Fair enough. There are people who are saying the market can’t go down because x, y, and z are “different this time”. I think that’s just a lot of realty industry hype. All I’m saying is that I wouldn’t make that assumption.
Use the same link I posted in post #8 and go to the home page.
A couple of good points, people with any debt start hurting when interest rates go up, there is also the ‘confidence’ factor - if people see their assets expanding they tend to spend more, and tend to tighten their belts when the assets decline.
I have vivid memories of 1990 when interest rates shot up, my salary just went straight out to the mortgage company, while I knew a fair number of people in a similar situation, they represented a very small minority of the overall population.
I don’t think anyone is disagreeing with you. The significance of an increase in foreclosures is that it is an indicator that the market might be in trouble. It can be a minority of homeowners who lose their homes and still affect the market.
By the way, if interest rates go up, it will affect a lot of people. 71% of mortgages are ARMs here.
Sorry, that should read: 71% of mortgages in the last quarter are ARMs.
Yes, but the reverse logic - that because we haven’t had a burst yet, one is now inevitable - is no more helpful when it comes as an actual guide for action.
Certainly the market goes in cycles; but I agree with your last paragraph - you gotta look at the fundamentals, which will go by region and even neighbourhood.
What I see is that a lot of people are still wanting a “bubble burst”. They want it because they want to be able to find affordable housing. That says to me that the bubble may be deflating, but hardly bursting overall yet - as there still exists a pool of people wanting to come into the market.
I agree. Just saying, “we haven’t had a crash so it’s due” doesn’t make any sense. What makes sense is that in the volatile markets, prices have gone up several hundred percent, affordability is extremely low, inventory is suddenly much higher than it was, there are a record number of ARMs, DOM is increasing, sales volume is way down, and foreclosures are up several hundred percent.
Right - which is what we’re doing.
I agree that prospective first-time buyers have a vested interest in having a market downturn, in the same way that everyone else has a vested interest in not having that happen. But that doesn’t really “say” anything to me, since that will always be true. There will always be people who want to buy a house. I think the “housing shortage” hype that the realtors wanted us to believe has been shown to be false. All of a sudden there’s no shortage of inventory - that doesn’t happen overnight unless the “shortage” was a myth in the first place.
I think what the industry is doing now is trying to convince prospective buyers that there’s going to be a “soft landing”, and that if they don’t get in now, it’s going to start going up again and they’ll miss out. They think if they can get everyone to fall for that, it will keep the prices propped up. We’ll see - I wouldn’t hold my breath for the boom to start up again. Potential buyers would be wise to adopt a wait & see attitude right now.
Very true. The house across the street from me has been having some very lonely open houses the last few weekends. They still haven’t dropped their price though. Someone is going to have to blink first.
On the other hand, there has not yet been a recession and interest rates remain low. I think these two factors have gotta change before we will see real panic selling.
No disagreement here.
People need housing even during real estate busts - but lack of income and high interest rates make renting preferable to buying.
I think the “shortage” was simple speculation. Personally, I agree - no more boom; the issue is whether there will be a bust. On that, I’m not fully convinced.
What I think is likely is that the market will go down in certain overheated areas, but remain relatively steady in others. Some may show modest gains. All that is subject to change of course if interest rates go up, or the economy goes down.
I think you’re arguing against a position that never was. I already said many times that this is something likely to happen in the more volitile markets, mainly coastal areas. Other areas are much more stable.
My comments have all been confined to California, since that’s where I live and that’s the market I’ve been following. There are other similarly overheated markets, but I haven’t researched them as much.
What you just wrote is exactly what I’ve been saying all along: “It is likely that the market will go down in certain overheated areas.” We are in complete agreement.
The real estate industry is busy trying to convince us that it won’t.
Yahoo Finance - Stock Market Live, Quotes, Business & Finance News I do not think it will get better soon. Foreclosures can not be good for any part of the system.
Heck, I didn’t think I was arguing against you. 
RE: Days on the market. This is something that savvy real estate agents and developers are aware of.
I’m not sure if I’ll get the exact terms right, but I’ll explain:
There are two ways to get a listing off of MLS. If you simply remove a listing of a house, and then re-list it, it will show back up on MLS with the “days on the market” going all the way back to the original listing. If you cancel a listing entirely, and wait a while (seven days, IIRC?) and then create a new listing, it will show up on MLS with zero “days on the market”. After a few months on the market, I always insist that my property is reset to zero. It’s well worth not having it listed for a week, IMO. Not having a listing out there for a week might cost you a showing or two, but is well worth the trade off to not have buyers given that huge leverage over you of knowing that the property has been sitting out there for a long time.
When talking to buyers, a good agent won’t lie, but won’t disclose information like this. Most buyers might ask “How long it’s been on the market.” But most will not ask “Has it been on the market before, and then re-listed?”
Sorry, it kind of read that way to me, but I guess I was reading more into it.
And I assume other agents do this as well, so the real DOM statistics (if you actually counted how long it took to sell the house in total) must be much higher than the ones shown to the public.