So here is my question. When will it be a good time to buy? In 6 months, 2 years, longer?

That depends on when you’re ready and also it depends on how quickly the market adjusts…

Since there are alot of greeding aholes out there, I’d imagine it’ll be sticky in the way down…losing 200K in equity even though it’s not theirs is painful.

Just go bang on these peoples door and tell them that there is no bubble and prices keep going up.
http://forsakencraft.com/proof.htm
nuf said.

Vinnie and other trolls are average Americans described by Adlai Stevenson.

Joe Sixpack won’t get it until suddenly mysteriously the housing ATM has run dry. They just simply cannot help themselves.

“You will find the truth is often unpopular and the contest between agreeable fancy and disagreeable fact is unequal. For in the vernacular, we Americans are suckers for good news.” Adlai Stevenson

Arm’s up cant cover the rent so I have to sell.
Ive been trying to sell a house in Lake Forest OC, Ca, below market for over 3 months now with no interest. Now there are 3 other, larger and much nicer homes for sale for about the same price. Dropped the price and told the realtor to mention we would consider resonalbe offers but no interest. Now 2 of the other homes has lowered there price. I know nobody will by mine if they see theirs so I have reduce. I should have cut at least 60k from the start. I know their realtor who lives down the street and he says everyone is starting to really get worried and will be listing a couple more in the comming weeks. So now I may be forced to drop 40k/50k and lick my wounds, I’ll still make some serious cash but if you think things are ok try to sell your house its getting worse and worse.

Deliverying bad news prepares people for what is coming and prompts them to take action before it happens.

Following B. Norris’ predictions, I sold my primary residence and rentals in SoCal near and at top of the market (for hefty profits).

I wish I got the bad news before the Japanese real estate market crashed in the early 90’s (actually, what I didn’t know was how long the downturn would last). I bought a property after the crash and still lost lots of money there!

bubblesurvivor

While there are the occasional person or persons who heed legitimate warnings (and there are plenty of non-legitimate ones), most people do not want to be burdened with bad news. If you are the bearer of bad news, you often become the target of derision and hatred (or severe grumpiness in the case of trolls). There is a reason that we have the saying “Don’t shoot the messenger”… because this is the most common knee-jerk reaction that most humans have to bad news… hurt the first thing they see.

I’m trying to imagine the massive denial that certain realors and recent home buyers are feeling inside, e.g. Vinnie.

Scientology calls it “Postulating”, i.e. “IF I POSTULATE IT, THEN IT *IS* SO!”. (Followed by “IT HAS TO BE! IT HAS TO! IT HAS TO!”)

Or, as one of my college buds put it, “Ignorance Is Bliss, and I Like Euphoria.”

Nozferatu –

I fully expect to lose $200k in equity over the next 2-3 years; according to my gut reaction from the graphs, that’s about how much of my $400k townhouse is pure bubble-foam.

(However, even that $200k loss puts the place $100k over what I paid for it when the last bubble bottomed out in ‘97. Even assuming an overshoot during the crash, I think I’ll still come out ahead. Remaining principal is below $50k, and there are sure to be cheap repos coming on market for us ghouls.)

Dear Vinnie, Can you please explain to us…with real numbers and calculations…how you suggest this housing market will sustain itself?

Magic. You see, if we all just clap our hands Real Hard and BE-LEEVE in the Real Estate Fairies, Tinkerbell will rise from the dead.

Trolls shouldn’t be ignored completely, lest the uninitiated check out the blog and somehow think they are real.

BubbleSurvivor, I would like to know how to buy real estate in Japan without being a Japanese national. I think it may be the one market that has truly found a bottom. The US probably won’t find a bottom before 2011.

John:

While I agree delivering bad news is difficult, it must be done.

See what Winston Churchill said.

Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened.
Sir Winston Churchill
British politician (1874 - 1965)

“The most frightening words in the financial lexicon are that it’s different this time. This refrain, a favourite of boomsters, was much in vogue at the time of the dotcom bubble. It remains just as suspect when applied to a housing market that is unnervingly priced to perfection.”

The Economist was probably the best business mag to identify the bubble as being a global problem. They definitely convinced me with their “In Come the Waves” article

http://www.economist.com/finan.....id=4079027

As you can see from the last paragraph from their June 29th article it doesn’t sound like they are advocating a permanently high plateau. When you put this article into proper context it sounds to me they are making the point that RE is priced to utter perfection. The problem is we don’t live in a perfect world. They do a good job of explaining how home valuations are sustaining themselves in places such as the UK but the underlying message is that these conditions are unsustainable. The economy always changes whether it slows down or encounters inflation creating higher interest rates. Today’s RE valuations provide no margin of change in either direction.

larenter said…
The economy always changes whether it slows down or encounters inflation creating higher interest rates.

This is precisely why there is no “equilibrium point” in economics; it is constantly changing. The mental picture they used in my advanced macro courses was the butterfly’s wings flapping in California causes tidal waves in Hawaii. Every actions sets off more actions.

I.E. The Fed raising rates actually makes companies spend MORE on interest, creating higher input costs, stimulating inflation… The argument some time ago among intellectuals was that the FED was creating pressure on deflation through lower interest rates. And, there are some truly radicals who think that Japan created their own deflation through ZIRP… my opinion is that this is akin to trickle-down laffer-curve Reaganomics, but there’s always the possibility that the unintended consequences of economic policy creates exactly the problem that was trying to be fixed. Think about what tax shelters of real property has done to affordability, or what generous welfare benefits does to unemployment and welfare needs.

When I arrived to OC I decided to rent. Some other colleagues who joined the same company from out of state took on interest-only loans. It was the only way to “bite the bullet” and get in the market of home ownership. Perhaps he is second guessing that decision now.

Okay Nosferatu, I’ll try to take down some of your questions to Vinnie. Note: I’m not saying there is not going to be a slowdown in residential housing, I’m just not as confident as most of you and all these housing blogs of the housing demise.

1. I must start by saying I hope you guys realize you have many of the same biases that these realtors and recent home buyers have, just in the opposite direction, you guys hope with all your might that these blogs and statistics are right and the housing bubble bursts because you either are bitter because you didn’t capitalize on this housing boom and/or don’t have a home and want to get one when the bubble bursts and/or you already sold your home so you want your decision to be right and/or you want to do some real estate investing when it bursts. This might not be 100% accurate, but I think there is some truth to this and many of you are biased in the opposite direction.
Okay, before I start, remember what someone posted earlier “most people do not want to be burdened with bad news. If you are the bearer of bad news, you often become the target of derision and hatred”. I like how a few of you agree with this but I bet before I quoted this you all were reading this and treating me as a target of derision and hatred. I’m not saying I’m so smart, I’m just saying your probably not so smart and informed about what will happen either.

A) low interest rates go up
*Will affect prices, but not payment since with lower price and higher interest rate, payment is the same, are you saying average payment is going to go down? Have you compared what average payment has been in the past and what it is now adjusted for inflation, it is not that dramatic a change from payments in the past*
B) home price to housing ratios are hovering at 10:1
*True
C) exotic loans will be very hard to qualify for and 20% down will be required again
*Definitely not necessarily true, where do you come up with this, are you the one giving guidelines for banks? Your statement is a possibility for the future but I work in the mortgage and real estate industry (commercial real estate) and have seen residential credit loosen recently and I’ve read articles that it will continue to loosen to bail homeowners out. I’ve seen more 40 year and 50 year loan products that are going to bail out these people on risky loans.*

What justifies paying over $600K for a 900sqft piece of garbage and a $3,500/month mortage other than speculation?
*Something to think about, home prices are cheaper here than they are in a lot of other big cities around the globe. Also, what I mentioned earlier about average payment adjusted for inflation not being that much higher.*

Do you assume speculation will continue? If so, do you think it’s going to last and do you think it’s a good thing for the majority of people?
*No I don’t think it will last, but I think there will be more demand in the future due to demographics so some investors will get bailed out, some break even, some lose.*

Do you think a 15% affordability index is a good thing for housing in various parts of the US?
*What housing affordability index are you using? The major ones make the assumption of a 20% down payment. But as you may know, almost no one is putting 20% down on a home anymore. I believe this distorts the affordability index and no longer makes it a useful tool.*

Do you remember what they were sayign regarding the dot.com boom about how there was no end in sight to the rise of stocks? Do you think they were right? Or wrong?
*True, They were wrong, but do you remember what many economists and people on blogs like these have been saying about the bubble for the past 3 years, which scared me to buy but I still bought, and have had my home double in value, where they right or wrong?*

It would be great to hear why you believe the housing market boom will continue and how you would justify the continuation of very high priced homes which only current home owners can purchase.
*It would be really great for these biased overconfident bubble predictors to answer some of my comments and questions: Explain why you think prices will go down? Is it because there will be so much supply? How will there be so much supply when: 1 in 6 homes are owned outright, the rest (5/6), a significant portion of the rest either have:
No need to sell.
A lot of equity.
Can afford their payments.
Have fixed rates.
Even if they have trouble with payments, will be able to take advantage of these previously mentioned positives to help them not have to settle for a lower sales price to get rid of the house, they will probably be able to refinance comfortably with one of these 40 year or 50 year options and/or negotiate with their lender to keep their home.

So I really want to know the answer to…what will be a likely scenario for how many homeowners will lose their homes and how much oversupply that will be and that effect on prices. I think there is definitely some truth to the saying the only bubble there is, is created by people saying there is a bubble. Even though I think appreciation won’t be nearly as great as recent returns and home prices will probably come down, I’ve never seen someone take into account the statistics and factors I mentioned in the previous paragraph (and from this whole post) and show how there is still a bubble based on that.

Again, what do you propose first-time homeowners to do? Any plans, suggestions??
I propose you do one of those rent vs. buy calculators that are on many websites that tell you based on your situation which will best to do (it’ll probably be best to rent) and most websites will have other articles with considerations you should make in addition to that calculation.

My final thought: I didn’t post to say there isn’t a bubble, I think there probably is, I just wanted to point out that it seems people are following a herd mentality in saying there is going to be a bubble popping, are biased with their opinions, don’t seem to be getting to the crux of analyzing whether prices will go down or not.

“I’m not saying I’m so smart”

You could say that again. When writing, you should put the quotation marks around the other persons words.

“But as you may know, almost no one is putting 20% down on a home anymore.”

Hello? Doesn’t this alone seem to be a BIG problem?

“How will there be so much supply when: 1 in 6 homes are owned outright, the rest (5/6), a significant portion of the rest either have:
No need to sell.
A lot of equity.
Can afford their payments.
Have fixed rates.”

You should have started that list with “Have fixed rates”. The people with the fixed rates will be fine without job loss. Too bad some many jobs in So. Cal. are real estate related. Interest rates are going up though, so that eliminates “Can afford their payments” for some. Once they are gone, “No need to sell” is a out the window. Next on the chopping block is “A lot of equity”.

“So I really want to know the answer to…what will be a likely scenario for how many homeowners will lose their homes and how much oversupply that will be and that effect on prices.”

I’m an agent here in Irvine/Newport. I don’t share the positive outlook the others do. I tell my clients to rent, not buy….for now anyway. Too many people over-extended to get into the market around here. I can find a rental for half the cost of buying(monthly cost), so why buy? If I can afford 6K a month, why not rent for 3K a month and save the rest? A lot of buyers are holding off, and I think it will continue. Homes in my area are dropping prices 10-60K at a time, so yeah…there is a bubble.

20 factors saying we land hard:

1. The lottery mentality of the market in the bubble zone areas has subsided. Where two years ago there were lotteries to buy properties, today in the bubble zone areas for-sale signs and excess inventory are highly visible (in some bubble zone areas the available housing inventory is growing at a rate of over 200% a year). Residential real estate development, based on the profit motivation of basic capitalism (builder’s profits have increased dramatically) has created excess speculation leading to excess supply. Nationally there are a record 555,000 new homes on the market which is 60% above the ten year average. Between April 05 and May 06 the inventory of existing homes for sale in the U.S. has grown 50% from 2.4 million to 3.6 million units. This supply of homes for sale is the highest since January, 1998.

2. Mortgage rates are increasing. Since June 2003 the Fed Funds Rate has increased from 1% to 5.25% and the six month Libor Rate has increased from 1.12% to 5.32%. Some ARMs use these rates as the index (which a margin is added to) for the final mortgage interest rate. Fixed rate mortgages have also increased approximately 150 basis points and the prime rate has increased from 4% to 8.25% since June 2003. These mortgage rate increases will eliminate potential buyers from purchasing real estate property.

3. Speculators are greatly curtailing buying homes to flip. Investors accounted for 10% of mortgages to purchase homes through the fall of 2005 and in some bubble zone markets 25% or more of the homes purchased in 2005 were by investors.

4. Some homeowners who have existing ARMs (or variable home equity loans) whose rates are increasing will find it problematic to make these new debt payments. These homeowners will be either forced to sell or want to sell. This will add to the supply of existing homes for sale. In 2006 and 2007 approximately $2 trillion of non-conventional mortgage debt will be resetting, .5 trillion in 06 and 1.5 trillion in 07. Mortgage defaults have already begun to rise. In the first quarter of 2006 there were 323,000 defaults compared with 188,000 during the first quarter last year — a 72 percent increase.

5. An increasing number of buyers will see the potential to lose money on real estate and see renting as the better financial alternative. The psychology of “I must buy real estate now” is fading.

6. Many buyers including speculators during the lottery times purchased new properties to be built. Many of these properties are being completed now or will be completed in the near future in a market where demand has decreased dramatically. These properties will be further increasing the supply of properties for sale. In many cases the buyers will find losing their deposits to be the best business decision. Cancellation rates are increasing.

7. Speculators who bought their property as income property will have greater incentive to sell immediately as the inventory of homes for sale increases. Many speculators will attempt to sell because they see their profits eroding, rents decreasing and/or their adjustable mortgage costs increasing.

8. The trillions of dollars in debt owed by the US to the rest of the world will make it harder to lower interest rates. This negative number is also increasing dramatically; in 2005 the current account balance of the US was a negative $805 billion.

9. Many buyers will curtail buying vacation homes as the market was driven for some by the investment aspect of the purchase. Among homes purchased in 2004, 13 percent were purchased as vacation homes.

10. The increase of inventory for sale will encourage some home owners whose homes have appreciated considerably but who might not have put their house for sale to do so as these home owners now see their gains evaporating.

11. Potential new homebuyers with existing homes that may want to trade up but whose existing home is in a market of growing inventory will hesitate before buying a new home. Current homeowners with fixed rate mortgages at interest rates lower than prevailing rates will also hesitate before buying a new home. This will be put downward pressure on the higher end market.

12. The decrease in house appreciation which will result in the loss of the ability to extract equity from a house will reduce the ability to use that equity for other housing purchases, such as vacation homes or housing investments.

13. The sub prime mortgage industry, which offers primarily ARMs, has grown over six times in the last eight years to nearly $1 trillion. Housing supply will increase (either through homeowners selling their homes or foreclosure) as interest rates reset with the much higher interest rates inherent with sub-prime mortgages.

14. The decrease in house appreciation in the bubble zone areas will reduce the option to refinance and extract equity as ARMs reset. Previously in the bubble zone areas homeowners were able to use the extracted equity as a short-term solution to the increased mortgage cost. This will add to both the rising mortgage default rate and the inventory of homes for sale.

15. The new economics of buying homes with no money down (approximately 40% of first time buyers), interest only mortgages, option ARMs, and negative amortization will prove problematic as housing prices drop and homeowners find themselves owing money at the closing table. This will not only reduce demand for further housing purchases but create longer-term problems for these homeowners.

16. With the subsiding of the ATM factor (that is homeowners extracting cash by borrowing against the housing equity that had been increasing) homeowners will no longer have access to those funds to help them manage their ARM increases and or their credit card debt increases. It is estimated that anywhere from $444 billion to $600 billion was liquidated from housing wealth during 2005. The only alternative a homeowner may then have is to sell their home to tap into the home’s equity. This will increase the housing supply.

17. Our economy’s negative savings rate will prove problematic, as homeowners will lack the resources to counteract increased ARM payments. This lack of savings combined with the subsiding of the ATM factor will increase the supply of housing as ARMs reset.

18. The stimulus to our economy generated by the ATM factor will subside. This will lead to less housing demand as the economy in general will decline.

19. Builders who currently have excess inventory are reducing (and in some cases drastically reducing in the bubble zone areas) their prices. Data is showing builders are dropping prices faster than sellers of existing properties. This will increase downward price pressure on all real estate prices. As many of the existing properties for sale will have lower cost basis than current market prices, these properties for sale will ultimately be priced to sell. Builders will then be further forced to adjust their pricing points to compete with these lower cost basis existing properties. These forces will act in concert to further push prices down.

20. The number of buyers will be reduced because their careers were in various industries tied to housing such as construction, real estate or lending.

“When writing, you should put the quotation marks around the other persons words.”
Okay you got me on that. Still not really used to this blog thing since unlike many people here, I tend to favor the WSJ and reliable economic publications than blogs.

“But as you may know, almost no one is putting 20% down on a home anymore.”
“Hello? Doesn’t this alone seem to be a BIG problem?”
It could be, but I just don’t see people looking at the increase of payment of putting 0 down and saying that’s unaffordable, I’ll buy anyway. It could be me though.

“You should have started that list with “Have fixed rates”. The people with the fixed rates will be fine without job loss. Too bad some many jobs in So. Cal. are real estate related. Interest rates are going up though, so that eliminates “Can afford their payments” for some. Once they are gone, “No need to sell” is a out the window. Next on the chopping block is “A lot of equity”.”

See again, someone pointing to all these factors without giving actual figures. How many homes won’t be able to afford their payments, and how many won’t be able to refinance into a 50 year and HAVE to sell? How leveraged are these people? If you don’t have an estimate of how much supply will come online due to this and how that will affect prices, you’re not really saying much at all.

“I tell my clients to rent, not buy….for now anyway. I can find a rental for half the cost of buying(monthly cost), so why buy? If I can afford 6K a month, why not rent for 3K a month and save the rest? A lot of buyers are holding off, and I think it will continue. Homes in my area are dropping prices 10-60K at a time, so yeah…there is a bubble.”
That follows my theory that the only bubble there is, is created by people talking about it. There are a lot more factors to consider in purchasing a home versus renting (interest and tax deductions, etc), when the people you advise buy a home they might have the same payment as if they bought two years ago. I’m not saying its bad advice you gave (I would give the same advice, hold off for a while), I’m just saying if you gave that same advice when a lot of people were talking about the bubble two years ago, those buyers would have gotten priced out and lost a lot of equity. With the media and people like you advising about the bubble, people hold off on buying, which creates the bubble. I want to see real figures that show the actual excess supply that will be online and the historic effect that has on prices. Still nowhere to be seen.

I didn’t have a chance to see this previous post before I sent mine, they were both sent at the same time…I don’t have time to go through each one and analyze it, a lot of these points seem true from my first reading but I didn’t really read in depth to know for sure. But as I said before, this post or no other post I’ve seen is showing how much equity people have (they’re just saying people have run out of equity), at what level they will not be able to afford or refinance, how much supply will that bring and how that will affect prices.

A couple I disagreed with off first glance is #2. You are giving 20 reasons why housing will fall hard, but higher interest rates probably mean lower prices to make the payment about the same, as I said before, but it is not a reason housing will fall hard. #13, first off, subprime homeownership, even though it has grown, still constitutes a very small percentage of total homeownership. It’s been able to grow so much in the last 10 years, instead of saying now they won’t be able to afford their higher interest rates, how about answering at what higher interest rate will sub-prime people not be able to afford their mortgage or refinance and have to sell?

I could probably dispell half of these 20. Not show they are not true but show that they aren’t necessarily true either. It may be fun for you guys to just list all these reasons without doing analysis or research into if they are true or not, look at this blog http://patrick.net/housing/crash.html, it has a long list of numbered reasons too and it’s been posting articles about the bay area housing crash for the last 5 years and didn’t call it right. 5 years!! ha ha. It shows exactly what I’m talking about. Following a herd mentality instead of getting to the crux of analyzing whether prices will go down or not and by how much.

So Amimassel how are you playing this crash. Shorting builders? Shorting banks? Shorting builiding supplies? Puts on any or all? Have you made any money yet?

I would like some opinions. I bought a house in 2003 for 294k, put 20% down and got a 30 yr fixed at 5.125. This puts my monthly payments for Mortgage, taxes and insurance at about $1600 a month. The house could rent for $1500-$1650 a month.

The house is now worth about 415k-425k and I owe 220k on my loan. After closing costs I could walk away with 175k.

I am under the impression that if I sell now and wait, I can use the equity to buy a house with all cash and not have mortgage if the bubble bursts. I do not have any family to take care of since I am still in my 20s and single, so renting wouldn’t bother me.

I know owning a home produces tax breaks, but with rising interest rates conservative investments can earn 6-10% on the 177k I take out of the home.

Should I sell, rent, and buy again later?

Or keep the house and rent it out when I want to move somewhere else?

my email is jason@eidzn.com

Thank you,
Jason

Jason -

who signed in as anonymous. i am a housing bear - i would not buy a house now. but what should you do? first of all do you like your house - big factor. If you do like it what you give up by selling is the costs of selling (real estate etc,), the hastle of selling, and your very low rate on your mortgage. This is an asset.

My bet if you are in a bubble area (google Global Insight/National City and get a list of overvalued areas) your house will depreciate…but I am not positive.

Last aside I would sell if I was thinking of renting if I was in a very overvalued area.

There are way too many variables here for anyone to give you the “right” answer.

somehow i bet you are bright because 5.15% on a 30 year mortgage is pretty good.

My name is Steven Krystofiak, President of the Mortgage Brokers Association for Responsible Lending. http://www.mbarl.org I have a letter in a word document form that highlights the risks of the current loan industry unrealized by regulators and economists alike, mainly due to stated income loans.
Email me at contact@mbarl.org if you want me to send you a copy.

~ Steve Krystofiak
13 main points in the letter are;
1. Stated income loans are associated with fraud, and started to become popular in 2002.
2. Banks originate these loans because they are profitable and then sell them to reduce their risk.
3. Fraud is encouraged by the banks
4. Stated income loans help no one.
5. Exotic loans originated with stated income are now causing foreclosures or forcing homeowners to refinance into negatively amortized loans.
6. Stated income loans are why home prices have skyrocketed. They have caused a large demand in the US housing supply.
7. Banks have sold their loans and have already made their profit. Investors will soon realize stated income loans are too risky and stop purchasing them.
8. Almost anyone can get a stated income loan for $950,000.
9. Stated income loans cost consumers hundreds of dollars a year because of higher interest rates.
10. Stated income loans allow tax cheats to purchase homes easier.
11. Stated income loans are not always faster than fully documented loans.
12. Appraised values are often inflated. Underwriters are basing their decision on inflated home values, inflated incomes and inflated assets. The only “real” number is the FICO (credit) score. This is why underwriters have become focused on FICO scores.
13. Rules are not enough, they must be enforced.

“So Amimassel how are you playing this crash. Shorting builders? Shorting banks? Shorting builiding supplies? Puts on any or all? Have you made any money yet?”

My graduate real estate economics professor started shorting the homebuilders since last July and she has cleaned up. I sold my house since I could save a lot of the costs of buying and selling by doing things myself, and hopefully I’ll be able to buy in a couple years for a better price. Besides that, although I’m pretty sure there is a bubble I’m still not an expert in what sectors of the industry are at risk and what a great move to make would be right now. I like to really think about what I am doing, but sometimes I think it is just better to have dumb luck and just go for it like a lot of these people that bought on spec and sight unseen in these past few years. I didn’t know enough about RE then to do that then. I still haven’t seen anyone give an estimate for how leveraged people are, when their payments will be at an unaffordable level, if they won’t be able to afford a 40 or 50 year loan, and how many will HAVE to sell, how much supply that will bring, and how that will affect prices.

To Steven Krystofiak, I agree with you, I know many of the “tricks” of the trade in the mortgage industry, not just for stated loans, but all kinds of tricks. I really think many people have no idea how shady a lot of the people in this industry are.

Bruce also predicted the upswing of the last cycle predicting prices would double in his first report the “California Comeback.” People didn’t want to hear GOOD news in 1997 either. You just can’t win.

I can tell you the California Builders Industry Association was giving Bruce a little more attention this year at their “Bear vs. the Bull” event July 10th. He debated economists John Husing in 2005 to a very cold builder audience who lambasted him for saying the market would be coming down. Well, Bruce was invited back because of his “California Crash” report and the fact the builders now see what Bruce was talking about. The kind of gains we have been seeing could not possibly be sustained. UBS builder analyst and expert Margaret Whelan debated Dad this year to a sold out builder crowd of 500 at the Nixon Library. Margaret’s predictions were more national in scope while Bruce was specific to California. She seems to be predicting a rough period in the coming months but thought in 2007, the government would actually lower interest rate and we could be back on track! There’s some good news for you. But is that enough to get people stoked about the real estate market again?

Let’s not forget that much of real estate activity is driven by mood. In the California Crash, Bruce has actually created a formula to show how much a buyer is willing to spend on a monthly payment depending on what the market is doing. It’s simply named the Real Estate Moodometer and it’s a huge missing piece to the puzzle. You can already see this as magically we’ve slipped into the “buyers market” here in California. No longer am I hearing, “Oh, I have to get in now or I’ll never be able to afford to get in.” Buyers have more time, submit lower bids, and happily watch as inventory quickly builds. Foreclosures are increasing quickly (ask any listing service) and sellers have no idea how difficult it will get as lender owned and foreclosed properties become their competition.

Bruce describes the current situation as “euphoric.” Builders, realtors, the construction industry, brokers, lenders, speculators and so many others made so much money in the last five years I don’t think anyone could fault them for being so. They just can’t imagine the home they just built or bought won’t be worth an extra 50k next year. Especially when the N.A.R., C.A.R., the government and numerous other organizations we rely on for real estate market news tell us wrong information.

“Year to date sales are down 19.5%, in line with our revised California Housing Forecast. I’m no longer using the term soft landing. I’m looking for a new moniker.” – Leslie Appleton Young, June 27, 2006

Thanks for the warning!

You’d be surprised what sort of responses we’ve received from our 412 page report we put together. The first chapter alone, Bruce read over 1000 articles. The chapter called “Pearls from the Past” is just that, a collection of real estate experts telling us the exact opposite things we as consumers needed to hear to protect ourselves. How fitting chapter 3 is called “The Fate of the Top 10 Builders After January 1990.” It covers the builders that went bankrupt during the last similar cycle.

The report has 350 charts showing you exactly why Bruce is predicting what he is. He’s does with his money exactly what he shares with his audience.

We handed this report to numerous media and scholastic venues only to be interviewed because a few liked the title. They never even opened except to say, “Nice color printing.”

“It’s too overwhelming” they tell us. It is very academic which should be a good thing. Not many choose to consider or understand the information.

In the mean time, we’re moving back to buying homes at wholesale prices. The past several years we focused on development due to the hot market. We’ve now moved with the shifting market. Looking to sell your house?

Love this blog. Isn’t it amazing how technology has changed the way we communicate? Good stuff.