Are we at the bottom yet?

[the]

Of course. Anyone who thinks that this bubble has even come close to deflating, in only 2 years, is completely delusional.

Just as delusional as those in the bubble areas who said 2 years ago that prices could not/would not go down.

[jyl]

Another reason why my kids are learning Chinese . . .

Though I'm not quite as dour as you. I think if one's kids are in the top 20%, life in the US will continue to be good. Of course that depends on being there . . .

Originally Posted by Porsche-O-Phile

I'm trying to be somewhat optimistic about this and see a silver lining (I've been pretty harsh on housing for a while), but I think you're 100% correct on this tabs.

The housing crash (and it will be a crash, not a "correction" before this is over) is just indicative of the changes coming. The American way of life is changing permanently before our eyes and without sounding to terribly dour on the subject, I'll just say that the prediction that I always heard as a kid, "your generation will be the first in history to live less well than its parents" is absolutely coming true.

The coming generations will work harder, longer and earn less. They will not travel as much, see as much or experience as much as we all have. They will not be able to afford the types of housing our parents/grandparents took for granted. They will watch as the ROW (China and India, mostly) catch up to and then pass us, while our currency continues to erode.

I don't see much to be optimistic about looking forward, unfortunately. We've borrowed & spent ourselves into an irreversible problem.

[onewhippedpuppy]

My opinion, the market has corrected when a middle class family can afford a middle class home. My Wichita home would probably cost over $1M in SoCal, pretty easily 6x what it's worth in Wichita. But from what I've seen, pay in the area is about 10% better. Does that sound sustainable?

Obviously there will always be a premium for desirable areas like SoCal, but the bottom line is simple. People have to be able to afford living there. $500k for a 1200 sq ft townhome is not sustainable. 25% yearly appreciation is not sustainable.

[onewhippedpuppy]

Apparently I'm developing an e-stutter.

[jyl]

Middle class in Wichita is not middle class in the coastal CA cities.

In the central part of the SF Bay Area, a family of four w/ $100K/yr income is pinching pennies hard to manage a "middle class" lifestyle - meaning live in a decently nice neighborhood, send kids to a good and safe school, etc.

I know it is kind of chicken vs egg, since one reason they are pinching is the cost of housing. But the cost of living generally is pretty high there.

Originally Posted by onewhippedpuppy

My opinion, the market has corrected when a middle class family can afford a middle class home. My Wichita home would probably cost over $1M in SoCal, pretty easily 6x what it's worth in Wichita. But from what I've seen, pay in the area is about 10% better. Does that sound sustainable?

Obviously there will always be a premium for desirable areas like SoCal, but the bottom line is simple. People have to be able to afford living there. $500k for a 1200 sq ft townhome is not sustainable. 25% yearly appreciation is not sustainable.

[onewhippedpuppy]

True, but when the wages aren't higher to compensate, is that a sustainable condition? While I'm sure it's not cheap overall, it seems that housing costs are the biggest difference between CA and much of America. This has been the opinion of friends who live in Orange Co and San Diego. It seems that this cycle is doomed to repeat itself until wages adjust upwards (doubtful), or cost of living adjusts downwards, especially housing. Really, lets face facts, it doesn't cost 6x as much to build a house in CA. This is an artificial condition, driven by demand and greed.

[Porsche-O-Phile]

When did sustainability ever have anything to do with real estate markets?

There you go thinking long-term again. . .

[onewhippedpuppy]

Originally Posted by Porsche-O-Phile

When did sustainability ever have anything to do with real estate markets?

There you go thinking long-term again. . .

Yeah yeah, simpleton midwestern folk, I know.........

[jyl]

Its been this way for decades. Probably got to an extreme recently, but I'm not hopeful for living costs in coastal CA to go anywhere close to middle America levels. Look at Manhattan, same thing - a very expensive place to live, and is always so. The condition does appear to be sustainable.

Housing decline will help, but I'm not sure price decline will translate fully to lower cost of living. Suppose a $800K house drops to $480K (-40% drop). But cost of borrowing goes up, as lenders require down payments, eliminate teaser adjustables, push borrowers to higher rate based on underwriting, higher rates on jumbo loans, etc. Suppose interest rate rises from 4% to 6%. Monthly payment then decreases only -25%.

I think its basically because a lot more people want to live in SF, LA, San Diego than want to live in Wichita. For job, lifestyle, weather, etc reasons.

Originally Posted by onewhippedpuppy

True, but when the wages aren't higher to compensate, is that a sustainable condition? While I'm sure it's not cheap overall, it seems that housing costs are the biggest difference between CA and much of America. This has been the opinion of friends who live in Orange Co and San Diego. It seems that this cycle is doomed to repeat itself until wages adjust upwards (doubtful), or cost of living adjusts downwards, especially housing. Really, lets face facts, it doesn't cost 6x as much to build a house in CA. This is an artificial condition, driven by demand and greed.

[onewhippedpuppy]

Obviously to some, it's worth the price (I think you're insane). An adjustment in housing costs to more realistic levels would certainly help. While there may not be as much creative financing available, those loans were only cheap for the short term. As we're all seeing today, long term they are far more painful. A 40% drop in home values would be a huge benefit to the smart borrower that only uses conventional financing.

[pwd72s]

PDX prices fall again; still No. 3
Posted by Ryan Frank, The Oregonian May 27, 2008 07:37AM
Categories: Housing economy
Portland-area home prices dipped further in March, registering a 4 percent year-over-year decline, according in to the Case-Shiller index.

That said, the Portland region continues to outperform the rest of the country. Of the 20 biggest metro markets, Portland had the third-best performance. Somehow, Charlotte remained in the black with a .8 percent increase. Dallas saw a bit of price growth from February to March and surpassed Portland for the No. 2 position. Seattle trails Portland at 4.4 percent.

For Portland, the index brings more of the same. Both the local RMLS stats and the Case-Shiller index have been showing the same trends since late last summer. Prices have been consistently edging down since about August. In April, the RMLS report for new and existing homes showed a 3.5 percent year-over-year decline. Who knows where it will end up but my guess based on talking to people in the industry would be between 7 and 10 percent sometime this summer.

Nationally, the market still stinks. The national index for the first quarter and the 10-city and 20-city composites all set new records for 20-year-old index. The national index is off 14 percent in the first quarter of 2008 compared to the same period in 2007. During the 1990-91 housing recession, the national index bottomed out with a 2.8 percent annual decline.

Six of the 20 biggest markets are reporting at least a 20 percent year-over-year decline. The worst markets: Las Vegas (25.9 percent), Miami (24.6) and Phoenix (23). You'll notice that all three of those markets were speculators markets during the boom. The Rust Belt cities with the deep economic problems aren't as bad off. Detroit is down a lot but still just 18 percent.

UPDATE: I didn't have access to the historical figures from home when I wrote this morning. So here's another number to chew on: The Portland region is already 6.5 percent off its peak. The Case-Shiller index for Portland peaked in July 2007 and home prices are already down 6.5 percent from that level. (The Case-Shiller figures are an index based on 2000 prices. So the index doesn't really compare to actual prices. In March, the index was at 174.39. That's 74 percent above the 2000 baseline of 100 but 6.5 percent below the peak of 186.51)

The RMLS figures show the region is down 9 percent to $275,000 from the August 2007 peak of $302,000.

[Porsche-O-Phile]

If you're very judicious and careful, there are plays to be made in the coming months/years - even in Southern CA. I've been positioning myself for this for months and will continue to do so.

I see opportunities for "Average Joes" like myself to actually buy here as once-in-a-lifetime opportunities. I certainly don't plan on missing mine, nor will I "fake" myself into loanownership instead of homeownership just to get in sooner.

When the time comes, I will buy with conventional financing, terms, rates and down payments. I think it's been proven ad nauseum that creative financing is just a veneer which doesn't ultimately do anything useful for the borrower, is unsustainable, unethical 99% of the time, and really shouldn't even be on the table for anyone with a shred of common sense.

As impatient of a person as I can be at times, I will be very, very patient on this one. Like I said - you only get the opportunity to buy here once in a lifetime. I don't plan on blowing it.

[m21sniper]

I don't understand why if you call it commie-fornia in your location, you would still want to stay there for life (or the majority of it.)

Please explain.

[126coupe]

Originally Posted by m21sniper

I don't understand why if you call it commie-fornia in your location, you would still want to stay there for life (or the majority of it.)

Please explain.

The weather, proximity to beaches, mountains, deserts, race tracks.

[Porsche-O-Phile]

My wife likes her job, I like mine, we're reasonably happy here overall and see better opportunities for us staying than going. And frankly I don't see an overall better viable alternative.

When one comes along, I'll be waiting in the alley with the car packed and the engine running though.

Sometimes you gotta' take the bad with the good. There's plenty to complain about here, but virtually everywhere else I can think of is worse. I'll take the nice days and sunshine over snow, rain, lousy weather, short days (that whole "winter" thing that I've repressed from my childhood in New England) that pretty much everywhere else has. Virtually everywhere has the same problems with being overcrowded & expensive. EVERYWHERE is overcrowded and expensive now. Show me someplace that isn't where I'd actually want to live. . .

My wife works for Disney (which she loves and has a decent future ahead of her at). Can't really do that career "just anywhere". If she's happy, I'm happy. I ain't about to just uproot that willy-nilly and have her gripe at me for the rest of my life about how I cost her "what she really wanted to do". I know what that's like (I walked away from a flying job that I loved a while back because it didn't pay the bills). I see good stable work opportunities here (in a recession, there's nowhere better to be than Southern CA - I know this from first-hand experience).

I've lived in enough places to know that everywhere has its good and bad. But overall, CA still has more net "goods" than "bads" far as I'm concerned and frankly, I don't see a better viable alternative right now. . .

But yea I agree with you - the pseudo-communist government of this state, the endless conversion of the region into a third-world extension of Mexico, the idiotic cost of housing, the overcrowding and traffic, etc. do all get a person down after a while. . . All I can do is find ways to accentuate the good points and mitigate the bad ones within the constraints of reasonable commute and my meager salary. . . It's the best one can do.

[The Gaijin]

Well, there you go. Supply and Demand. Only one sunny SoCal and too many people want to be there.

I am optomistic about the future. If only we can keep income transfers to the baby boomers ( I mean social security) and welfare, medicade and section 8 for illegals in check - we just might have a future.

By SoCal might be lost. At least it will be an object lesson for the rest of the country.

[widebody911]

Originally Posted by m21sniper

I don't understand why if you call it commie-fornia in your location, you would still want to stay there for life (or the majority of it.)

Emigration is the most sincere form of flattery...

[tabs]

So long as the people (Middle Class) have money in their pockets the socialst government of Ca will keep putting their hand in their pockets. But as soon as the money and or borrowing power runs out, watch out. The CA legislature thinks the well is bottomless.

[onewhippedpuppy]

Originally Posted by Porsche-O-Phile

Virtually everywhere has the same problems with being overcrowded & expensive. EVERYWHERE is overcrowded and expensive now.
Not Wichita!

Show me someplace that isn't where I'd actually want to live. . .
Yeah, about that........

Hey, I tried. We only had something like 150 tornados in the last 4 days, along with record rainfall, microbursts, high straight-line winds, and up to softball sized hail. That's May for you!

[jyl]

After living in West LA and West Hollywood in years, I moved to Glendale, CA, which is part of greater LA. In 45 minutes I could be in a stream casting to wild trout, or hiking in some of the most rugged mountains around. 1.5 hours to skiing and more trout. 2 hours to fantastic high desert peaks. 1 hour to any number of beaches. 3 hours to Baja for ocean kayaking, fishing, drinking. 1.5 hours to backcountry remote enough that they released wild condors there, and more wild trout. 4 hours (paddling) to beautiful coastal islands. For more urban activities, almost any kind of music, shopping, nightlife, can be found in LA. If you have the energy, it is a good place to live. Not my favorite now that I am older and more sluggish, but great for a certain time in life.