[TorrKing]

Existing-home prices fall for 1st time in 11 years

Maybe the market is past the tipping point now. Collapse is probably next. Just ignore all of the soft landing baloney in this article. The message is in the headline itself.

Torjus Gaaren

[TreebeardsUncle]

That graph (http://graphics8.nytimes.com/images/200 ... .large.gif in http://www.dailykos.com/storyonly/2006/9/22/75144/3774) indicating that a house worth $100,000 adjusted for inflation would have been $66,000 in 1920 and $199,000 in 2006 is interesting. Before 1997 the value varied by 100,000 - 34,000 up to 100,000 + 23,000, but in the last 10 years it has come up 99,000, which is 3 to 4 times as much variation seen in the previous 107 years. Along these lines I read, perhaps in this forum, that a Dutch economist stated that the runup in housing prices seen in the states over the last several years was a statistical aberation likely to be seen only once in 500 years or so. Also, note that in time series one is likely to see values more than 2 standard deviations above the mean only 2.5 % of the time. We are clearly well above that, perhaps 3 or even 4 standard deviations above the mean housing values. (Would appreciate someone with greater statistical knowledge of housing prices in particular weighing in here.) At any rate this mortgage lender's market is due for a big reduction as up until 1997 that originally 100,000 house was never worth more than 123,000.

I also read an article in the Sacramento Bee or SF Chronicle business section yesterday that noted that real estate agents etc were the ones claiming there would be a soft landing and who are also now proposing a wild card market as an alternative. More likely we will see a hard crash of a 20% or more in depriation followed by a stagnant market as the hard landing and lost decade scenarios were those favored by those in the know who weren't so financially dependent on continued speculative appreciation.

[Tapas]

Study this bearish forecast by Dr. David Lereah, Chief Economist for the National Association of Realtors:


Real Estate Reality Check


Notice, how he reveals the true state of affairs through these 60 slides while speaking amongst his peers at the NAR Leadership Summit held last August. Quite a departure from the cheerleading role he plays on TV, won't you say?

Tapas

[Tapas]

$this->bbcode_second_pass_quote('nazman', '
')I agree, The Housing Collapse, Second Great Depression, Falling off Olduvai's Cliff and Decent of Hubbert's Curve you've mentioned are bad enough. But that's too optimistic in my view.

But think about it along side the immenient Crash in the U.S Dollar, Martial Law in America, Declining EROEI for all Energy, the Clash of Civilisations, the Tradegy of the Commons, Jevon's Paradox, the Law of Diminishing Marginal Returns, The Coming Peak Oil Grand Depression, the Euro vs the Petro Dollar, Bird Flu, Acquired Immune Deficiency Syndrome, Liebig's Law & Overshoot, Diebold Black Box Voting and the 2000 and 2004 Stolen Elections, Let It Happen On Purpose Complicity on 9/11, Global Warming, The Second Law of Thermodynamics and the Inevitability of A Globo-Thermal Nuclear War for Resources point to only one thing. The Shit Hits The Fan. Every Word Deserves To be Capitalised.

[Doly]

It's bad, but isn't as bad as it looks in that post. We only have to deal with three interrelated issues.

1. Depletion of Fossil Fuels

The first critical point we'll reach in this category is Peak Oil AKA Descent of Hubbert's Curve, Falling off Olduvai's Cliff (in somebody's rather extreme and quite nutty version of the consequences). A consequence of this is Declining EROEI for all Fossil Fuel Energy. This is a specific instance of the Law of Diminishing Marginal Returns, but by no means diminishing returns are anything new. The Second Law of Thermodynamics very definitely does NOT have to do with this.

The reason we'll reach this critical point instead of preparing for it in time is the Tradegy of the Commons. Jevon's Paradox, in spite of all the claims that it's relevant, in fact, isn't, because when total production declines, there's no possibility of somebody else taking what you conserve.

An almost inevitable consequence of this is Resource Wars AKA Clash of Civilizations in the doublespeak of the West, with the possibility of leading to Martial Law in America (though not very likely, in my opinion). The Inevitability of A Global-Thermal Nuclear War for Resources remains to be seen, and in my opinion both a global war (as opposed to fighting where the resources are) and a nuclear war are unlikely.

2. Global Warming.

Tied to the above, because we wouldn't have global warming if we hadn't been burning fossil fuels in the first place.

3. Economic crash.

AKA Second Great Depression, Crash in the U.S Dollar, The Coming Peak Oil Grand Depression. The Housing Collapse is only an aspect of it. The issue of the Euro vs the Petro Dollar is only a small part of it, and it remains to be seen if it's even particularly important.

The real background reason for this is the fact that our economy intrinsically assumes there will be always more available energy, so productivity can always be increased by throwing more energy into the process of manufacturing.

The fact that oil needs to be imported in huge quantities doesn't help to square the books, either.

The fact that the current American government is suspect (Diebold Black Box Voting and the 2000 and 2004 Stolen Elections) doesn't help either, but perhaps it's logical to expect that only vultures have an interest in a dying country. I regard Let It Happen On Purpose Complicity on 9/11 as a conspiracy theory, though.


Because the three issues are interrelated, you could see it all as only one big problem, as opposed to several problems happening at once. I would call this overall problem Reaching the Limits to Growth.

Pandemics, like Bird Flu and Acquired Immune Deficiency Syndrome, are unlikely to be a major issue, unless living standards drop catastrophically. After all, we've dealt OK with AIDS and the vaccine for bird flu is almost ready.

Even though Liebig's Law & Overshoot is a favourite of Monte, it remains to be proven that we're in overshoot.

[emailking]

$this->bbcode_second_pass_quote('Doly', 'I') regard Let It Happen On Purpose Complicity on 9/11 as a conspiracy theory, though.

[Zardoz]

$this->bbcode_second_pass_quote('Doly', '.')..it remains to be proven that we're in overshoot.

[TommyJefferson]

http://www.wtop.com/?nid=111&sid=918889
$this->bbcode_second_pass_quote('', 'W')ASHINGTON (AP) - Federal regulators directed banks on Friday to properly explain the risks posed to borrowers from interest-only and other nontraditional mortgages.
The regulators said that banks needed to make sure that the loans they made were "consistent with prudent lending practices, including consideration of a borrower's repayment capacity."

[Denny]

They locked the gate after the cattle escaped. Again.

[EnergyHog]

Oh that is rich. I suppose this is so that they can say that they did their duty by warning people. What a joke.

[RonMN]

They "JUST" figured this out?

It's no wonder they can't understand the economic ramifications of peak oil production!

I'm heading back to the "preparing for the future" forumn

[Daculling]

$this->bbcode_second_pass_quote('EnergyHog', 'O')h that is rich. I suppose this is so that they can say that they did their duty by warning people. What a joke.

[rwwff]

$this->bbcode_second_pass_quote('EnergyHog', 'O')h that is rich. I suppose this is so that they can say that they did their duty by warning people. What a joke.

[Tapas]

Guys!


On a lighter note....how about some humor to kick off the weekend?



Mr. and Mrs. Too Much Home Buyer



Mrs. Addicted to Big Sales Shopper



Mr. Impulse Buyer Guy



Tapas

[coyote]

I've actually heard a couple of advertisments on the radio lately, banks offering consolidation on ARM loans. This is in the San Diego area, with one of the biggest runups of real estate values in the nation. I'm thinking that's going to be big business over the next couple of years.

[rwwff]

$this->bbcode_second_pass_quote('Gideon', 'I')t's all very sad.
Most people in the US have no guidance and no direction.
It worked out great for the banks
....
Man, you have gotta respect the banks for their clever evilness.
I despise bankers.

[mmasters]

$this->bbcode_second_pass_quote('rwwff', '')$this->bbcode_second_pass_quote('Gideon', 'I')t's all very sad.
Most people in the US have no guidance and no direction.
It worked out great for the banks
....
Man, you have gotta respect the banks for their clever evilness.
I despise bankers.

[Tapas]

Some posters can be pretty creative! Here is a funny one by Jannifl on the Housing Bubble Blog

A Grim Fairy Tale:

One day little piggy decided that he wanted a new car so he went to the wolf and said, "Wolfy, I want a brand new car, but I don't have the money to pay for it." The wolf said, "Little pig, you deserve a new car because you are a smart pig and luckily the straw house you built can now exactly pay for that car with its equity. I can refinance your loan with a lower interest rate and your house payments will be even lower, its like getting a free car of your choice."

Little piggy was very happy and went out and picked out a car he would never have been able to pay for otherwise. He was only mildly disturbed by the fact that when he pulled up to the stop lights all the other little piggy's had new cars also. This worked so well that little piggy bought a lot of other things as well.

Little piggy was very pleased with his new found success and all the things he had acquired and he decided that a bigger straw house that befits a pig of his stature was in order. So he went back to the wolf and said, "Wolf, all the other little pigs I know have new straw houses and I want one too. Wolf said, "My you are a smart little pig, because sight unseen I have figured your straw house is worth enough to give you the financial standing to buy the new house you want."

Little piggy was very happy and went out and put a contract on a home he would never have been able to buy otherwise. He was only mildly disturbed by the fact that all the other little pigs were doing the same thing and he was outbid on the house he really wanted. So he put his old house up for sale, and it did not sell. He was not just a little mildly disturbed that all the other pigs were doing the same thing, in fact he was outraged.

Finally along comes chicken little, at last a real potential buyer. Chicken little said she liked piggy's house, but that at his price there was no way she could afford piggy's house and a car to drive.

Piggy was exasperated that chicken little could be so stupid about financial matters, so he took the time to explain to her that if she just bought a house she could be successful like him and get a lot of free stuff. Chicken little was skeptical, because she had been hit in the head once before by someone else's nut and knocked unconscious.

So she said, "No deal piggy". Piggy waited and waited and got more and more frantic. The wolf had called and was huffing and puffing about how time was running out and he needed to sell his little straw house soon. So he called chicken little on the phone and said, "O.K. chicken little, I will give you my new car if you buy the house".

Chicken little thought about it and decided that did not like the kind of car that piggy and all the other pigs were driving, and if she was going to pay all that money she wanted to pick out her own car. So she told piggy that she wanted him to lower the price on his house. Piggy did not want to do this, because then he would have to pay for his car with his income and he could not afford to do that.

The wolf called and said he would huff and puff and blow down both of his straw houses down he did not find a buyer soon. Piggy is now worried that now he may end up without a house at all. He is also trying to figure out how he will be able to make the payments on his car and afford rent also.

Meanwhile chicken little has been hanging out in the chicken coop co-op, the wolf has been knocking, but no one is answering the door.

The end
---------------------------------------------

And now from A Grim Fairy Tale to the Grim Reality:


LA Times: Housing Party Collapses


Tapas

[rwwff]

$this->bbcode_second_pass_quote('article', 'T')he house, the broker explained to me and my partner in voyeurism (we'd spent the afternoon visiting open houses, but it was chiefly to scrutinize people's bookshelves), was weeks away from being auctioned off by the bank. This was our chance, she implied, to get a great deal by taking advantage of someone else's royal screw-up (call it a schadenfreude sale!).

[rwwff]

$this->bbcode_second_pass_quote('Gideon', 'C')ome on rrwwpo, MFP, you can do much better than that, can't you? That was your weakest post yet, and, frankly, a few more like that and you'll lose your MFP status.