Home Buying & Real Estate Thread

[frankmatthews]

I dont know if its too early for me but that chart/ graph is all over the place.

If the trend seems to always trend up and then correct back down why does their prediction have it trending down for 26 years? What information supports this?

Nothing trends UP forever. We've seen how unstable housing is, it's literally a house of cards. This is based on a mathematical computer model of historical imputs. It's pretty complex and has a history of being correct in the past.

There are several things wrong with these projections. First, relative payments are actually lower than what they were 30 years ago due to low interest rates. If rates stay low, prices should remain relatively high/stable. Second, Prior to WWII, most people wouldn't have imagined buying a home with credit (mortgage). Most homes during that period were bought with cash and then when mortgages did come around, the banks held the notes. Only once Fannie & Freddie came into being and injected liquidity in the market and started buying mortgages were rates actually able to come down (it's more complicated than that, but they help). Third, if home prices were seeing that drastic of a decline you better believe our entire economy would go into free fall and something major like TARP would be done to stabilize things.

Rates being so low for so long is what's going to cause systemic failure in the financial system. That and the sovereign debt crisis in europe. The world is awash in debt. This whole ponzi of endless lending and packaging and speculation does have and end.

Before, during and after both world wars you had money flowing from Europe into the US which affected housing and all kinds of worldwide currency devaluation and revaluation happening which makes the model in the top graph "flawed" prior to 1955. As well as the dollar devaluation and gold peg, housing prices aren't clearly depicted in case schiller. And you are correct around 1955 is when they began pushing home loans for the general public, you can see the model has correlation after this time period.

With what money is this tarp like program gonna happen? Have you seen the feds balance sheet? These banks are toxic. Their liquidity pumps have been on full blast dealing with this interest rate situation.

Yeah only a fool would believe that chart. Housing prices dropping back down to 1920s levels?

Not sure if you have noticed that the real estate market has reached pre market crash pricing again. Some areas have surpassed pre market crash pricing.

So you have an economics degree i presume, since you are calling a mathematical models stupid? Are you highly educated in the field or are you just assuming what goes up must keep going up indefinitely. Obviously no model is 100% accurate and I'm not saying you should take it as gospel but to dismiss it as stupid without even knowing what it is is blind foolishness.

The graph of home prices is in the post. It is not precrash. In some areas it might be because US real estate is the new Swiss bank account with purchases by she'll companies allowed to hide individual identities. Money is pouring out of the euro and yuan trying to find somewhere to hide. You see China tightening capital controls on people trying to send money overseas to get out of their crashing currency. US just announced they are cracking down on all these anonymous housing buys. This bull market in real estate has little to do with America's economy supporting strong domestic housing purchasing power. It has a lot to do with the same speculation and securitization in lending and housing that led to 2007, which the model you called predicted as well.

 

[americangenius]

Nothing trends UP forever. This bull market in real estate has little to do with America's economy supporting strong domestic housing purchasing power. It has a lot to do with the same speculation and securitization in lending and housing that led to 2007, which the model you called predicted as well.

Facts. Foreign buyers are what's holding these prices up, but it can't continue if the interest rates go back up.

 

[frankmatthews]

Nothing trends UP forever. This bull market in real estate has little to do with America's economy supporting strong domestic housing purchasing power. It has a lot to do with the same speculation and securitization in lending and housing that led to 2007, which the model you called predicted as well.

Facts. Foreign buyers are what's holding these prices up, but it can't continue if the interest rates go back up.

See when ur at 2-3% a quarter point is no big deal. When ur at .25% and u raise .25% you have doubled the interest expenditure, it wreaks havoc on a balance sheet. The cost to banks to lend to you just doubled.

 

[slicknick951]

My only thing is the graph has prices going down for 26 years. You don't think something will happen for it rebound?

The government and the banks are just going to sit back for 26 years?

 

[capital sb]

So you have an economics degree i presume, since you are calling a mathematical models stupid? Are you highly educated in the field or are you just assuming what goes up must keep going up indefinitely. Obviously no model is 100% accurate and I'm not saying you should take it as gospel but to dismiss it as stupid without even knowing what it is is blind foolishness.

The graph of home prices is in the post. It is not precrash. In some areas it might be because US real estate is the new Swiss bank account with purchases by she'll companies allowed to hide individual identities. Money is pouring out of the euro and yuan trying to find somewhere to hide. You see China tightening capital controls on people trying to send money overseas to get out of their crashing currency. US just announced they are cracking down on all these anonymous housing buys. This bull market in real estate has little to do with America's economy supporting strong domestic housing purchasing power. It has a lot to do with the same speculation and securitization in lending and housing that led to 2007, which the model you called predicted as well.

Nope no economics degree I do have a CS degree w/ Math minor though. I never said the models were stupid just very unrealistic, you must be offended by me saying only a fool would believe this. A model is just a prediction, and their prediction seems very unrealistic guess we will have to wait and see. If people truly believe housing prices will drop back down to 1920 levels the us economy is going to take a beating, and there is no need to purchase a home until those prices are hit. 

I know how to read a graph they show pre and post crash pricing, showing a 26 year decline in pricing starting this year. Nothing goes up forever that is obvious by the last housing crisis, but like I said I live in an area where homes have already surpassed pre crash pricing. Which would make the model that you posted inaccurate for my area, and inaccurate for other areas too. I don't see any reason for housing pricing to decline in the DC area.

You say they predicted the crash, when did this chart come out? The link to the graph is from March 2012.

 

[crcballer55]

 

There are several things wrong with these projections. First, relative payments are actually lower than what they were 30 years ago due to low interest rates. If rates stay low, prices should remain relatively high/stable. Second, Prior to WWII, most people wouldn't have imagined buying a home with credit (mortgage). Most homes during that period were bought with cash and then when mortgages did come around, the banks held the notes. Only once Fannie & Freddie came into being and injected liquidity in the market and started buying mortgages were rates actually able to come down (it's more complicated than that, but they help). Third, if home prices were seeing that drastic of a decline you better believe our entire economy would go into free fall and something major like TARP would be done to stabilize things.

Rates being so low for so long is what's going to cause systemic failure in the financial system. That and the sovereign debt crisis in europe. The world is awash in debt. This whole ponzi of endless lending and packaging and speculation does have and end.

Before, during and after both world wars you had money flowing from Europe into the US which affected housing and all kinds of worldwide currency devaluation and revaluation happening which makes the model in the top graph "flawed" prior to 1955. As well as the dollar devaluation and gold peg, housing prices aren't clearly depicted in case schiller. And you are correct around 1955 is when they began pushing home loans for the general public, you can see the model has correlation after this time period.

With what money is this tarp like program gonna happen? Have you seen the feds balance sheet? These banks are toxic. Their liquidity pumps have been on full blast dealing with this interest rate situation.

I agree, rates being so low for this long will be a bad thing. Working in Real Estate and owning a home I think a lot of people are going to sit tight in their current home for longer than the historic 7 years because their rate is so good. The financial system will need to come up with a product to entice people to get out of their 3% loans like they did in the 80's with ARM's when rates are going sky high and they were stuck with low double digit loans on their books while paying 18% on CD's.

However, there's no way the Fed will allow something that severe to happen for that long. Even in the 70's when we had stagflation, Volker came in and basically tanked the economy even more for 3 years which helped lead to a significant recovery. The Fed will always manipulate the market whether we agree or not to keep inflation low and employment relatively high. There's no way a market correction that severe would be allowed to occur. Remember, unlike stocks, people will always need some place to live. Unless there is a significant glut in houses then a long term widespread crash is highly unlikely. Especially in highly desirable places like New York, San Francisco, Miami, & Southern California.

 

[luckyluchiano]

I agree, rates being so low for this long will be a bad thing. Working in Real Estate and owning a home I think a lot of people are going to sit tight in their current home for longer than the historic 7 years because their rate is so good. The financial system will need to come up with a product to entice people to get out of their 3% loans like they did in the 80's with ARM's when rates are going sky high and they were stuck with low double digit loans on their books while paying 18% on CD's.

However, there's no way the Fed will allow something that severe to happen for that long. Even in the 70's when we had stagflation, Volker came in and basically tanked the economy even more for 3 years which helped lead to a significant recovery. The Fed will always manipulate the market whether we agree or not to keep inflation low and employment relatively high. There's no way a market correction that severe would be allowed to occur. Remember, unlike stocks, people will always need some place to live. Unless there is a significant glut in houses then a long term widespread crash is highly unlikely. Especially in highly desirable places like New York, San Francisco, Miami, & Southern California.

When do you see things potentially hitting the fan? If ever.

 

[frankmatthews]

So you have an economics degree i presume, since you are calling a mathematical models stupid? Are you highly educated in the field or are you just assuming what goes up must keep going up indefinitely. Obviously no model is 100% accurate and I'm not saying you should take it as gospel but to dismiss it as stupid without even knowing what it is is blind foolishness.


The graph of home prices is in the post. It is not precrash. In some areas it might be because US real estate is the new Swiss bank account with purchases by she'll companies allowed to hide individual identities. Money is pouring out of the euro and yuan trying to find somewhere to hide. You see China tightening capital controls on people trying to send money overseas to get out of their crashing currency. US just announced they are cracking down on all these anonymous housing buys. This bull market in real estate has little to do with America's economy supporting strong domestic housing purchasing power. It has a lot to do with the same speculation and securitization in lending and housing that led to 2007, which the model you called predicted as well.

Nope no economics degree I do have a CS degree w/ Math minor though. I never said the models were stupid just very unrealistic, you must be offended by me saying only a fool would believe this. A model is just a prediction, and their prediction seems very unrealistic guess we will have to wait and see. If people truly believe housing prices will drop back down to 1920 levels the us economy is going to take a beating, and there is no need to purchase a home until those prices are hit. 

I know how to read a graph they show pre and post crash pricing, showing a 26 year decline in pricing starting this year. Nothing goes up forever that is obvious by the last housing crisis, but like I said I live in an area where homes have already surpassed pre crash pricing. Which would make the model that you posted inaccurate for my area, and inaccurate for other areas too. I don't see any reason for housing pricing to decline in the DC area.

You say they predicted the crash, when did this chart come out? The link to the graph is from March 2012.

Before I go any further are you aware of which part is the model and which part is factual reality? Cause from your response it seems you are not following along at all. It's unrealistic based on what? You have no clue what's in it, you don't even seem to be able to differentiate between the projections and the reality. But yet its unrealistic. Ok buddy. What's actually unrealistic is the current state of the US housing market and I think any educated individual will tell you the same. But go ahead and keep thinking you know what your talking about.

 

[capital sb]

you got it man, now you're tryna tell me I don't know how to read a graph/chart. Carry on, I'll be happy to see the 1920 housing prices return. Great opportunity for investment properties. I'm not the only person that thinks the graph isn't realistic, but you obviously believe it is 100% gonna happen. You've posted it multiple times.

 

[frankmatthews]

you got it man, now you're tryna tell me I don't know how to read a graph/chart. Carry on, I'll be happy to see the 1920 housing prices return. Great opportunity for investment properties. I'm not the only person that thinks the graph isn't realistic, but you obviously believe it is 100% gonna happen. You've posted it multiple times.

I'm not saying what you do or don't know, I'm saying from your last response it doesn't appear that you are following the graphic correctly.

You say the model is unrealistic yet you have zero knowledge of whats in the model or how it is making these predictions. You pulled that opinion out of your *** with absolutely no thought, research or understanding whatsoever. You saw a housing price crash displayed and assumed it must be unrealistic because housing only goes up, right? That was the extent of your analysis. Correct me if I'm wrong.

You should understand WHY housing prices are up in your area and others. You should understand that americans are still broke, the economy is stagnant, banks have lent money to oblivion. You should understand whats going on overseas. You should understand whats going on with the dollar. You have taken none of this into consideration in your rosy outlook. Housing prices always go up and housing prices around me are up, thats the extent of your knowledge, or so it seems.

I don't 100% believe it's gonna happen. And I only posted it once. I believe it happening is more likely than it continuing on it's current course.

 

[capital sb]

I'm not saying what you do or don't know, I'm saying from your last response it doesn't appear that you are following the graphic correctly.

You say the model is unrealistic yet you have zero knowledge of whats in the model or how it is making these predictions. You pulled that opinion out of your *** with absolutely no thought, research or understanding whatsoever. You saw a housing price crash displayed and assumed it must be unrealistic because housing only goes up, right? That was the extent of your analysis. Correct me if I'm wrong.

Not sure how many times I have to tell you I am well aware of the fluctuation of housing prices, stock market etc. why are you so invested into this graph? "You pulled that out of your *** with no thought "

I believe the graph is unrealistic, because of the constant 26 year decline plain and simple.

You've posted it in another thread. First time in this one. Clearly you aren't reading what I'm saying go back and forth with someone else. I don't agree, get over it. You still never answered my question about when the chart was released?

 

[frankmatthews]

I agree, rates being so low for this long will be a bad thing. Working in Real Estate and owning a home I think a lot of people are going to sit tight in their current home for longer than the historic 7 years because their rate is so good. The financial system will need to come up with a product to entice people to get out of their 3% loans like they did in the 80's with ARM's when rates are going sky high and they were stuck with low double digit loans on their books while paying 18% on CD's.

However, there's no way the Fed will allow something that severe to happen for that long. Even in the 70's when we had stagflation, Volker came in and basically tanked the economy even more for 3 years which helped lead to a significant recovery. The Fed will always manipulate the market whether we agree or not to keep inflation low and employment relatively high. There's no way a market correction that severe would be allowed to occur. Remember, unlike stocks, people will always need some place to live. Unless there is a significant glut in houses then a long term widespread crash is highly unlikely. Especially in highly desirable places like New York, San Francisco, Miami, & Southern California.

This is not a situation where rates are going to impact demand and cause a slowdown in buying and therefore a downturn in price. It's going to be a systemic meltdown where banks are going to be neither ready, willing or able to lend out vast sums of money over 30 year periods to any and everyone that wants to borrow. Unemployment will rise, the base of consumers that will be able to qualify for a 30 year loan from banks that are trying to just survive til next month will be so small that demand will be virtually non-existent.

What is it that you think the Fed can do about home prices? I think it was written the Feds balance sheet is already leveraged 77 to 1 and climbing. The Fed has no obligation to housing prices, and trust me they will have their hands full dealing with sovereign debt, financial liquidity and currency by the time housing becomes and issue. People think the fed just comes in and declares a rate and everyone goes along with it. No, they have to participate in the markets with real capital to move rates where they want them to be. The Fed is going to start buying homes? MBS's? How is it that the Fed can save housing, what tools do they have to do this? People have become to accustomed to this notion of too big to fail, govt bailouts to save systemically important institutions. There will come a point when they will not have a choice. Govt is already broke. They can't save everything with a printing press.

 

[frankmatthews]

I'm not saying what you do or don't know, I'm saying from your last response it doesn't appear that you are following the graphic correctly.

You say the model is unrealistic yet you have zero knowledge of whats in the model or how it is making these predictions. You pulled that opinion out of your *** with absolutely no thought, research or understanding whatsoever. You saw a housing price crash displayed and assumed it must be unrealistic because housing only goes up, right? That was the extent of your analysis. Correct me if I'm wrong.

Not sure how many times I have to tell you I am well aware of the fluctuation of housing prices, stock market etc. why are you so invested into this graph? "You pulled that out of your *** with no thought "

I believe the graph is unrealistic, because of the constant 26 year decline plain and simple.

You've posted it in another thread. First time in this one. Clearly you aren't reading what I'm saying go back and forth with someone else. I don't agree, get over it. You still never answered my question about when the chart was released?

But the 52 year constant increase was realistic to you? Ok bud, you're clearly biased to the upside, most people are.

I'm reading what you are saying. You just aren't saying anything. It can't go down for 26 years because that is unrealistic. Just becasue, that is the crux of your argument. I am 100% certain the person who created this model is infinitely smarter than you and your "just becasuses".

Someone spends 20 years creating a complex mathematical computer model with inputs dating back to ancient times and here you come with your community college education talking about "its unrealistic cause it doesn't make sense to me". That's how you sound right now.

 

[crcballer55]

 

I agree, rates being so low for this long will be a bad thing. Working in Real Estate and owning a home I think a lot of people are going to sit tight in their current home for longer than the historic 7 years because their rate is so good. The financial system will need to come up with a product to entice people to get out of their 3% loans like they did in the 80's with ARM's when rates are going sky high and they were stuck with low double digit loans on their books while paying 18% on CD's.

However, there's no way the Fed will allow something that severe to happen for that long. Even in the 70's when we had stagflation, Volker came in and basically tanked the economy even more for 3 years which helped lead to a significant recovery. The Fed will always manipulate the market whether we agree or not to keep inflation low and employment relatively high. There's no way a market correction that severe would be allowed to occur. Remember, unlike stocks, people will always need some place to live. Unless there is a significant glut in houses then a long term widespread crash is highly unlikely. Especially in highly desirable places like New York, San Francisco, Miami, & Southern California.

When do you see things potentially hitting the fan? If ever.

Ever? Yes, things will hit the fan at some point. But when? that's the big question.

I think we might experience some deflation in prices soon. However, I'm on the fence about affordability since both rent and home prices have been going up. In addition to that, home ownership is at a 40 year low. Normally when rent prices go that high you see a transition to ownership since people don't want to "throw money away" on rent. The problem this time around though seems to lie in the debt burden among Millenials. With student loan debt topping $1.3 Trillion many people who would normally be in the market are waiting it out until they've paid down their debt. Unfortunately though, the trend of going more and more into debt over school is only escalating among those going into school so I think that will be a drag on the housing market for a while too.

 

[capital sb]

you're hilarious man

 

[frankmatthews]

you're hilarious man

The amount of emojis you've posted in response to complex financial issues pretty much says it all.

 

[capital sb]

No need to get logical, you obviously have all the answers. Any question that I have asked hasn't been answered, conclusions about me have been drawn from your imagination, and your making personal shots. Like I said argue with someone else. It's not that serious to me [emoji]128580[/emoji]

Edit: I just noticed your community college education shot. Like I said you got it, you posted a graph with no link, no explanation how are we supposed to know what went behind creating that poorly executed graph? What are the personal shots for ? Saying only a fool would believe that graph got you that mad man?

 

[pdino]

http://www.forbes.com/sites/trulia/2013/05/02/american-homes-by-decade/#46a7f6504295

Median price homes in 1920s were ~140,000$ (rounded up)

If SF homes go down to that price, I'm gonna make it in this world.

 

[capital sb]

Community College though that really has me weak. Where are these conclusions being drawn from ?

pdino housing hits that level we all eating bruh

 

[frankmatthews]

No need to get logical, you obviously have all the answers. Any question that I have asked hasn't been answered, conclusions about me have been drawn from your imagination, and your making personal shots. Like I said argue with someone else. It's not that serious to me [emoji]128580[/emoji]

Edit: I just noticed your community college education shot. Like I said you got it, you posted a graph with no link, no explanation how are we supposed to know what went behind creating that poorly executed graph? What are the personal shots for ? Saying only a fool would believe that graph got you that mad man?

Look I don't got nothing against you beezy, but don't come in here talking out of your *** calling people foolish when you haven't the slightest and think I won't call you on it. You don't know what you are talking about. You've shown that

It was that serious when you mindlessly replied to my post but now that your intelligence on the matter is on display it is not that serious.

From your responses I honestly doubt that you even comprehend the graphic itself let alone the math behind it. The link is in the graph. All these questions you are asking now should generally be asked BEFORE arriving at the conclusion you did in your first post. Convo could have went a lot different.

 

[capital sb]

You got it

 

[stork]

prices will come down next 1-2 years or less. tons of buyers are already pushed out due to very high prices for a starter home, along with wages stagnating.

 

[townbidness]

Hope so [emoji]128532[/emoji] Saving up for a home at the moment.

 

[lilchico4life]

Perfect, will be buying more rental properties.

 

[truth-serum]

Looking to buy a house in the immediate future and renting a portion of it out while I live there