Off in the Distance

If history is any guide, then the following chart from the 2012 Economic Report of the President suggests that any recovery in housing prices, contrary to what Wall Street is saying, is at least 15 to 30 months away [dotted line annotations mine].

Of course, that doesn't even take into account the unprecedented scale of the bubble that preceded the current bust, as well as supply-and-demand fundamentals that remain largely negative (not to mention the fact that when bubbles burst, they tend to overshoot on the downside).

Comments

[Tom]

and the next bubble is already being blown (in a few areas). This will end badly.

[banana messenger]

Inflation Everywhere but MSM Says NOT

It seems every chance the mainstream media (MSM) gets, it tells us things really aren’t that bad.

Do the writers at the AP read their own stories? Do these reporters not talk to each other or read the rundown (a list of stories every reporter is working on.) Do the editors for the AP not want some sort of continuity? I don’t have the answers to any of these questions, but those are the ones I am asking to myself.

http://usawatchdog.com/inflation-everywhere-but-msm-says-not/

[John G.]

After owning five homes due to work-related moves, we decided to be renters beginning in '04, as we saw that home prices here in San Diego were unsustainable. I did some fancy number crunching (stepwise regression) of a number of variables from '88-'02, and concluded that three factors predicted rising home prices here in San Diego: falling defaults, rising employment, and rising home sales. These three factors seem to be reasonable proxies for the real, underlying economic variables of liquidation pressure on home prices, wherewithal to pay, and demand for single family homes.

The economic and real estate environment supporting those three factors -- falling defaults, increasing employment, and rising demand for single family homes -- is many, many years away, seems to me. Only when we get write-off/Jubilee of the terrible household debt overhang will the housing market get back on its feet, seems to me.

[roger]

The real estate bubble is global,any body
wonder Why? Maybe the answer is to scary!

[D]

I second John G.

Although, it was a very sharp decline for the housing industry; unlike the stock market; housing will have to work back to a historical average. The historical PE average for most companies was hit in 2009, the historical average for housing occupancy is still lower than it is now.

Factor that with declining wages and increasing costs of everything and it'll be another 5-10 years that we sit here on the bottom.

[Tom]

i don't think it's coming back fellas. Seems that with energy prices going through the roof we're gettin' real close to the next step down in the global collapse. If gas goes to $5 by Memorial Day, like it says on the news, that's higher than EVER and will put the kaibosh on any "recovery." The economy is about to tank. Here comes the long hot summer, too many people laid off, broke, desperate . . . things could get 'interesting.' Look for housing to keep falling as nobody wants to deal with the fraudulent banks.

[Trickle down and then back up?]

High-end loan owners strategically defaulting in large numbers

‘Strategic Defaults’ by the Rich

By TIM REID, Reuters

February 16, 2012

… A sprawling, Spanish-style estate, fringed by majestic pine trees and located near the boutiques of Santa Monica Boulevard, its former owners were served with a default notice in 2010; they were $205,000 behind in their payments on mortgages totaling $6.9 million.Welcome to foreclosure Beverly Hills-style.

http://www.itulip.com/forums/showthread.php/21792-Jumbo-Defaults-HELOCs

[The Big House]

Too Big to Jail

2012-02-22

WASHINGTON, DC – Among the fundamental principles of any functioning justice system is the following: Don’t lie to a judge or falsify documents submitted to a court, or you will go to jail. Breaking an oath to tell the truth is perjury, and lying in official documents is both perjury and fraud. These are serious criminal offenses, but apparently not if you are at the heart of America’s financial system. On the contrary, key individuals there appear to be well compensated for their crimes.

The Obama administration and its allies have worked hard to sell its roughly $20 billion settlement with the banks as one that will have a meaningful impact on the housing market. But nothing could be further from the truth. As Kelleher points out, the United States has “more than 10 million homes under water” (the outstanding mortgage exceeds the house’s value). “Twenty billion dollars doesn’t make a dent in that: one million homes at $20,000 loan forgiveness is it.”

Top bankers want to make a lot of money. They also want to stay out of prison. Political leaders can huff and puff as much as they want, but, without a credible threat of poverty and time behind bars, bankers have no reason to comply with the law. For them, it’s all about the trade – and you can be the sucker in public policy as easily as you can be the sucker in an individual loan agreement.

The message to bank executives today is simple: build your bank to be as big as possible – and then keep growing. If you manage to become big enough, you and your employees are not just too big to fail, but also too big to jail.

The Obama administration has just made everyone else the sucker.

http://www.project-syndicate.org/commentary/johnson29/English

http://en.wikipedia.org/wiki/Big_House_%28comics%29