upkeep)”””

It’s never the price you pay, its the deal you make. You have to factor in the carrying cost. A 5% loan on 500k for the homeowner is pretty much the same as 10% loan on 250K.

Prices have not gone crazy if the homeowner is looking to how much do I pay per month? IMHO

I am not an optimist on the economy or housing market But the potential disaster of huge price drops seem a little overstated to me.


24 posted on 02/27/2008 2:21:29 PM PST by underbyte
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To: fireforeffect
2. 2.5-3.0 x yearly gross income = cost of the house

That was the rule of thumb for lenders for many, many years, and if they had followed it, this bubble would never had happened. Actually a 2.7 with a twenty year mortgage will save a buyer tons of money.

25 posted on 02/27/2008 2:24:21 PM PST by org.whodat (What's the difference between a Democrat and a republican????)
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To: steve86

***House inventory is the same situation as a car lot. I quit reading there.***

Yep, you can’t call in a massive truck and have all the unsold houses hauled to a used-house lot.


26 posted on 02/27/2008 2:52:16 PM PST by kitkat
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To: org.whodat
“The good people need to band together and sue the banks that loaned them the money that they didn’t understand everything about. The bad people need to understand the speculation has it’s risks”.

Way to think things through, Sherlock. Sue everyone and make it go away, Mommy.

This guy’s a card carrying moron. -mks

27 posted on 02/27/2008 2:53:51 PM PST by Wagonboy (STOP GLOBAL WHINING!)
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To: slackattack19
In any market excess or bubble there are people who get caught and people who get away. The bad news is that there's too much housing available. The good news is that it's never been cheaper.

NEVER BEEN CHEAPER? Who does he think he's kidding? Housing has NEVER been less affordable. Not only are houses still too high, but far less people can qualify for a loan today.

Ignoramus. He defines the term.

28 posted on 02/27/2008 7:02:25 PM PST by Freedom_Is_Not_Free
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To: RightWhale
One of our associates specializes in foreclosures and short sales in Riverside and San Bernardino counties. He put up 1 listing last Friday, one Monday, and one yesterday. They all got multiple calls and have contracts as of today.

In Mira Mesa and Chula Vista in San Diego county, we're seeing multiple offers on many properties.

Sales are down in Calif on average, but the body seems to be twitching a little.

29 posted on 02/27/2008 7:06:38 PM PST by purpleraine
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To: fireforeffect

#1 seems very much more conservative when compared to #2 and #3.


30 posted on 02/27/2008 7:11:05 PM PST by ItisaReligionofPeace
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To: SF Republican

Really, really, silly. You can get the house they had for that mortgage for a very reasonable amt in most places in the country. You are either very ignorant or purposefully ignoring the difference in the size of homes and amenities from then and now.


31 posted on 02/27/2008 7:12:42 PM PST by ItisaReligionofPeace
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To: 2banana

Big problems. 1) Never heard of a place that you could rent for 2,400 per month that would sell for only 300,000. 2) You don’t consider tax benefits.


32 posted on 02/27/2008 7:15:11 PM PST by ItisaReligionofPeace
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To: ItisaReligionofPeace
Really, really, silly. You can get the house they had for that mortgage for a very reasonable amt in most places in the country. this discussion is about prices not the size of the house; you should pay attention to the discussion before calling people names.
33 posted on 02/28/2008 8:22:14 AM PST by SF Republican (Conservatives wanted all or nothing, and they got it.)
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To: slackattack19

Maybe the author needs to see this:

http://www.housingtracker.net/affordability/?sort=price-income&;

A hint at where we are going is in the above.

And if you think some markets are “local”, there are interesting trends here:

http://seekingalpha.com/article/66215-case-shiller-steepest-price-decline-on-record?source=d_email


34 posted on 02/28/2008 9:03:50 AM PST by RobRoy (.)
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To: SF Republican

Discussion of price without considering size and other factors is idiotic


35 posted on 02/28/2008 2:57:02 PM PST by ItisaReligionofPeace
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To: Cicero
"Rental housing is seldom profitable in itself. You can make money on it, but usually only in a rising real estate market."

Hmmm Seldom? myself and many local friends must be extremely lucky or just dang good at rental evaluation.

We don't buy a rental unless it is a moneymaker from the gitgo.

The only time we even consider "break-even" properties is if they happen to be located in areas set for large growth.

The key to rental property investing is "buying right", not "buying fast" or "buying many" like these Real estate get-rich hucksters try to sell you on.

36 posted on 02/28/2008 3:07:36 PM PST by Mad Dawgg ("`Eddies,' said Ford, `in the space-time continuum.' `Ah,' nodded Arthur, `is he? Is he?'")
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To: slackattack19

Mr. SHARK

You can live in the Land of OZ, but do the math, we are in a housing crisis!!!!

Mason Dixon

PS We haven’t even got to the Baby Boomers housing bubble
yet!!!!!


37 posted on 03/02/2008 4:05:45 AM PST by mason-dixon
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