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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (38202)	8/9/2005 12:36:59 PM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 110194

i'm building dude. roof over head on decent land = priceless in a bottom line sort of way. here i expect good locations to drop say 25 percent max burbs as much as 60 percent. but that's a dart throwing contest. however, the 80's bank crisis is probably a pretty good guide for what's coming. good location i think also means those owners will hold the line (i.e. they have the dough).

To: mishedlo who wrote (38202)	8/9/2005 12:38:14 PM
From: epicure	Respond to of 110194

In the last market slump in California prices dropped by about 1/3 in our area. It is a suburban area, and it got so bad that some people who were desperate to move started putting fliers on doors begging people to buy their homes (that turned out to be the bottom of the market). Many of us had our homes revalued, because the sale price we were being taxed on no longer reflect the real value of our home. We were lucky and bought near the bottom of the dip. This dip will be worse (imo) because so many people have such strange loans, and there is so much speculation in the housing market by inexperienced under capitalized "investors".

To: mishedlo who wrote (38202)	8/9/2005 12:51:17 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

The big issue that will emerge even in "less" bubbly areas, is that the financing used for this is going to get seized up and will be largely unavailable at least cheaply. Transactions will fall dramatically, and there won't be any liquidity in housing. Even if you put your house on the market at a reduced and realistic price, you'll just watch the for sale sign rust. I don't know about other's lifestyle choices (and I no longer have a wife to answer to (sort of a rolling stable of independent minded girl friends close to my age), or kids to raise), but I'm not receptive to the idea of getting stuck somewhere in a house or condo, that I can't readily put on the market and sell. I want to have total mobility and choice. I might find a give away luxury unit in some great location at a foreclosure in 2010, that I could dive into, or maybe just leave the country. What do you think the US will look like socially in this? Lots of angry, depressed people is my bet.

To: mishedlo who wrote (38202)	8/9/2005 2:29:35 PM
From: regli	Read Replies (1) \| Respond to of 110194

As you know I predicted a 50% drop in real prices on your thread even in the less desirable areas. A significant portion of this will be loss of confidence in the housing asset class when the drop starts to accelerate. I don't think it will be fun to watch.

To: mishedlo who wrote (38202)	8/9/2005 4:15:55 PM
From: anachronist	Read Replies (1) \| Respond to of 110194

Now two questions 1) What is wrong with what I am suggesting? The only hole I can see is that you are assuming that the traits that make your neighborhood desireable will not change during a housing crash. Echo Park used to be the playground of the wealthy Hollywood elite. For many decades, it was a slum. Even if your house is affordable (or paid off) what are the chances that you will still want to live there, and if you don't, will you be able to get rid of it? Not saying this will happen, but its possible. 2) How big a decline do you think we see and in what areas? Perhaps Mish is an optimist. I can only speak for California. Assuming income does not decline (median $55,000 household) and prices do not overshoot to the downside (as they always do in a crash), you would expect the median house price to be $200,000. That's a 60% decline. Not totally out of the realm of possibility since those are the same prices levels we saw here in 1997-98 (IIRC). Personally, I think it will overshoot. I also think that by the time it bottoms, no one will want to live in California, and no one will care about real estate prices anymore. BWTFDIK, IJADAB.