Housing Market Is Nowhere Near Bottom

Housing is what started the current mess me are in.  Thanks to record low interest rates from the Federal Reserve, the US consumer went on a debt-induced home buying binge.  That binge is now coming home to roost.  And it's not going to let up for the foreseeable future.

Let's start with supply.  First, there are a ton of existing homes on the market -- right around 4 million (charts are from Calculated Risk).

And this is before we get into the issue of foreclosures.  

This translates into a little under a 10 months supply.  Also note that this number -- months of supply -- has been increasing.  

So -- we have a ton of supply on the market.  Unfortunately that has not translated into a big enough cut in prices to stimulate demand.  Here is a chart of the Case Shiller home price index.

Notice that prices increased about 90% in 6 years, yet have barely dropped in comparison to the massive run-up they had during the early 2000s.  Simply put, we have a long way to go before we start seeing prices hit an inventory clearing level.

And who's going to buy these houses?

Job growth has been dropping, which is leading to

Dropping income, and

Dropping consumption.  In addition, it's not like Americans can take on much more debt.

The basic economic facts are very straightforward: inventory is really high and demand is dropping.  That means we can expect more price drops for the foreseeable future.

•  And just wait until the pension fund managers

  finally open their mouths and tell people just how many worthless CDOs make up their funds.

  by bethrsingleton on Fri Apr 25, 2008 at 12:31:36 PM PDT

•  Something has got to give

  The current state of the economy, including housing, can't continue, so it won't. But then what?

  Really, then what?

  Thanks Bonddad.

  by lgcap on Fri Apr 25, 2008 at 12:32:15 PM PDT

  •  While I have no special expertise

    I have to suspect that "MAY be entering a 'recession'" must at some point give way to "ARE in a 'depression'.  Maybe a BIG one.  And I'm pretty sure they'll find a way to blame it on President Obama.

    by lgmcp on Fri Apr 25, 2008 at 12:39:23 PM PDT

    •  Yes, and the Iraq War will be Obama's fault as

      well.  The fucking Republicans are so grand at screwing things up, leaving enormous messes behind and then pointing the fingers at Democrats who try to exercise responsibility in cleaning things up.

      It still infuriates me to hear Republicans blame Democrats for losing the War in Vietnam. Just like the current Republican asshole in the White House, Nixon had six years to bring the war to a close and finally was forced against his will to do so by a Congress with more balls than the current one.

      Not once did Nixon or the Republicans ever question our being in Vietnam, and they were indifferent to the costs in terms of human lives, national treasure, and America's reputation. Iraq is a replay of that scenario, and you can bet that Republicans will be moaning for years about how Democrats lost the war in Iraq.

      by rontun on Fri Apr 25, 2008 at 12:56:05 PM PDT

      •  Revisionist history

        I hate to say this, but Nixon did inherit that war (it was started by JFK and then escalated greatly by LBJ).    While Nixon did in fact keep us in it from 1969-1975, it was hardly his war.

        by SilverOz on Fri Apr 25, 2008 at 01:06:14 PM PDT

        •  Eisenhower started it

          There is plenty of blame to go around.

          by lgcap on Fri Apr 25, 2008 at 01:17:45 PM PDT

          •  Did Eisenhower Send the First Miitary Advisors?

            Or troops?

            This was primarily LBJ's war.  And it cost him his Presidency.  Nixon faced the same dilemma that the next President will face.  And it won't be a pretty sight!

            by in the Trees on Fri Apr 25, 2008 at 01:41:18 PM PDT

        •  No where did I suggest that Nixon started the war

          What I said is that he had six years to bring the war to a close and failed to do so until Congress cut off funding.

          When he ran for office in 1968 he promised "peace with  honor" and that "new leadership will end the war", hinting of a secret plan to do so. Once elected he immediately began the process of "Vietnamization", which allegedly was meant to turn over the responsibility for combat operations to the Vietnamese people.

          Nixon reportedly offered Michigan Congressman Donald Riegle an assurance that the war would be over within six months of his assumption of office.

          According to Wikipedia, as this six month deadline approached, in May 1969, Henry Kissinger asked a group of Quakers to give the administration six more months. "Give us six months, and if we haven't ended the war by then, you can come back and tear down the White House fence."

          Anyone for another Friedman unit?

          by rontun on Fri Apr 25, 2008 at 01:41:48 PM PDT

    •  wait a couple of months

      Wait a couyple of months. They don't announce a recession until we have two successive quarters of negative growth. And then not until the figures have come out. That will be late July or August.

      by Frank Palmer on Fri Apr 25, 2008 at 01:20:17 PM PDT

      •  We've had negative growth for a while, IMO

        but they find ways to hide it, by jiggering the formulas.

        by lgmcp on Fri Apr 25, 2008 at 01:25:11 PM PDT

    •  ohhh

      don't be so alarmist! president bush says it's a "slowdown".

      he is so stupid it hurts my brain

      by jemjo on Fri Apr 25, 2008 at 01:59:10 PM PDT

  •  Americans have been living on the edge

    of bankruptcy and disaster for many years now.

    Not only the American people, but the American government as well. Overspending, undersaving, unstable job markets, food shortages in foreign countries, and now our housing market failing as well.

    While the rich get richer and the middle class,the very foundation of this country, dries up and slowly sinks into poverty.

    There will be a correction, and it will hurt like hell.
    Unfortunatly, the generations that brought the economic disaster about will not have to face the inevitable struggle to bring our country out of the hole. That will be left to the children, grandchildren and great granchildren to shoulder that burden.

    I don't see why more people aren't scared of this!?! The general public hides it's head and is in serious denial of the whole thing.

    I'm sure that the religious right beleives that the rapture will come and take them away so they wont have to be bothered with facing reality, but what is the rest of the country's excuse?

    by Peperpatch on Fri Apr 25, 2008 at 01:35:59 PM PDT

    •  They Want "Things"...

      And they don't mind going into debt to do it.

      Parents and schools should be teaching children thrift rather than consumerism.  

      by in the Trees on Fri Apr 25, 2008 at 01:44:52 PM PDT

•  dropping consumption

  is probably a good thing........sort of.

  by terrypinder on Fri Apr 25, 2008 at 12:32:19 PM PDT

  •  Yes, but this

    feels like theft.

    by lgcap on Fri Apr 25, 2008 at 12:33:42 PM PDT

    •  It isn't just a feeling. It's real.

      The banks and credit card lenders have been gouging the American people with fees and interest rates that are unconscionable. Mortgage brokers, in pursuit of the highest fees, have intentionally marketed products that they knew would inevitably lead to mortgage defaults. Wall Street has then bundled those mortgages into securities it's touted as being credit worthy when it knew it was all a house of cards.

      And who's going to be forced to pick up the losses? The American taxpayers.

      So yes, we're being fleeced. And we should be outraged.

      by rontun on Fri Apr 25, 2008 at 01:02:44 PM PDT

      •  There Is Plenty of Blame to Go Around...

        My son-in-law handles financing at car a dealership.  He told me that finance compamies now will approve new car loans for 90 months or longer.

        Outrageous.

        Individuals should have more concern about their future financial well being than to buy a car with those terms.

        Both the individual and the lender are at fault.

        When my daughter bought her first car I recommended no loan over 36 months.  All she could afford was an inexpensive Hyundi, but at least she always had equity in her car.

        I was listening to a financial show recently and a caller asked about a mortgage.  The advisor recommended that he not buy a house unless he planned on living in it for 7 yers or longer.  Individuals that buy houses intending to "flip" them in the near future always get burned during the downturn.

        How come they aren't filing criminal charges on any mortgage brokers?  Surely in some states it is against the law to force a switch at closing.

        by in the Trees on Fri Apr 25, 2008 at 01:53:35 PM PDT

    •  Some of both --

      consumers opened their wallets and said to the thieves, take all the money and leave me with some foreign made crap that I don't need.

      by Marie on Fri Apr 25, 2008 at 01:09:07 PM PDT

  •  Yes and Probably Not

    Less consumption = less buying = less sales revenue. That is what I thought when I read that States' Deficits increasing. I think this is just the additional problem of states' increased costs of everything, but loss of sales tax revenue will be a huge problem for some states.

    by PAbluestater on Fri Apr 25, 2008 at 01:33:39 PM PDT

    •  raising property taxes

      The WSJ today had an article on how a number of counties are raising their property taxes to pay for increasing healthcare costs, while offsetting lost revenue from lowers sales taxes.
      Basically the middle class is getted effed both ways.

      by sunshineonthebay on Fri Apr 25, 2008 at 01:58:24 PM PDT

•  We're Shopping Now

  Sadly, we have to make a move during the summer. Previous house is sold so lenders are really happy to talk to us with c. 50% down payment capability.

  It'd be nice to be able to time it X months later, but it's hard to know what X should be.

  What's the economic prognosis for the time when housing nears the bottom? Cheap prices and low mortgage rates? Or could there be a credit crunch of low prices and high mortage rates?

  by Gooserock on Fri Apr 25, 2008 at 12:32:26 PM PDT

  •  a few more months couldn't hurt you

    in my view, but I'd also say there are MUCH worse positions to be in than yours...

    by decembersue on Fri Apr 25, 2008 at 12:37:11 PM PDT

    •  Oh, Yeah, It's a Matter of Having the Maximum

      monthly leeway after housing payments for when food and energy shoot up as everyone's expecting. We're past the days of any prayer of income growth.

      But as you say, otherwise it's quite a luxury position to be in.

      If we'd merely waiting another 9 months till now to have sold the house, we might have found that we're now stuck here like so many millions with a situation we could neither sustain nor leave.

      by Gooserock on Fri Apr 25, 2008 at 12:41:46 PM PDT

      •  if you can snag a low-interest FHA mortgage now

        you'd probably be better off buying sooner rather than later.  Assuming you're purchasing the home to live in for a reasonable period of time - more than just a year or two, any further dip in prices in the short run will be wiped out when the market turns around again.  

        by lcork on Fri Apr 25, 2008 at 01:35:54 PM PDT

  •  Don't try to time the bottom

    Wait until things are stable and start rising. It is the only way to identify that the bottom has passed.

    The cliché "Don't try to catch a falling knife" fits perfectly here. You will find deals now when you compare the price to the peak, but it won't seem like such a bargain later.

    Historically bubbles take twice as long to resolve as the run up took to climb. This started in around 2002, depending on the area, and peaked around four years later-give or take in both directions. Another five years or so is a safe bet, watch the market for signs of improvement, they aren't around yet.

    by lgcap on Fri Apr 25, 2008 at 12:40:35 PM PDT

    •  We Probably Can't Wait. Rents Everywhere We Check

      are just about prohibitive on our cash flow, compared with buying at 40-50% down.

      by Gooserock on Fri Apr 25, 2008 at 12:44:41 PM PDT

      •  Good point,

        where are you going to put the money that is safe anyway?

        You know what you're doing, sorry to meddle.

        by lgcap on Fri Apr 25, 2008 at 12:48:54 PM PDT

      •  lending rates may keep coming down here

        it might also be possible to keep your money in the bank and only offer a small down payment.

        the smaller the footprint with eco design the better with regard to both util. and taxes.

        your location also matters...

        state, city, inner city vs. rural.

        i like using the cash for scottrade.com and day trading alt. energy small cap.

        good luck.

        by 1Eco on Fri May 02, 2008 at 04:30:05 AM PDT

  •  You're actually in an ideal situation.

    As for trying to predict X, so much depends upon the local market. In areas that have experienced the most rapid inflation in housing costs, ie: Florida, Nevada, parts of California, Arizona, Colorado, etc., reaching the bottom in prices is still months away. They're also the areas with the highest number of vacant homes on the market.

    In more stable areas such as the midwest and south, including most of Texas, price declines have been relatively marginal, in line with price appreciation. Though I don't see much of a recovery in terms of sales in these areas within the immediate future, new construction has slowed considerably, and inventories are unlikely to rise above actual demand.

    In other words, it all depends upon where you live.

    Another consideration that should be on your radar is that overall inflation is going to devalue the cash you have available for a down payment, so holding out for lower prices may not make much sense. Whatever loss you might incur through a drop in the value of the house you purchase is unlikely to exceed the loss you'll experience in the real value of the cash.

    Tough decisions, but you're in an enviable position nonetheless.

    by rontun on Fri Apr 25, 2008 at 01:16:11 PM PDT

•  As prices drop

  and payments balloon, and people go upside down on their mortgages,
  prices will drop.

  by Snarcalita on Fri Apr 25, 2008 at 12:33:20 PM PDT

•  how far BD?

  How far will prices drop? How far will debt climb? And what can we do about it? I have been doing a lot of reading of diaries concerning economics recently among the Kossacks. It is not unlike being in class. Great diary.

  by cactusflinthead on Fri Apr 25, 2008 at 12:35:20 PM PDT

  •  Probably nobody knows

    the answers to your questions.  But you might want to start reading the following:

    http://calculatedrisk.blogspot.com/
    which has been tracking the housing mess...

    http://www.rgemonitor.com/...
    Roubini's a real bear, but he knows his stuff

    http://norris.blogs.nytimes.com/...
    Norris covers business for NYT; this is his blog

    plus The Bonddad Blog and Paul Krugman's NYT blog.

    What can we do about it?  Nothing until the chimp is out of power.  Hate to be so negative, but while the economists are admitting we're probably already in a recession, el chimpo only admits to a "slowdown."

    Get ready to relive 1931-32 (jeez, I hope I'm wrong about that...).

    by Youffraita on Fri Apr 25, 2008 at 01:33:59 PM PDT

    •  checked his blog earlier

      My head nearly exploded. I have a lot to read. I understand far too little about economics.

      by cactusflinthead on Fri Apr 25, 2008 at 01:37:51 PM PDT

      •  I'm no expert, either

        but I just keep reading, and some of it sinks in--and then there are the occasional posts that are blessedly written in terms even I can understand.

        by Youffraita on Fri Apr 25, 2008 at 02:34:39 PM PDT

•  We're Hearing From Rust Belt Real Estate Agents

  That prices are down around 25% so far in many places.

  Here on the W. Coast they'll probably not drop far enough for us to afford to stay; however we've spotted some make-almost-any-offer-before-Wednesday type places, probably foreclosure issues. There may yet be a way for us to stay somewhere here, maybe OR.

  by Gooserock on Fri Apr 25, 2008 at 12:36:41 PM PDT

  •  The big drops in the Rust Belt have occurred in

    very limited areas. Prices are relatively stable, or have declined very little in metropolitan areas such as Cincinnati, Indianapolis, Louisville, Columbus and Chicago. Cities such as Cleveland and Detroit have been hit much harder.

    Charlotte continues to be fairly affordable and stable, but so far I've mentioned areas far away from your preference to remain on the West Coast.

    Portland's prices have been rising rapidly, creating real affordability issues. The same with Seattle.

    I don't know much about prices in Salem, Eugene or Medford, Oregon or Olympia or Vancouver, Washington. Those might be alternatives.

    by rontun on Fri Apr 25, 2008 at 01:56:03 PM PDT

•  Mortgage rates are starting to creep up too

  which will exacerbate the problem.  We are probably about halfway through the housing correction right now.  On the other hand, there are some fantastic buys available through foreclosure sales/auctions.

  by SilverOz on Fri Apr 25, 2008 at 12:37:03 PM PDT

  •  Foreclosures are

    very dangerous. People trash houses on their way out because they are angry. The title may not be clear. There is normally no opportunity for inspection. The list is endless, it's a game for seasoned real estate investors, not for someone who can't afford the risk.

    The better alternative for someone who just has to buy now is a short sale. The seller at least has an interest in keeping the property in a condition that it will move, the buyer can take the time necessary to protect him or herself.

    by lgcap on Fri Apr 25, 2008 at 12:43:59 PM PDT

•  i can't recall when i first heard

  the euphamism "using your house as an atm" to describe the (mis)use of equity to maintain consumtive behaviors, but it was at least three years ago, and i found it to be a very jarring concept: maintaining the illusion of prosperity not through anything remotely close to income gains, but through the vagaries and fiat of an unbridled, bugfuckcrazy credit market.

  jeez louise. credit non-liquidity, a bone-dry-teat of a greenback, housing prices plummeting, oil now just south of $120 (??!), basic staple food price inflation. yikes, yikes, yikes. i try not to invest a lot of psychic energy into worry, but my gut continues to tell me that the forecast calls for extended pain.

  by homo neurotic on Fri Apr 25, 2008 at 12:37:41 PM PDT

  •  Yes, long ago I gave up on 'early retirement'

    fantasies.  But at this point I'm starting to wonder how old you can be and still grow enough of your own beans to live on.  

    by lgmcp on Fri Apr 25, 2008 at 12:43:00 PM PDT

    •  Grow potatoes - more food per acre

      than practically anything else.  Really, my retirement is dependent on the neocons not getting their hands on social security.  I'm scheduled to have my house paid off a year before I'm scheduled to retire, and without the mortgage payment I can live comfortably on my social security.  (This of course presupposes the price of everything hasn't more than doubled by then - more than 100% inflation over today's not exactly low prices will pinch a bit.)

      by bfitzinAR on Fri Apr 25, 2008 at 01:33:05 PM PDT

      •  The potatoes go in

        this weekend.  Beans, lettuce, peas, sunflowers already doing well :)

        Any particular high-yield varietals?  I'm fond of the red potatoes and yukon golds as far as flavor goes.

        by drbloodaxe on Fri Apr 25, 2008 at 02:26:32 PM PDT

        •  Yukon Golds are a good mid-season

          potato, but if you want a "keeper" for over winter, plant russets.  They are long-season types.  You plant them at the same time as the mid-season potatoes, but they don't mature for an extra month or so - in fact, you can leave them in the ground and just "lift" them as needed until things get cool.  Be sure to harvest them before the ground freezes, but other than that no great urgency about getting them out of the ground on anything but an "as needed" basis.

          by bfitzinAR on Mon Apr 28, 2008 at 10:18:00 AM PDT

  •  This actually began in the late

    eighties as mortgage interest rates began to decline.  That round pooped out when that housing bubble burst and mortgage rates stabilized above 7% for long term fixed rate loans.  

    by Marie on Fri Apr 25, 2008 at 01:15:28 PM PDT

•  I drove around a neighborhood near work yesterday

  I was looking for rental properties (no way am I buying in this market now as I expect real estate to hit bottom about 2011) and I was amazed at the number of foreclosures and vacant houses for sale.  Mind you, this was in a good neighborhood.

  by Neon Vincent on Fri Apr 25, 2008 at 12:45:02 PM PDT

  •  I think 2011 at the earliest

    We are just about to hit the peak on subprime resets and then they will taper off until about the end of 2009 when the Option Arms and Alt-A loans start to reset. These loans will likely be just as bad, and likely worse then the subprimes. At least most of the subprimes were owner occupied. Take a look at this diary by gjohnsit from last Sunday on the Option Arms & Alt-A loans. We may end up looking back on the subprime crisis as "the good ol' days!"

    by reflectionsv37 on Fri Apr 25, 2008 at 01:15:43 PM PDT

    •  Relevant economic cycle is the...

      ...Kuznets Cycle.

      A cycle of economic activity lasting between 15 and 20 years that acquired the name of the first economist to study it, Nobel Prize laureate Simon Kuznets. The Kuznets cycle is attributed to investment in housing and building construction and is well know among professionals in the real estate market. This is one of four separate cycles of macroeconomic activity that have been documented or hypothesized. The other three are Kitchin cycle, Juglar cycle, and Kondratieff cycle.

      Given a 2005 top, a 15-year-long cycle would give a bottom in the 2012 range, while a 20-year-long cycle would give a bottom in the 2015 range, so you might be right in saying 2011 at the earliest.  However, there is another cycle, the Juglar cycle, which runs from 8-10 years and determines the timing of the once a decade recessions the US economy experiences.  Right now, we are on track for a Juglar bottom between now and 2010, but the peak should hit between 2013 and 2015, pulling the housing market up a bit with it.

      If you want to read more about what a fellow Kossack has to say about these long wave cycles, check out mikebert's work on SafeHaven.

      by Neon Vincent on Fri Apr 25, 2008 at 02:00:34 PM PDT

      •  Without having read your link yet...

        I'm going to comment that I'm not sure normal cycles can be used in this instance to predict what is going to happen with this real estate market. This crisis wasn't the result of "normal" activity. This crisis was more "manufactured" to keep us from slipping into a recession. The lowering of interest rates to levels that were rediculous was the cause of this bubble and I'm not sure normal cycles can predict its end.

        When you look at what is coming with these other types of loans, those that gjohnsit termed "home of the liar loan", you can only assume that an even larger percentage of these loans will end up in foreclosure. These are where the negative amortized loans are. Many of these loans will end up "upside down" without a drop in value. And since a much higher percentage of these loans are owned by speculaters, these loans going bad will not only affect the speculators, but will also have very negative effects on the renters who are living in those properties.

        Now, I'm off to read your links!! Thanks!

        by reflectionsv37 on Fri Apr 25, 2008 at 02:15:59 PM PDT

        •  Oh, you're right that this market was...

          ...manufactured, but all that ended up happening was it pushed prices in the direction they were going anyway, just faster and higher, then kept them suspended for a few years longer than usual, as 20 years after the last bottom, which was in 1992, would have been 2002.  Now, the market is correcting in the direction it would have gone without the stimulation, just faster and lower.  There is only so much manipulation one can perform on a market, any market, before its natural tendencies take over.

          by Neon Vincent on Fri Apr 25, 2008 at 10:39:08 PM PDT

•  The greatest transfer of wealth in history

  will continue until all of our sorry carcasses are picked clean.

  Most people in this country will give up all they have trying to hang on, but oil prices, foreclosures, unmanageable debt, medical bills, inflation, job loss and whatever they think of next will prevent the current generations from having anything to leave to their kids.

  by dewey of the desert on Fri Apr 25, 2008 at 12:45:42 PM PDT

  •  Greenspan is a modern day

    Willie Sutton on hyper-steriods.  He could see that the piggy banks of most Americans were their houses.  All he and his cronies had to do was figure out a way to get the money out without breaking the container.  They may well have exceeded their wildest dreams (in that way, sort of like the 9/11 thugs).    

    by Marie on Fri Apr 25, 2008 at 01:22:12 PM PDT

•  Thanks Bonddad

  I've never been online early in one of your diaries to post a comment this high on the list

  Thanks for all you do with the info you post !

  by eeff on Fri Apr 25, 2008 at 12:46:26 PM PDT

•  Does "Household Debt" Include Mortgage? n/t

  by Spirit of Fighting Bob on Fri Apr 25, 2008 at 12:47:51 PM PDT

  •  Offset by the value of the asset, I think.

    It is a recent phenomenon that mortgage balance is greater than home value.

    by lgcap on Fri Apr 25, 2008 at 12:58:55 PM PDT

    •  Is it? I'm just asking, don't know

      but thought I read somewhere that the same thing happened back in 1928-30.  Do you know if that's true?

      by Youffraita on Fri Apr 25, 2008 at 01:39:06 PM PDT

•  anecdotal observations in my area:

  In my suburban edge city:

  a) the mortgage foreclosure call in our courts is getting crowded.  I suspect that there's not only more filings, but that there are fewer resolutions prior to the sherriff's sale because there's no other feasible end game, like refinancing or sale.

  b) The local paper reports housing prices are up.  Go figure.

  c) No more signs than before.

  by Inland on Fri Apr 25, 2008 at 12:49:41 PM PDT

  •  Love your sig line n/t

    by rontun on Fri Apr 25, 2008 at 02:04:22 PM PDT

•  we've still got a long way to go

  here at ground zero for the housing bust (CA central valley).

  by wu ming on Fri Apr 25, 2008 at 12:59:09 PM PDT

•  What Will Happen That's Unexpected?

  I keep hearing these distant, theoretical predictions. Comments have mentioned never going on vacation, shopping in thrift shops instead of clothing stores, driving less. But then I read about someone having her gas siphoned, and that rung a bell.

  It's one thing to switch from roast beef to hamburger, but it's another to have your groceries stolen out of your car (No, I haven't seen that on a comment, it's just an example).

  I'm wondering about everyday things that will change that haven't been mentioned in the predictions and warnings.

  by JG in MD on Fri Apr 25, 2008 at 12:59:44 PM PDT

  •  Unexpected?

    The poor won't be blamed for their fate.

    Conspicuous consumption will be tasteless and dangerous.

    by lgcap on Fri Apr 25, 2008 at 01:15:03 PM PDT

  •  im getting really scared

    and having fantasies of winning the lotto and building a compound in the country....growing my own food...being off the power grid...and learning how to make wine!

    i thought i was crazy, but have found several other young, smart people who are having similar thoughts.

    ps. pretty sure i HAVE had my gas siphoned.

    by jemjo on Fri Apr 25, 2008 at 02:06:26 PM PDT

    •  I just missed out

      on a land auction we had around here - 600 acre farm up for sale, had several 6.4 acre parcels split out, but best guess made those still too expensive without winning that lottery ;)

      by drbloodaxe on Fri Apr 25, 2008 at 02:21:58 PM PDT

      •  yes well

        that's the problem.  so sad that i fantasize about the lottery! so pathetic.  

        but yeah...don't think the compound will be up and running off my bar tips. haha.

        (if i win you're in)

        by jemjo on Fri Apr 25, 2008 at 03:25:36 PM PDT

  •  Just got a locking gas cap on my vehicle

    yesterday.  Went through a tank ungodly fast last week somehow, despite having walked to work most days.

    And I already wear my clothes until they're horribly ragged and falling apart and don't do the vacation 'thang'.

    do a tag search for Survival Sundays to catch the food cache diary I put up a few weeks back.  Got busy, but I need to get off my duff and do the next installment of SS soon, heh.

    by drbloodaxe on Fri Apr 25, 2008 at 02:20:19 PM PDT

    •  Thanks for the Survival Sundays diary

      I'm reading it now. There's so much here that I miss, I'm glad people toot their horns sometimes.

      by JG in MD on Fri Apr 25, 2008 at 06:14:46 PM PDT

  •  I had a landlord siphon my heating oil

    It really was a tragic situation.  A young couple had purchased the two-family house in which I was living and faced an avalanche of unanticipated problems that ultimately led to their having to file bankruptcy.

    Shortly after purchasing the property, the couple's first child arrived but was born with severe birth defects, including a defective heart and neurological problems. She was forced to give up her job to devote full time to the infant, which created a financial strain. Less than a year later her husband was laid off from his job when the firm for which he worked merged with another, and they lost their health insurance.

    I knew things were pretty desperate and I did try to help out when I could without openly acknowledging what I knew was for them a humiliating experience. Little things, really, in retrospect, like borrowing his pickup truck, ostensibly to haul something I could easily have carried in my car so that I could fill it with gas and pay him a few bucks for the truck's use. And I was constantly looking for excuses to buy something for the infant, frequently presenting them with a $50 or $100 gift card to Target so they could make their own choices.

    I was alerted to the theft of the heating oil when I jumped into the shower one morning and there was no hot water.  Given that I'd had the tank filled only a couple of weeks before, it made no sense.  The weather had been chilly, with lows in the thirties, but usually a tank of oil would last for six weeks in the harshest of weather.

    When I went to check on the boiler I encountered the landlord and mentioned that I thought there might be a problem with the boiler since I had no hot water. He fessed up that he'd been siphoning oil out of my tank into his so they didn't freeze. He's was embarrassed and contrite, and clearly acted out of desperation.

    Two months later I received notice that I had to move, that the bank had foreclosed on the mortgage.

    The tragedy that confronted this young couple is no anomaly.  We are facing some pretty dire times.

    (I apologize for the length of this comment. Perhaps it should have been a diary, but I'd not planned on addressing this issue in advance and believe it is germane to the discussion we're having on this diary."

    by rontun on Fri Apr 25, 2008 at 02:29:22 PM PDT

    •  If he had asked you would have

      given it to him, but it was too humiliating for him.

      Your compassion is touching.

      by lgcap on Fri Apr 25, 2008 at 04:16:36 PM PDT

    •  We Need These Stories

      We mustn't get compassion fatigue, but also we have to know what people are going through.

      Not to mention being reminded that no matter what happens to us, we have to support others as well.

      It's more important than ever that the circle be unbroken.

      And this is just the beginning.

      by JG in MD on Fri Apr 25, 2008 at 06:10:48 PM PDT

•  hmm, I thought an awful lot of the real estate

  transactions in recent years were actually by investors, small and not so small, looking to make a quick profit.

  is there any data that shows how many real estate transactions each year are investments (including 2nd homes) as compared to people actually buying their own primary homes?

  Any data that actually shows some huge new wave of homebuyers buying their own homes who shouldn't have been buying homes at all?

  I'm referring to this: "the US consumer went on a debt-induced home buying binge." sure, speculators and investors are "consumers" too, but it seems a little misleading.

  Most of the general news stuff I've read in the last couple of years blames the housing bubble on speculators and investors and developers more than everyday homebuyers.

  I mean, it seems some buyers bought more expensive homes than they should've. even disregarding problems with ARMs that they weren't cautious about. But prices were high.

  and there's been a lot of layoffs you know. some of the foreclosures must simply be due to plain old economic problems -- look at today's NYT article:

  Cutoffs and Pleas for Aid Rise With Heat Costs

  After struggling with soaring heating costs through the winter, millions of Americans are behind on electric and gas bills, and a record number of families could face energy shut-offs over the next two months, according to state energy officials and utilities around the country.

  The escalating costs of heating oil, propane and kerosene, most commonly used in the Northeast, have posed the greatest burdens, officials say, but natural gas and electricity prices have also climbed at a time when low-end incomes are stagnant and prices have also jumped for food and gasoline.

  by jennifer poole on Fri Apr 25, 2008 at 01:03:16 PM PDT

  •  huge amounts of foreclosures in North Minneapolis

    you can't tell me the high foreclosure rate there is due to "investors". That's an inner city neighborhood. That would strike me as working class people buying homes and then not being able to hang on to them for whatever reason. And people in those neighborhoods are disparportionately offered subprime loans, as some of the lending eligibility from Sallie Mae is tied to zip codes.

    by decembersue on Fri Apr 25, 2008 at 01:26:20 PM PDT

    •  Do you mean Fannie? Sallie is in the

      student loan business. :-)

      by Gary Norton on Fri Apr 25, 2008 at 01:41:09 PM PDT

      •  yeah, fannie

        all those fannies, sallies, freddies, they all run together...

        by decembersue on Fri Apr 25, 2008 at 01:56:11 PM PDT

    •  right, that makes sense to me. so would you

      describe the majority of those working class people who bought homes there and are now facing foreclosure as consumers going on a binge of spending? if the neighborhood isn't gentrifying at all, no investors or would-be landlords buying up property, how much more would a mortgage payment be than rents, anyway? How much equity could they get out of their ungentrified homes to irresponsibly waste on a binge of consumer spending?

      If they got subprime loans, we know they're in a financial situation where they don't have much wiggle room. how much could high fuel prices add to monthly expenses? look at the link. millions facing utility shutoffs. Maybe these folks shouldn't have irresponsible enough to rent apartments, given all the predictions about increased fuel prices we heard about a couple years ago?

      well, I'll try and find the diary that drbloodaxe talked about in his comment below, and see what I find re: actual data about owner-occupied foreclosures, and hopefully I'll learn a little more.

      by jennifer poole on Sat Apr 26, 2008 at 10:44:27 AM PDT

  •  There actually was a recent diary

    that gave the exact data you're talking about.

    Don't recall if it was by bonddad, Jerome a Paris, or somebody else though.

    It showed the %'s of subprimes that were owner occupied, the alt-A's that were, reset dates for the arms on both and similar data.  It actually looked like we had nasty resets dogging us til mid 2010 or so on both.

    by drbloodaxe on Fri Apr 25, 2008 at 02:16:08 PM PDT

    •  thanks, I'll try to find it. n/t

      by jennifer poole on Sat Apr 26, 2008 at 10:45:09 AM PDT

•  DKos and the economy...

  The housing market is a disaster but in most areas, it will start to recover relatively soon.  I'm in the real estate business and every day I see potential buyers who can afford the homes they're looking at, they're just waiting for someone or something to tell them it's okay to get back in.  

  Prices have come down about 10%.  If they went up 100% in six years, then down 10% in two years, in one year they will be about where they should have been if you could reasonably expect prices to double every ten years, which isn't crazy.  

  That said, I'm a little disturbed by the zeitgeist of this place vis a vis the economy.  It's like everybody hates Bush so much that they're hoping for a depression just to further justify the hate.  Trust me it's not necessary, he's bad enough even if the ecomomy were great.

  by dts on Fri Apr 25, 2008 at 01:19:19 PM PDT

  •  Sounds like the pessimists here

    are going to miss a golden opportunity.

    by lgcap on Fri Apr 25, 2008 at 01:22:29 PM PDT

    •  What are you,

      a realtor?  Interest rates are low! Now is a great time to buy!

      The time to buy will be when the word on the street is that real estate is a bad investment.  Right now, the word is "wait to sell until the market bounces back."  Meanwhile, the buyers are waiting until prices fall farther.  Buyers never have to buy; many sellers have no choice but to sell.  

      by Shesk on Fri Apr 25, 2008 at 02:00:25 PM PDT

  •  The bears are speculating that

    prices in some areas will drop 25-30% before they bottom out.  Of course, in areas where the bubble never got that big, it won't be so bad.  Location, location, location....

    by Youffraita on Fri Apr 25, 2008 at 01:42:25 PM PDT

  •  Ha, ha, ha, ha, ha

    People in real estate have been calling the bottom since this thing started to topple.

    Prices did not double in 6 years.  In many places they tripled in 6 years.  During that period, salaries have been flat, the prices of food and energy became inflated, interest rates have been at historical lows, people have over-extended themselves, and investors have bought more houses than they can sell.

    As things start to come down, those industries that were supported by the housing industry are starting to decline, laying off people, and hurting stock prices.  That equals unemployment, higher credit card debt, and lower total worth (making people even bigger credit risks).

    Sure, there are people on the sidelines looking to get back in, but given the amount of inventory, there simply aren't enough of those sideliners with good enough credit who can sell their existing homes to reduce the inventory.

    It's all supply and demand.  Too much supply, not enough qualified buyers, prices will come down.    

    by Shesk on Fri Apr 25, 2008 at 01:53:00 PM PDT

  •  Wow, just simply WOW. Trust me? I don't think so

    Trust you or believe my lying eyes?

    You lose.

    See the NYT link under my uid below.

    by 0hio on Fri Apr 25, 2008 at 01:53:54 PM PDT

    •  My comment was for dts. eom

      by 0hio on Fri Apr 25, 2008 at 01:55:20 PM PDT

  •  I think you might...

    want to do a bit more research before you start predicting there will be a recovery any time soon. We are just entering the months where the highest amounts of resets will be hitting the subprime mortgages and then after a short lull the option arms and Alt-a's will begin resetting in late 2009.

    This mess is still in it's infancy! See my comment above for a link to frightening diary of what's in store with the option arms and Alt-A's!

    by reflectionsv37 on Fri Apr 25, 2008 at 01:57:07 PM PDT

  •  nah

    A lot of people here are just pessimistic in general.  There are about a dozen diaries a day about how the nomination will be stolen from Obama.

    by sunshineonthebay on Fri Apr 25, 2008 at 02:02:04 PM PDT

    •  I was going to make some jokey rebuttal

      but it would just turn out badly.  Everything in life does. ;)

      by drbloodaxe on Fri Apr 25, 2008 at 02:13:33 PM PDT

      •  i'm feeling brave

        It's Friday afternoon and it's gorgeous outside.  I need to step away from the crack.

        by sunshineonthebay on Fri Apr 25, 2008 at 02:18:46 PM PDT

•  Empty New Homes causing problems in Burbs

  Seeing lots of built-but-not-sold new homes still on the market for months (blame greedy home builders for over-building in some areas). So existing home values decrease and forget about trying to sell your home if you want to move, or need to sell - because you've been lost your job. Not good.

  by PAbluestater on Fri Apr 25, 2008 at 01:41:40 PM PDT

•  Subprime loans.... how many do you think

  there exist?

  Well, here's a link that displays each county in each State concerning subprime loans.

  http://www.nytimes.com/...

  First take notice of the US map that is color coded.

  If you hover the curser over each State the percentage of subprime loans will display for each county.

  Only two States, North/South Dakota have counties whereas I could find 0%. All other counties and States have varying degrees of subprime loans.

  I wonder if every bank in America issued these types of loans?

  by 0hio on Fri Apr 25, 2008 at 01:49:50 PM PDT

•  Interesing that the "short" housing fund is down

  SRS, an ETF which moves the opposite direction as the Dow Jones Real Estate Index, is down a lot in the last 6 weeks.  And the underlying index IS up since the first week of March.

  So even though the news continues to get worse, it seems that the index has been climbing for going on 2 months.

  Which leads me to this speculation - the housing market cannot recover until no one any longer believes in the inflated prices or the easy selling we had before.  I think we are just about there.  In all likelihood, the housing market will bottom out before the various charts suggest any sort of recover.  I think it's possible that we are approaching the bottom.  It could be 1-2 years before it starts to rise from the bottom, but I'm getting the sense that we're close to the worst.  And it's pretty bad.

  by eparrot on Fri Apr 25, 2008 at 02:07:27 PM PDT