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PerfectStorm_IHB

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The downturn has just begun, today's buyers are tomorrow's short sales.The next round of foreclosures will be of the Alternative-A type, a market of $12 Trillion. You ain't seen nothing yet! Lennar (Villa Rosa) or any other builder wherever they may be must build or die. When the smoke clears there will hardly be anyone left who is credit worthy to qualify for a loan even at depressed prices, cash is King but not necessarily in $'s. Buy the resale not new, wait another 6-8 years for this to play out with some sort of a bottom somewhere within 2-4 years and an exhaustion bottom within the later time frame.<span style="font-size: 13px;"></span><span style="color: red;"></span>
 
Rent for 6-8 more years? Say it isn't so! Sorry, I just can't wait that long. Kids will be in school. I guess I'll just have to be one of the loser knifecatchers who buys next year and loses money.
 
[quote author="miriam" date=1218146564]Rent for 6-8 more years? Say it isn't so! Sorry, I just can't wait that long. Kids will be in school. I guess I'll just have to be one of the loser knifecatchers who buys next year and loses money.</blockquote>


Miriam - We will probably not wait for 6 - 8 years, but we are renting where we will eventually buy so that our children will not have to move schools. I do not understand why people think their children's education can not be consistent if they are renting.
 
When you consider the mortgage payments, taxes-mello-roos (1.6 to 2 %!),hoa & comm. assoc. fees, R&M;, less the tax advantages it's still a raw deal at today's still historically high prices.Don't expect rents to remain high as people are leaving the state and country in droves, further lay-offs will accelerate the downward pressure on housing and rents will eventually turn with that.If you have to buy then join the masses who have to..... be impulsive what the heck!Watch the Baby Boomers with little to negative savings scramble for Home Equity to retire on because they weren't disciplined enough to save their entire life, spoiling themselves and pleasing every material whim.
 
[quote author="PerfectStorm" date=1218148304]When you consider the mortgage payments, taxes-mello-roos (1.6 to 2 %!),hoa & comm. assoc. fees, R&M;, less the tax advantages it's still a raw deal at today's still historically high prices.Don't expect rents to remain high as people are leaving the state and country in droves, further lay-offs will accelerate the downward pressure on housing and rents will eventually turn with that.If you have to buy then join the masses who have to..... be impulsive what the heck!Watch the Baby Boomers with little to negative savings scramble for Home Equity to retire on because they weren't disciplined enough to save their entire life, spoiling themselves and pleasing every material whim.</blockquote>


Opine much?



<em>And yes, I recognize the irony.</em>
 
[quote author="awgee" date=1218147651][quote author="miriam" date=1218146564]Rent for 6-8 more years? Say it isn't so! Sorry, I just can't wait that long. Kids will be in school. I guess I'll just have to be one of the loser knifecatchers who buys next year and loses money.</blockquote>


Miriam - We will probably not wait for 6 - 8 years, but we are renting where we will eventually buy so that our children will not have to move schools. I do not understand why people think their children's education can not be consistent if they are renting.</blockquote>


Awgee,

I completely agree with this. We are looking at some good school as well as private school in the area. My only concern at this moment is the ability to obtain consistent work (for engineers - I essentially need health care only). We will see though.



As for renting for long term, I can rent for 4-5 YEARS before I reach the 100k depreciation for a small 500k condo/home. My guess would be to rent for 2-3 years then purchase near bottom, the only real issue is, will you have enough cash?



good luck.



-bix
 
[quote author="miriam" date=1218146564]Rent for 6-8 more years? Say it isn't so! Sorry, I just can't wait that long. Kids will be in school. I guess I'll just have to be one of the loser knifecatchers who buys next year and loses money.</blockquote>


did someone call me out? :)
 
[quote author="PerfectStorm" date=1218142615]The downturn has just begun, today's buyers are tomorrow's short sales.The next round of foreclosures will be of the Alternative-A type, a market of $12 Trillion. </blockquote>




Since the whole residential value is around 20T, and mortgages account for only ~12T, I'm a little mystified as to how 12T could be alt-A?





unless I have made a mistake remembering the total/mortgage value numbers.





Could you provide a reference?



Thanks
 
The headline of this thread might be perfect for <a href="http://online.wsj.com/article/SB121806259835418475.html?mod=yahoo_buzz">this article </a>from the Wall Street Journal.



Sellers, please take note of the following from a recent seller:



<blockquote>When we put our Dallas house on the market for $490,000 in February, we thought it would sell in weeks with little discounting.



Talk about being delusional.



We ended up lowering the price of our house five times before it finally sold last month. We didn't get our first offer until late June, and it was $102,000 below where we had started.</blockquote>
 
$12 Trillion refers to the prime loan market in the U.S., a growing percentage (12%) of those are Alt-A , which is a quadrupling from a year earlier and the number is rising, delinquencies in the same time period doubled on home owners with good credit, the numbers are more staggering when you consider the issuance of these loans on a global level.This data was provided from an article in NY Times 8/5/08.
 
<em>Mass hysteria, also called collective hysteria, mass psychogenic illness, or collective obsessional behavior, is the sociopsychological phenomenon of the manifestation of the same or similar hysterical symptoms by more than one person. A common manifestation of mass hysteria occurs when a group of people believe they are suffering from a similar disease or ailment.</em>



Baby boomers: "must. buy. house. now. everyone else is." 8-/
 
Although rent is high in Orange County, it has remain rather steady for the past 10 years.

Owning, on the other hand, had skyrocketed in the past 5 years.



I can see why it would be a good idea to rent for the next 2-5 years - rent is much more affordable than owning.

But I can also see why it would be good to buy in the next 1-3 years - prices really have dropped significantly.



I think age matters. If you're 20, rent. If you're 25, rent. But if you're 30+ and are considering starting a family, buying seems like a good thing.

I have a 30 year old friend and a 40 year uncle who are both planning to buy by the end of 2008.

Both have good incomes and really want to own a home. I suggested to them that they can simply rent a really nice home for 2-3 years then buy.

However, both insisted that they want to be in a home for at least 5-10 years. Moving is not an acceptable option for them.



Personally, I want to settle down in an area too. I want to establish some roots. I've lived in Garden Grove, Santa Ana, Tustin, Irvine, Westminster, and Fountain Valley in the past 10 years. I don't want to be so mobile anymore.



I want to settle down near Irvine or Huntington Beach. Costa Mesa would be right in between, but I don't like their schools. Newport is too expensive. So I guess Fountain Valley would be ideal.

As for my 30 year old friend, he intends to move to Irvine. To him, having a nice looking home is priority. For my uncle, he insists on Huntington Beach. He desires the beach weather.
 
Ah, the stupidity of youth, vanity of middle age, and supreme wisdom of geriatric inertia.





Age is also a big determinant on who has been getting crushed in this housing market. Most of the kids born in the 70s were a little too young to really see the early 90s crappy market, and so were often the ones who had the bad timing to "buy a house and start a family" when so many of those crappy ranchers were up in the 700Ks and new inland McMansions were in the 600s.



Meanwhile, the folks older than the Boomers, if they're smart enough to have stayed in the same place since the early 80s, have such a low tax basis that moving would be insane. They're also old enough to remember when money was silver and not plastic. If they were lucky enough to avoid any long spells of unemployment or health problems, they shouldn't really care whether their house falls back to where it was when things bottomed out in '95.
 
[quote author="Hormiguero" date=1218242711]Ah, the stupidity of youth, vanity of middle age, and supreme wisdom of geriatric inertia.





Age is also a big determinant on who has been getting crushed in this housing market. Most of the kids born in the 70s were a little too young to really see the early 90s crappy market, and so were often the ones who had the bad timing to "buy a house and start a family" when so many of those crappy ranchers were up in the 700Ks and new inland McMansions were in the 600s.



Meanwhile, the folks older than the Boomers, if they're smart enough to have stayed in the same place since the early 80s, have such a low tax basis that moving would be insane. They're also old enough to remember when money was silver and not plastic. If they were lucky enough to avoid any long spells of unemployment or health problems, they shouldn't really care whether their house falls back to where it was when things bottomed out in '95.</blockquote>


Bad timing? I don't think that most people who bought during this bubble were born in the 70's. There are plenty of stories out there of older folk and younger folk (Casey Serin, anyone?), trying to cash in on the bubble. It wasn't bad timing, for a lot it was greed, or drinking the kool aid.
 
[quote author="k.o." date=1218252765]I don't think that most people who bought during this bubble were born in the 70's. </blockquote>


I wouldn't (and didn't) write "most". Just that the relatively young are uniquely susceptible to being oblivious to the concept of fundamentals in investing. But, of course, stupidity is not held with an exclusive patent by the young. Maybe some of the more vainglorious elements of the narcissistic Baby Boomer psyche helped those folks to strap on mortgages that were a multiple of their net worth.
 
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