Media Doom & Gloom - Home Values

[jyl]

Corporate profits are doing quite well indeed, at record levels in some cases. While the SP500 remains below prior highs due to the financial sector, other indices such as NASDAQ, Russell, etc are nearly back to 2007 highs. Since the key to America's economic health is all about corporate profits - so I hear often, including here - I'm happy to conclude that the economy is doing very nicely indeed.

[techweenie]

Originally Posted by jyl

Corporate profits are doing quite well indeed, at record levels in some cases. While the SP500 remains below prior highs due to the financial sector, other indices such as NASDAQ, Russell, etc are nearly back to 2007 highs. Since the key to America's economic health is all about corporate profits - so I hear often, including here - I'm happy to conclude that the economy is doing very nicely indeed.

Yes, the Great Recession "officially" ran from 12/07 to 6/09. But the recovery has been described as an "L" rather than a "V." Jobs have not come back in significant numbers yet.

Not sure why the threat title mentions the "media" since all the numbers are coming from public records. I guess the media is always to blame if the news isn't good.

[Noah930]

Well, as also has been said, what's good for American business isn't necessarily good for the American people.

[techweenie]

Commie.

[Noah930]

Hey, I'm not putting any emotion to that statement. It's just a fact that we frequently forget.

[techweenie]

Ditto.

[techweenie]

What I'm alluding to (obscurely) is that in the 30s, a couple of European countries adopted a sort of 'corporatocracy' that defended its existence as a bulwark against Communism. We are the closest we've ever been as a nation to a corporatocracy, with corporations enjoying a sort of "super citizen" status.

[McLovin]

Originally Posted by onewhippedpuppy

Part of the motivation for my rant - I wish our media could show some DATA like this chart. Prices went too high, they're largely adjusting back to this inflation adjusted normal, we've still got a ways to go.

Wouldn't have mattered if the media showed the chart.

Looking in the More Bad RE News thread, you can see that chart was posted many, many times in 2006 and 2007. Just as the "straight up" appreciation line was peaking and beginning to fall.

Even with that, at the time, 90% of posters here in this very illustrious group did not believe that it would fall.

Because:

"They're not making land anymore."

"This time is different."

"So Cal is different."

"RE never goes down."

"Dumb asians will keep coming to So. Cal and pay anything,"

Etc.

Go read through the More Bad RE News thread through 2005, 06, 07 and see for yourself.

If even most here would not heed the chart, the general public didn't stand a chance.

[RANDY P]

Originally Posted by McLovin

Go read through the More Bad RE News thread through 2005, 06, 07 and see for yourself.

If even most here would not heed the chart, the general public didn't stand a chance.

I wasn't one of them


I identified one of the key reasons speculators were enabled right on the 1st page of that thread back in 2005. I was freaked back then, and honestly it came out worse than I anticipated. I didn't expect the lending environment to totally disintegrate like it has. All the checks and balances were eliminated because the banks misjudged two facts:

1)- RE goes up and it comes down

2)- the willingness of the American consumer to protect their credit.

Using borrowed money from the bank to pay off debts incurred to other banks. Brilliant.

rjp

[Porsche-O-Phile]

Actually I don't see that the lending environment really has "disintegrated". It simply has returned to something resembling normal where it takes more than the ability to fog a mirror to get a half-million dollar loan. You actually have to prove the ability to repay it. Oh the horror! It still astonishes me that people grew to believe that this was normal. I could tell you personal stories of getting pre-approvals shoved in our hands for $500k+ (that I didn't want) simply on the basis of a credit report - no other documentation - a few years ago. No joke. If people think this is normal and how it should work, I'd say they're smoking the dipso weed.

My take is that there are still a lot of people (and companies) out there with a lot of money, looking for safe investments to put it in. If you're a person with good credit, a reasonably stable income and don't have a history of taking speculative risks, you can get backing without too much difficulty. I'm sitting on two pre-approval letters right now (one local direct lender and one huge national bank) and it wasn't really all that hard to get them even now. Yes, it took submitting some documentation and so-on in addition to getting credit reports run, etc. but it wasn't that bad. I also recently (within the last 12 months) opened a new line of credit and took out a personal loan with my credit union. Again, no problems. Two co-workers of mine just closed on houses of their own, another guy bought a vacation home (second home) this past summer and another just bought a new car (a BMW X5) and qualified for the top-tier, low-interest rate financing. Again, no horror stories. These are just the ones I know about. I'm sure there are more.

People are lending. Don't believe everything you read in the press. I'd suggest if someone isn't getting money lent to them, there's probably a reason (i.e. they're a bad risk).

[RANDY P]

Compared to what was available in 2005 it has disintegrated. Investing into mortgage lending as a private investor is about as popular as wanting to catch AIDS at the moment..... the only people left doing it are really little itty bitty credit unions (who usually sell to Fannie anyhow) and Fannie and Freddie- which are amongst the living dead.

The whole industry is technically kaput- it's the Govt keeping it running we should already be back to the barter system by now...

Even FHA is under attack because of rising defaults and we still haven't hit the big adjustments yet in option arms (hello CA!!) simply because rates have been so low (less added to principal) - once rates climb upwards, watch what makes the news next.

It's just a matter of time. They will have to give up the sinking ship when it comes to supporting banks and to some extent Fannie and Freddie.

rjp

[RANDY P]

Fannie and Freddie goes down the toilet for whatever reason there isn't going to be a bank that is going to want to lend out of their own funs only because they will have NO IDEA if the collateral is going to go down in value, and if that happens it will.

Look at what happened to the non-warrantable condo market to see what I mean. Notice how no one is chortling the benefits of owing a Condo anymore? Funding for those dried up when private investors took off and then pricing took a nosedive.

Now you can buy a non-warrantable condo in a lot of nice areas for nothing only because there are only cash buyers.

rjp

[jyl]

A good piece in Calculated Risk on the resets. Most of the resets are done. Of the remaining, many of those mortgages are already in default. The rest won't adjust higher until rates go up quite a lot. There are resets from mortgages with low initial rates but many have reset or defaulted by now. It's been years since the bulk of those were written. I think the mortgage reset problem is in the last innings. The housing market's problems are now more the fundamental ones of oversupply, underwater mortgages, and deflation.

[Britwrench]

Originally Posted by Porsche-O-Phile

Actually I don't see that the lending environment really has "disintegrated". It simply has returned to something resembling normal where it takes more than the ability to fog a mirror to get a half-million dollar loan. You actually have to prove the ability to repay it. Oh the horror! It still astonishes me that people grew to believe that this was normal. I could tell you personal stories of getting pre-approvals shoved in our hands for $500k+ (that I didn't want) simply on the basis of a credit report - no other documentation - a few years ago. No joke. If people think this is normal and how it should work, I'd say they're smoking the dipso weed.

My take is that there are still a lot of people (and companies) out there with a lot of money, looking for safe investments to put it in. If you're a person with good credit, a reasonably stable income and don't have a history of taking speculative risks, you can get backing without too much difficulty. I'm sitting on two pre-approval letters right now (one local direct lender and one huge national bank) and it wasn't really all that hard to get them even now. Yes, it took submitting some documentation and so-on in addition to getting credit reports run, etc. but it wasn't that bad. I also recently (within the last 12 months) opened a new line of credit and took out a personal loan with my credit union. Again, no problems. Two co-workers of mine just closed on houses of their own, another guy bought a vacation home (second home) this past summer and another just bought a new car (a BMW X5) and qualified for the top-tier, low-interest rate financing. Again, no horror stories. These are just the ones I know about. I'm sure there are more.

People are lending. Don't believe everything you read in the press. I'd suggest if someone isn't getting money lent to them, there's probably a reason (i.e. they're a bad risk).

That is the reality of today.

Also businesses are realizing they can operate and make profit will less people, retail shops are working on one-stop shopping (hopefully at their store) and banks will lend IF a proper business plan is presented and for normal people, proof of repayment commitment through previous finanacial history is available.

I believe this happened before (in the 80s?) when banks (and investors) had the money but no real business plans were being put forward that didn't have major risks.
And recently we had the dotcom debacle where no-one learned from the past...

[look 171]

Originally Posted by patssle

I took a quick look at Chino real estate. Almost everything under 220k is condo/complex, no individual homes.

There are not too many homes under 200k west ward of the 57 fwy. Well, you will have to go to So. Central or other war zone pockets. At 200k, they are snapped up in a heartbeat. Silverlake, Hollywood, Eagle Rock, Pasadena, and etc are gone within a few day it comes on the market at 250-300k. I hope it keeps up. At those price range, investors and home owners are fighting for them. I think people no longer want to drive from Fontucky, or Redlands.