ANSWER THIS DOOMERS

WHEN WILL BE A GOOD TIME TO BUY?

FOR MOST OF YOU EXPECTING THE END OF THE WORLD IT WILL NEVER BE THE RIGHT TIME ANYWAY! YOU"LL ALWAYS HAVE A NEGATIVE REASON
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March 20 2008 - US
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Profile picture for BuyEqualsRent

When inventories have dropped year-over-year for 3 straight months.

When you can buy for the cost of renting.

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March 20 2008
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Dido for BuyEqualsRent;

 

Also, another SIMPLE indicator; when foreclosures are less than 2% of what is on the market and no pending ARM resets are about to dump another load of foreclosures onto the market.

 

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March 21 2008
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Another indicator -

When loan officers and Realtors are so busy with clients that they have absolutely no time to post on Zillow.

 

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March 21 2008
Profile picture for BuyEqualsRent

Basically, right now all of the rates-of-change are signalling "DON'T BUY!!".  Until they reverse, it is suicide to try and guess where the bottom is.

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March 21 2008
Profile picture for ikwya

Economic times are changing quickly.  The dollar is worth less than ever before due to our country's $50 + trillion in debt which is mostly to foreign countries who have tried to keep the dollar propped up in order to fullfill thier desires of having their debts repaid.  However, foreign countries who are the primary purchasers of treasury bills have not been investing in long term T bills,  but mostly short term ones that they are not renewing.  Upon maturity, they are taking their marbles from the U.S. playground and going elsewhere to play--investing their funds in gold backed commodaties such as in the Euro.

 

The economic unraveling is not something new.  It is something that can no longer be hidden.  The dollar  is woth less and foreign countries and investors have finally woke up and said, "Hey, why are we investing in a currency and country that is levereged to a breaking point?"  Without their support, the walls of many markets are no longer propped up and are crumbling down.  It's an implosion that we've been warned about since the 70's.  And you ask, why we who have kept our heads out of the sand, are so negative?

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March 21 2008
Profile picture for BuyEqualsRent

I know you would love it if all the "doomers" were irrational, Amerisave, but we're just realistic people who understand math and have time on our side...

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March 21 2008
Profile picture for Randy_H

He justifies that by declaring rational people as "not doomers".

 

I'll buy when things approach equilibrium.  I'm ambivalent about where, when or how equilibrium occurs.  I have my guess about those things, but if it happens in a different way so be it.  I'll buy when it makes sense.  People buying $2.4mm homes that are over 10x their income is _not_ equilibrium.  When those people are thoroughly clensed from the market demand, then those prices will come down and I'll buy.

 

It's happening now.  It just ain' done happening yet.

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March 21 2008
Profile picture for randy321

It's kind of like the stock market - I look at underlying fundamentals and technicals to make a decision. Look at, let's say RMBS for example. When it was at $3 almost 3 years ago, I almost bought in, but I thought it was just a penny stock. I saw it go from $3 to almost $18, I thought it was overpriced, but I looked at it's fundamentals, and it said a much higher price was there. It went up to $40, and then I sold out, because I thought it was crazy high. Sure enough, I shorted it and it started plummeting. Now, it sits at it's $18 cost that is priced correctly. (For those that don't know how - yahoo.finance.com, put in the symbol RMBS, look at a 5-year chart).

 

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March 21 2008
Profile picture for randy321

So, I look at today's economy. Unemployment is increasing, we're at the top of a business cycle (Things don't grow forever), real estate prices are coming down which will lead to the irrational problem that people will stay away longer so that prices will become lower than intrisic values, I look at the past and why it went up so high - those fundamentals have changed. Banks have become stricter in their lending, not anyone with a pulse gets lending. There are so many factors that are making it obvious that prices will come down. How long will I wait? I will wait until I see some turnaround legislation, banks changing their ways, or I am able to afford the home of my dreams with traditional 30-year fixed rate financing that is 25-30% of my gross income and 20% down. Meaning my 50K in the bank is waiting until it's time to get that $250,000 home of my dreams. 3 years ago, homes were at the lowest 300K here in So. Cal. - and that's condo's in bad areas. Today, I have 10K more in the bank, and my dream home is about that price - if not maybe 50-100K more... But, that is proof that my waiting game is great.



And for those that say renting is throwing money away. If I bought 3 years ago - I would have lost all of my money that I have in the bank due to a declining home value. Now, my 50K goes that much further.

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March 21 2008
Profile picture for jal74

Economic times are changing quickly. The dollar is worth less than ever before due to our country's $50 + trillion in debt which is mostly to foreign countries who have tried to keep the dollar propped up in order to fullfill thier desires of having their debts repaid. However, foreign countries who are the primary purchasers of treasury bills have not been investing in long term T bills, but mostly short term ones that they are not renewing. Upon maturity, they are taking their marbles from the U.S. playground and going elsewhere to play--investing their funds in gold backed commodaties such as in the Euro.

 

Sorry Virginia - but the economic police need to issue you tickets.  Pretty much every fact in this paragraph is completely and utterly wrong.

 

Please go look at the following reports issued by the Fed Reserve

 

Total debt outstanding is actually less than half your 50 trillion.  Foreigners own less than 40% of that (although still a large amount).  Total debt of the US Govt actually outstanding (almost 45% of the actual federal debt issued is held by the US government - like loaning yourself money) can be found here

 

Oh yeah, the Euro is not backed by gold either.  No major currency is after bretton woods collapsed

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March 21 2008
Profile picture for jal74

To answer the OP

 

When the fundamentals support an increase in housing values.  Right now they support a continued decline in value.  The reasons have been given ad nausem (a) inventory declines to historical averages at around 4-6 months of sales (b) distressed sales decrease as a total percentage of the inventory available and (c) median incomes represent no more than 3x of median house price after a 20% downstroke

 

Regards

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March 21 2008
Profile picture for mjy138

Don't know about other areas but in my area you have not been able to buy for the cost of renting for the past 30 years - so that argument doesn't have a leg to stand on. 

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March 21 2008
Profile picture for Aldreth

"WHEN WILL BE A GOOD TIME TO BUY?"

 

---When you no longer post here.

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March 21 2008
Profile picture for randy321

I find homes in So. Cal that are offered for rent at the equivalant as it would be to buy - So, the question you need to ask yourself is are you willing to bare the market risk of a declining housing market or are you going to make the decision to purchase for, "an investment into the future". I personally believe the former, as if you look at the average home on Zillow's 30-day price change for So. Cal. it is in excess of rent. Namely, a $1500 condo is selling for $250K. At 6%, that's a payment of $1500. Granted, with that price, it's actually less than renting - but, still you bare market risk.

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March 21 2008

My mortgage payments are less than rent is charged. Hence the name "Income producing properties"

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March 21 2008
Profile picture for . . .

Jarrod -

The question is not about properties we already own; it was about potential new properties.

 

So, I'm assuming you are saying the same as others already posted, when buying is cheeper than renting -- thus it can be used as an income producing property, even if still declining in value.

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March 21 2008
Profile picture for Mark75NYC

When median home prices are back to historical levels compared to median income.

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March 21 2008
Profile picture for interested_observer

"WHEN WILL BE A GOOD TIME TO BUY?

FOR MOST OF YOU EXPECTING THE END OF THE WORLD IT WILL NEVER BE THE RIGHT TIME ANYWAY! YOU"LL ALWAYS HAVE A NEGATIVE REASON "

 

I had no problem buying a home a total of five times prior to the recent bubble so you are way off base if you think most of us will always have a reason not to buy.  I will buy again when the ratio between median income and median home price returns to historical norms for the area where I plan to purchases.  Right now in Southern California, prices need to decrease around another 25% to get back to where I would feel comfortable that any additional decreases would be relatively minor.

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March 21 2008
Profile picture for AliaG

Waiting to buy until mortgage + taxes is not more than 20-25% of our income. I'd be comfortable with a higher percentage, except I have a feeling property taxes are going to go up a lot. Homeowners are a bit of a captive audience, so I think they'll be relied on even more by local gov't freaking out over less tax revenue during the upcoming recession. (Also waiting to buy for a minimum of 12 months, due to family reasons. Not everything is economics. :)

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March 21 2008
Profile picture for randy321

negative? I am only realistic. Like, I think right now is a great time to buy for a short term flip. I think home prices will go up for the next year because the people on the sidelines are going to start entering the game. But, once that happens, all of the home sellers that are also sitting on the sideline will begin to enter the game too, in hopes of selling for a profit. What you'll see first is sales numbers go up, pending home sales go up, prices possibly rise... Then, number of homes on the market will slowly increase and then will soon be larger than the demand, which will lead to the next big down swing that will send the economy back into it's recession/depression fears. This will take place over the next year or so.

 

So, am I negative? No - Just realist.

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March 21 2008
Profile picture for jal74

See the chart below.  Its a classic bubble, the nasdaq, and what happends after.

 

chart

 

Right after Feb 2000, people kept asking the same question.  Cheerleaders kept giving them the same answers all the way down.  However, if you follow the same reasoning we have already given you - you would know that the all clear was signaled in 2003.  Buying anytime before that was trying to catch a falling knife.  Afterward you were ok.  Not stellar gains, but gains none-the-less

 

Hope this helps

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March 21 2008
Profile picture for space_acer

Any Question when to buy?

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March 21 2008
Profile picture for randy321

For those that don't know how to read graphs - when the pretty colored lines meet the green line - that means that prices have corrected to their average. However, because of emotions entering in the factor - it will always overshoot the pretty little green line and head a bit lower before going upwards.

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March 21 2008
Profile picture for Painless

I think the Y2K bug will cripple the economy and bring on a new dark age.... Oppsie got overcome by my doomer shoulder Devil there for a minute.

Poor Space Acer is the “Zillow Don Quixote” he keeps posting his graph and none of the cheerleaders listen.

In a serious answer to your question. I would say 6-12 months after banks stop ratcheting up lending standards. You can’t have any hopes of price recovery when every week you have a major bank announce that it’s asking for a larger down payment % or ypu have a MI provider lowering the LTV at which it will provide insurance. Every time you see a news story about that what you are actually seeing is a statement that says “This week Bank X announced that there are now XX,XXX more people that they won’t give a mortgage to”

Having an asset be generally considered overpriced is a large enough reason to cause prices to drop. Cutting millions of people out of the buying pool causes a catastrophe. That’s what most people don’t get, this isn’t a FEAR issue on the part of borrowers , there are now millions of people in this county that can’t qualify for mortgages that they could 2 years ago. Prices are adjusting accordingly.

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March 21 2008
Profile picture for Painless

Or if you don't want to figure all that out,   when SPace Acer's rainbow of lines hits the green line,

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March 21 2008
Profile picture for nstarr

Space Acer, please publish a larger graph.  Thanks.

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March 21 2008
Profile picture for space_acer

" Y2K bug "

 

The Y2K bug was planned for decade earlier. Much of the software that was reworked

happened in 1995-99.... by Indian firms and programmers.  Thats why after 2000

sw develpment took off overseas.    My company did the same as did many others near me...

 

Here is the link

 

http://www.housingbubblebust.com/OFHEO/Major/NorCal.htm

 

and more data to back up the claim....I suggest you read and

do the research from the wiki site....its invaluable

 

http://en.wikipedia.org/wiki/Us_housing_bubble

 

 

 

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March 21 2008
Profile picture for . . .

nsarr-

Space_acer already posted the larger graph, the link is:

graph

 

And if you click on it after it opens, it gets a bit larger still.

(every picture posted on Zillow can be viewed larger if the original was posted larger by using the right click; copying the photo location, and opening in a new window without the "size" command.)

 

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March 21 2008
Profile picture for caliguy

jal nailed it and said it better than I could...this is the key:

When the fundamentals support an increase in housing values.  Right now they support a continued decline in value. 

 

Second year in a row that local cheerleaders here have sworn that the market is suddenly fabulous again. And yet, through the first week of March, sales are still half off what they were at this time last year, and the overall median is down 16.7% from 2007 (20% from the peak). That's more than it dropped during the whole five or so years of the last RE bust here. And it's not slowing down yet.

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March 21 2008
Profile picture for Randy_H

Just FYI, re: the whole y2k fiasco (which I have a lot to say about, if ever anyone is interested)--

 

* The Y2K7 (DST07) problem turned out to be far far worse in total costs, and even that caused almost no problems despite lack of remediation.  It's what happened when the US changed the daylight savings time by 2 weeks.  For example, Oracle servers literally stopped working, in some cases, for almost a month.  The workaround was to change the clock on the servers, which screwed up all kinds of things.

 

* Y2K38 (when Unix dates roll) is a very serious problem which won't be fixable the same as Y2K was.  It's a basic binary compatability problem.  Our hope is that there won't be any 32-bit systems around by 2038, but those kinds of assumptions generally turn out badly.  I know one mega telecom that still runs some infrastructure billing systems on mid-1980s technology today.

 

* Y10K.  Yes, the year 10,000 could pose a problem because it has 5 digits, not 4.  Silly?  Maybe not given that we may have to yet resort to 10,000year mortgages in order to prop up housing prices.  One REA on here a couple months ago was positing something to me like a 50,000year 1% term loan.  Well, you can't actually punch such a calculation into most computer systems if you use real dates.

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March 21 2008
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