Thoughts Opinions Ideas???

[WetWillie]

I know were all speculating. I think there is some pretty smart people in here and I would like to just hear diffrent oppinions and thoughts. They have been talking about a correction for some time havaent they... In 1999 they said how high can it go???
Why do they always post this stuff when I am making a move???
What do you guys think is something going to happen??
Economists warn of slowdown in the economy by year's end
By Dean Calbreath
UNION-TRIBUNE STAFF WRITER
June 21, 2005
K.C. ALFRED / Union-Tribune
Rising housing prices, as witnessed in Chula Vista and throughout the county, have been a key engine of the economy, with refinancings and home equity loans fueling retail sales and construction activity.
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Report: Housing market at risk
By the end of the year, America's bubbling housing prices will likely flatten or pop, causing an economic slowdown, economists warned in a flurry of reports yesterday and today.
Red flags issued by such diverse sources as the Merrill Lynch investment firm, the University of Maryland and the UCLA Anderson Forecast warn that a stumble in housing prices could take a major bite out of economic growth, damaging the already weak job market.
Other signs of economic trouble also loomed yesterday. The price of oil surged to a 20-year high of almost $60 a barrel and the nation's leading economic indicators fell twice as much as had been projected.
But the economists warned that the most serious problem is in the overpriced housing market.
"Policy-makers need to reckon with the end of the housing boom, which has been holding up consumer spending and the economy," said Peter Morici, economist at the University of Maryland. "With so many buyers benefiting from creative and highly questionable mortgage schemes, and regulators expressing concern about those practices, a pullback in the housing sector seems inevitable. When that happens, growth will skid."
In the past several years, housing has been a key engine of the economy, with home equity loans, refinancings and other forms of creative borrowing helping to fuel retail sales as well as construction activity.
But in a report to be issued today, the Anderson Forecast warns that the construction of new homes is outstripping the natural growth of the population.
The report notes that current population growth supports about 1.5 million to 1.6 million new houses being built throughout the nation. But 1.9 million units were built last year and 2 million are slated for construction this year, indicating that a slowdown is in order.
The report predicts a slow but steady decline in home sales throughout the second half of the year. Because so much economic activity is tied to housing, said Michael Bazdarich, senior economist at the Anderson Forecast, economic growth will decline from its current pace of 3.2 percent to about 1.5 percent by the middle of next year – assuming that the decline is orderly.
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"Beyond the housing market, there's really not much going on in the economy," he said. "The rise in housing prices has represented an inordinate part of our economic recovery. If the housing market slows too sharply, there would be nothing to sustain economic growth."
But it may not take an actual decline in housing to put the economy on the skids.
According to a report issued by Merrill Lynch yesterday, if the housing market merely stays flat, rather than declining, it could shave half a percentage point off economic growth this year and a full percentage point in 2006.
Overheated housing markets in cities from Los Angeles to Miami to New York "represent a big enough slice of economic activity that should they falter, we could see a fairly hefty impact on aggregate U.S. economic growth," warned Merrill Lynch economists Sheryl King and Claudia Lokody.
King and Lokody said that home prices have risen far above incomes in 30 of the nation's top 52 metropolitan areas.
"Six cities in the Golden State – San Diego, Riverside/San Bernardino, Los Angeles, San Francisco, San Jose and Sacramento – are well in bubble territory," they wrote.
"On average, home prices for these six cities, which represent about 70 percent of the state's population, have risen about 75 percent since the start of 2001. Per capita income growth has averaged around 3 percent since this time."
Other economists say that the predictions of economic decline are overly dire. But they add that if a decline in the housing market is combined with another economic hurdle, such as a spike in the price of oil, the effect could be serious.
Yesterday, the price of oil surged to $59.37 per barrel, up 90 cents on the day. It was the highest closing price for oil since the energy crisis of the early 1980s, when prices spiked above $80 per barrel, after adjusting for inflation.
In the past month, oil prices have risen almost $12 a barrel because of rising demand. And economists do not see the price slipping any time soon.
So far, consumers have adapted to the rising prices. In fact, gasoline usage has risen in the past several weeks despite the rise in prices.
The past two years, the rising price of oil has contributed to a slowing of the U.S. economy, which grew 3.5 percent during the first quarter compared with 4.5 percent during the same time last year.
Economists say that a price rise above $60 would not be enough to derail the economy. But if oil prices rise to $65 or $70 at the same time the housing market stalls, it could inflict serious damage.
"I don't think a price rise of an additional $5 a barrel will be all that life-threatening to the economy," said economist Morici. "But if housing prices decline at the same time that oil prices rise, then the whole economy's in the soup."
In the meantime, the nation's leading economic indicators, as tallied by the Conference Board in New York, fell by 0.5 percent, more than double the 0.2 percent that economists had been forecasting.
Only one of the indicators rose in May: stock prices. Building permits, vendor performances, consumer expectations, manufacturing orders, consumer goods and unemployment claims were all negative indicators.
The indicators suggest that growth will slow over the next three months worldwide, said Ken Goldstein, labor economist for the board, which is a corporate-funded research agency.

[shadow]

[QUOTE=WetWillie]I know were all speculating. I think there is some pretty smart people in here and I would like to just hear diffrent oppinions and thoughts. They have been talking about a correction for some time havaent they... In 1999 they said how high can it go???
Why do they always post this stuff when I am making a move???
What do you guys think is something going to happen??
Economists warn of slowdown in the economy by year's end
I'm by far not the smartest one around here so can i give you my opinion by years end? :rollside: I'll have alittle better insight by then. :)

[ZZ-Man]

I heard there would be a fizzle or sizzle but not a bubble burst. I personally would like to see the economy slow down just a hair. I've been through these economical changes in the last 25 years and the media seems to control the economy then the people. They are the ones anouncing it, if they said the economy was on a rise like they always do everyone spends like crazy and vise versa. Its a technique the government has been using for a long time, I guess it works. Also if anyone is going to buy a toy, home etc.. you have to live within your means any way. So good luck on your decisions.. just my .02

[WetWillie]

:supp: [QUOTE=WetWillie]I know were all speculating. I think there is some pretty smart people in here and I would like to just hear diffrent oppinions and thoughts. They have been talking about a correction for some time havaent they... In 1999 they said how high can it go???
Why do they always post this stuff when I am making a move???
What do you guys think is something going to happen??
Economists warn of slowdown in the economy by year's end
I'm by far not the smartest one around here so can i give you my opinion by years end? :rollside: I'll have alittle better insight by then. :)

[WetWillie]

1. Experts: Housing Prices False, Recession on the Way
For a few years now, UCLA economic researchers have been warning that a bubble has formed around California's bustling housing market.
And in their latest quarterly forecast, they predict that a housing decline could drop California into a recession and simultaneously arrest economic growth in the rest of the country.
According to an article in the Los Angeles Times, these economists assert that Californians have assumed a sense of false wealth as a result of a 40% spike in home values over the past two years.
As a result, increased spending has artificially boosted the state's economy.
But if the experts are correct and the housing boom suddenly slows, consumers will abruptly stop spending - and that could trigger a recession. And this scenario simply requires a leveling off of home prices.
"This process will have a detrimental impact on the economy even if prices don't fall," said UCLA senior economist Christopher Thornberg.
Bolstering this view, the Fed has recently noticed indicators of "froth in some local housing markets."
And a recent report from Merrill Lynch claimed that home price stagnation in some major cities could slow economic growth by a whopping 1% next year, while the company determined that a number of large California cities maintained exceptionally high ratios of home prices to actual household incomes.
According some frightening data from the FDIC, the top 55 housing markets in the United States - which have appreciated some 30% or more since 2002 - made up some 40% of the U.S. housing market's total value in 2004. So obviously, a housing slowdown would be a disaster of epic proportion.
Of course, naysayers believe current housing prices are valid and due to both inadequate supply and the rapidly rising requirements of immigrants. And they don't see a potential slowing in housing prices as a any reason for concern.
But bubble theorists insist the hot housing market has disguised some serious deficiencies in California's economy - they say that solid job growth is deceptive and incomes have made only insignificant gains. And all the while, people have been spending more based on an unfounded sense of wealth.
"Your average Californian adult found him or herself richer to the tune of $40,000 on the basis of housing appreciation over the past two years," Thornberg said.
But that amount was only about half what that same person took home in income for the same period of time.
If the market comes to a halt, that statistic will surely come back to haunt a great many Americans.
The U.S. Government is Perpetuating an "Inflation Lie" - Learn More
2. Could Overbuilding and Speculation Mean a Housing Bust?
More evidence of a bubble. Over the past year, there has been a 47% rise in the number of U.S. homes that were sold before they were ever even built, USA Today reports in a page one story Tuesday.
And that has created worries that too much speculation (or "flipping"), coupled with a housing saturation, could lead to a housing bust.
As of April, the Census Bureau reported that 88,000 homes were for sale - but they hadn't yet been constructed. That number was almost double the 2000 figure, and it represented the highest total since such information was first tabulated in 1973.
While demand for homes is strong, a housing overstock could easily lead to a bust, according to experts.
"Builders have a long pipeline for development that will be difficult for them to shut down, even when demand begins to weaken," says one economist. "They are geared for growth, and it will be hard for them to pull back."

[mexrunner]

i can only hope being single and looking for a house has been sucking lately got pre approved for 350 but that dont buy nothin nowadays so maybe i'll hold on for awhile

[XtrmWakeborder]

I heard there would be a fizzle or sizzle but not a bubble burst. I personally would like to see the economy slow down just a hair. I've been through these economical changes in the last 25 years and the media seems to control the economy then the people. They are the ones anouncing it, if they said the economy was on a rise like they always do everyone spends like crazy and vise versa. Its a technique the government has been using for a long time, I guess it works. Also if anyone is going to buy a toy, home etc.. you have to live within your means any way. So good luck on your decisions.. just my .02
speculative economics i think its called, and i think thats the main factor in the economy and how it moves.

[riverroyal]

as long as you dont have a 500k house that you owe 500k on its not a big deal,if it drops 10% and you owe 300 on it then you are still ok,10% is only 50k,everyone in socal has made more than that in the last year.If your not owning a home in socal yet,well then you screwed unless you can afford a 3000 a month payment

[Nord]

I'm single (never married no kids) and I own a house and I get screwed on taxes because of it! However, I am looking to buy a second home right now and the prices aint getting any lower!!!

[piper]

I'm single (never married no kids) and I own a house and I get screwed on taxes because of it! However, I am looking to buy a second home right now and the prices aint getting any lower!!!
I got the same deal. Got screwed on Taxes.

[Sleek-Jet]

I know alot of houses around here (Tucson AZ) are being bought up as speculation... usually people are cashing out their equity in Cali, moving here and buying two or three houses, cashing out the 401K to buy another, maybe even financing one more(interest only???) One to live in, the others for rental income. I personally know of a guy that has done this.
Anyway, in the last month there have been an inordinate amount of "For Rent" signs poping up... i.e. there are a bunch of vacant rentals sitting around. I don't know if I would want to be sitting on two or three vacant rentals, even if I didn't owe any money on them.
It occurs to me that some people (more than we probably would like to know) are playing the margins in real estate. It could get ugly real quick if values stagnate.
I guess we'll wait and see...

[locogringo]

People that I am in the mix with who have been investing for 20 plus years and track the market have several tattle-tale signs which point to an inevitable correction.
States that in 2006-09, foreclosures will increase 1500%. This guy was right twice before in the 80's then the mid 90's.
One way he tracks trends is by U-Haul costs and the pattern of migration.
Riverside California to Phoenix, AZ for the 24' truck costs $1311. From Phoenix to Riverside it cost $155
Riverside to Dallas costs $2,641. Dallas to here is $917
Riverside to Vegas is $873. Vegas to here is$265.
This is showing the beginning of a migration pattern. When houses costs more than what most can afford this is what starts the swing in the market.
Another example is total trustee deeds recorded. From 1979 to 1983 it went from 2,905 in '79 to 28,500 in 83. In 1990 there were 7,182 deeds recorded, in 1997, 70,513. Both instances are an exact 981% difference.
04 was at 5,500 total trustee deeds recorded.This is the beginning of the trend also.
One last point so I don;t bore everyone, the unsold inventory and median days a house is on the mnarket is indicative of previous trends in a change of the marketplace also.
Time will tell but it is going to happen.

[INSman]

No expert here, but I am building a Havasu house for investment and to stay in and another to build/flip.
Many places have and are still going crazy, FL, AZ, NV and of course CA. I would bet on a small correction but no BIG burst. A 10-15% drop would not kill most people, unless they were looking to cash out and move from CA right after said possible correction. Houses have appreciated in most parts over 15% this past year alone. Unless you just recently bought or are leveraged to the hilt, I think you should be fine.
I have a buddy building some spec houses around the Tahoe area and he turnd 1 already for a $180k profit. Who knows, if we all had crystal balls on our desk, we would all be Gazillionaires !!!!!!!! ;)

[phebus]

I had to sell my home in Havasu, so you can expect record appreciation in the future. They don't call me Rick Vegas for nothing. The old saying: If it wasn't for bad luck, I'd have no luck at all.

[Domn8er]

In my opinion, I think the people who have the interest only loans are banking on the market to keep going up but it will eventually decline and these people are going to be the ones in trouble. Usually when rates are low prices jump up and vice versa. Anyway, as long as you put money down you will be ok. Especially with rates as low as they are today on 30yr fixed. The margin between an adjustable and 30 yr fixed loan has been very small lately. :D :D

[WetWillie]

layman terms please. You usually have some good thoughts so I am interested!
People that I am in the mix with who have been investing for 20 plus years and track the market have several tattle-tale signs which point to an inevitable correction.
States that in 2006-09, foreclosures will increase 1500%. This guy was right twice before in the 80's then the mid 90's.
One way he tracks trends is by U-Haul costs and the pattern of migration.
Riverside California to Phoenix, AZ for the 24' truck costs $1311. From Phoenix to Riverside it cost $155
Riverside to Dallas costs $2,641. Dallas to here is $917
Riverside to Vegas is $873. Vegas to here is$265.
This is showing the beginning of a migration pattern. When houses costs more than what most can afford this is what starts the swing in the market.
Another example is total trustee deeds recorded. From 1979 to 1983 it went from 2,905 in '79 to 28,500 in 83. In 1990 there were 7,182 deeds recorded, in 1997, 70,513. Both instances are an exact 981% difference.
04 was at 5,500 total trustee deeds recorded.This is the beginning of the trend also.
One last point so I don;t bore everyone, the unsold inventory and median days a house is on the mnarket is indicative of previous trends in a change of the marketplace also.
Time will tell but it is going to happen.

[HighRoller]

When you figure the housing market in good areas appreciates an average of 1-3% over inflation, 85-90% of the appreciation in "bubble" markets has occurred in the last 10 years. Cali is at 25% or more a year. The housing market right now is mirroring the stock market of the late 90's, and we all know what happened when it corrected itself.
That being said, even a minor correction right now would devastate many in the bubble markets. Why? Because they've had to leverage themselves way beyond normal with interest only or adjustable rate loans so that they can afford the payment. In short, they don't own the house; the house owns them. I predict the air coming out of the bubble sooner rather than later. That's when I'll buy.

[SB]

1. Oil is high. (While I personally think $2 gas is not a crisis) When oil is low, our economy does great. When it is high our economy sucks.
2. I would not buy a house right now in a froth area. Demand is being driven by low rates, speculators, and interest only loans. When there is a tiny drop in housing, speculators will start to get out, that will cause a bigger drop, and so on.
3. Buying a house you need to live in is ok. Don't buy as an investment at this time in a froth area.
4. Find the next real estate area that is going to take off, buy there. Or figure out where the investment money is going to go when it leaves real estate, like stocks.
5. Our economy has some weaknesses, namely that margins are very thin. When there is a tiny slowdown, a lot of businesses are going to tank.

[Havasu_Dreamin]

your not owning a home in socal yet,well then you screwed unless you can afford a 3000 a month payment
That would be me.

[jas0502]

SB- please expalin what a froth area is?
We were acctually looking at buying some investment property, but I also think we should wait.

[Goodtime$]

Our family has been in developments/grading for generations. If i had to put a nail on the coffin, people re-fing is what is driving the consumer economy in buying depreciable items... when houses out weigh demand than a slow down will occur, its common economics...all business go in cycles, housing cycle is no different. interest only loans are a gamble, and more than 80% of new buyers are cashing in on the gamble, or speculating on future growth.
fk it, re fis are helping to sell a lot of big new boats so we are all happy. Gas is high, inflation is creeping, our dollar doesnt look to well when you travel abroad, we are fighting a war than no one knows about in iraq and out sourcing is increasing..if you looked at things black and white, you would want to kill yourself....hence why we have coors light and boats, cars, planes and harleys etc. my 2cents....im goin to watch a disney movie

[ChumpChange]

I have some really good ideas on this. Unfortunately, I don't have enough time to type it. The people with the problems are the ones with the 3yr arm interest only payments. That's all I'm saying for now.

[totenhosen]

My advice is get the biggest HELOC you can on your place right now. Let it sit and be ready to get some bargains in the next 5 years. When the prices come down you'll be able to pick up places for cheap. Banks don't want to hold the properties and the owners are going to end up walking away from the place. What another 5+ years for the cycle to come the other way and you should have a nice retirement.

[OutCole'd]

My advice is get the biggest HELOC you can on your place right now. Let it sit and be ready to get some bargains in the next 5 years. When the prices come down you'll be able to pick up places for cheap. Banks don't want to hold the properties and the owners are going to end up walking away from the place. What another 5+ years for the cycle to come the other way and you should have a nice retirement.
Whats a HELOC?

[SummitKarl]

No expert here, but I am building a Havasu house for investment and to stay in and another to build/flip.
Many places have and are still going crazy, FL, AZ, NV and of course CA. I would bet on a small correction but no BIG burst. A 10-15% drop would not kill most people, unless they were looking to cash out and move from CA right after said possible correction. Houses have appreciated in most parts over 15% this past year alone. Unless you just recently bought or are leveraged to the hilt, I think you should be fine.
I have a buddy building some spec houses around the Tahoe area and he turnd 1 already for a $180k profit. Who knows, if we all had crystal balls on our desk, we would all be Gazillionaires !!!!!!!! ;)
what do you mean 2 houses I only have a contract for one(are you cheating on me already) :D

[SummitKarl]

relax!!!!!!!!!!!!!! just watch intrest rates, when 30yr fixed goes above 7% then a correction is on it's way (that's what happened in the last SoCal correction = 1989-1990) untill then, growth will continue, esp during a 2nd term president, same with the last (2) term pres = slickwillie,(pun intended) it's the next election that things may change or if OSAMA decides to drop in again. In the mean time the housing market will continue to grow in the south west. just don't go past 35% (NET) debt ratio, NO MATTER WHAT THE LENDER TELLS YOU!!!!!!!!!!!!!!!!.

[totenhosen]

Whats a HELOC?
Home Equity Line of Credit

[Ion]

Whats a HELOC?
home eq. line 'o credit

[OutCole'd]

Home Equity Line of Credit
Thank you
home eq. line 'o credit
And Thak you.

[Ion]

Whoever was denouncing them should have made the distinction that the real risk comes if one is applying it toward their primary residence. I personally used an int. only eq. line to buy lots in a booming, upcoming golfcourse area near Havasu. After the end of the 3 year term, I will sell one lot to pay off the loan (and then some) and own the remainder outright. Real estate is always a gamble, but this is one on which I'm willing to double down...especially in this locale.

[abraman1326]

Home Equity Line Of Credit. I am staying so far away from them right now b/c they go up as the FED raises rates. They were a good idea last year when the FED rate was low, but right now they don't look too good to me.
I don't believe in this housing bubble thing at all. Homes will alway be a good investment over the long haul. We may see a slow down in appreciation, but you don't buy real estate as a quick return investment. We can't see this 25%/year appreciation forever, but for now, it's just the way it is. I've heard people say they are waiting for a correction in the market to bnuy a home, and that was 3 years ago, now they are paying twice what they would have then for the same home. We'll be getting back to the standard 3% appreciation soon enough. But even if there was a slight decrease in values, it won't be much, and it won't last long. Now of course this is my opinion, but it is supported by some very high falutin mortgage guys.
I do agree that this is not the time to be buying income property, but if you want to move up yourself, there is nothing wrong w/ turning your current home into an investment property.
Just my .02...
BRA

[SummitKarl]

Home Equity Line Of Credit. I am staying so far away from them right now b/c they go up as the FED raises rates. They were a good idea last year when the FED rate was low, but right now they don't look too good to me.
I don't believe in this housing bubble thing at all. Homes will alway be a good investment over the long haul. We may see a slow down in appreciation, but you don't buy real estate as a quick return investment. We can't see this 25%/year appreciation forever, but for now, it's just the way it is. I've heard people say they are waiting for a correction in the market to bnuy a home, and that was 3 years ago, now they are paying twice what they would have then for the same home. We'll be getting back to the standard 3% appreciation soon enough. But even if there was a slight decrease in values, it won't be much, and it won't last long. Now of course this is my opinion, but it is supported by some very high falutin mortgage guys.
I do agree that this is not the time to be buying income property, but if you want to move up yourself, there is nothing wrong w/ turning your current home into an investment property.
Just my .02...
BRA
good advice for CA-(taxifornia),residents. but as a Architect in AZ, dbl digit APR. will continue while AZ turns into another CA, Bullhead to Erinberg the next So Cal coast line, I watch people flip the spec homes I design for $100k everyday. the only things I see that could stop this are
1) rise in intrest rates
2) Visit from OSAMA
3) area wages (for those still working) but even those are on the rise in (LHC)
4) a flood of resales on the market could devaluate prices. (supply&demand)
but I think all 4 could apply to just about everywhere

[Up 4 River]

No expert at all here but have some opinions based on what I see in my field on a daily basis. It seems to me the ones who are going to take the hit are up and comers who have recently bought, and in a lot of cases did it while maxing out their expenses on a double income household. Many of the people on these boards can afford that drop in prices because they bought some time ago. The 3 and 5 year arms on the adjustable rates are going to come and people either need to pony up or will be forced to downsize. I know many of you have talked about simple ecomonics and I would agree. When we are seeing the common hardworking person cashing out of IRA's and 401(k)'s to buy property I see a red flag. Right now a lot of people are net worth rich and cash poor. Right now a lot of people have all their eggs in one basket and diversification is the last thing on their mind. There have always been peeks and valleys in any kind of investing and it will continue that way. Real estate has become more of an investment item now days than a residence and just like equities, bonds, and commodities there will be a readjutment period. When? Who knows but if we're spending time talking about it on ***boat and it's in the paper almost everyday and you constantly hear people at work talk about it it's probabll closer than we think.

[Norseman]

i can only hope being single and looking for a house has been sucking lately got pre approved for 350 but that dont buy nothin nowadays so maybe i'll hold on for awhile
Buy in Az, when the big quake hits it will become ocean front property!!! :jawdrop: :notam:
J/K :D :D

[INSman]

I have some really good ideas on this. Unfortunately, I don't have enough time to type it. The people with the problems are the ones with the 3yr arm interest only payments. That's all I'm saying for now.
I agree that overextended primary homeowners paying "Interest Only" will be the first ones in trouble if they can't step up on payment when rates climb, but I don't see anything wrong with adjustables over fixed unless someone can show me the last time the fixed rates outperformed the adjustable rates.

[Nord]

I have a home equity line of credit through Washington Mutual that I haven't touched. But when I'm ready, its there!
When interest rates go up, there will be a glut of homes for sale because people with adjustable rate morgages will get pinched out for the most part. Just my .02 do not get an adjustable rate morgage

[essexjet]

If you dont have a house now WAIT, save for a down now and then buy when its down at an interest only loan.

[WetWillie]

I guess none of us know.. Just wanted to here some oppinions? I have capital gains issues to.. Damn those taxes dont they make enough off us?
To much to deal with! :notam: Time to pull the rip cord! :D

[totenhosen]

I don't see anything wrong with adjustables over fixed unless someone can show me the last time the fixed rates outperformed the adjustable rates.
Right now there is very little difference between the rates for ARMS and the 30yr fixed. Perhaps .50%. To me it isn't worth the risk when the difference is so little

[HOSS]

I do believe the bubble will burst by years end. Its starting to slow down now. All the landlords better hold on to their asses. GM will file a chapter this year also. GM North America. Thats what my crystal ball reads.

[SB]

Most of the country has stable housing prices. But Greenspan said the other day that there are some "froth" areas, namely the coast in FL, CA, and in NY, where there have been huge price increases for several years. This rate of increase is unsustainable.

[Freak]

Correction in 06 especially in the froth areas. That's what the old gut says. What does your gut tell ya?