I don t know what the price income ratio in the 70 s was but I declined my sisters offer to buy a 3

Will 2012 begin the unclogging of 6,000,000 distressed properties? Over 40 percent of the 2 million active foreclosures stand with no payment in over two years and some with three years and more. Foreclosure starts surge 28 percent in last month of data. Mid-tier markets in Los Angeles and Orange County contract severely in 2011. Dr. Housing jimmy buffett tour dates Bubble Blog
Will 2012 begin the unclogging of 6,000,000 distressed properties? Over 40 percent of the 2 million active foreclosures stand with no payment in over two years and some with three years and more. Foreclosure starts surge 28 percent in last month of data. Mid-tier jimmy buffett tour dates markets in Los Angeles jimmy buffett tour dates and Orange County contract severely in 2011.
The housing market is clogged like backed up plumbing in an old building.  The shadow jimmy buffett tour dates inventory is still very present even though visible inventory declined last year.  It seems like we are diving back into the rabbit jimmy buffett tour dates hole where information is disguised and bad news is spun as being good.  Take for example the number of homes actively jimmy buffett tour dates in foreclosure.  Early in 2009 we had roughly 2,000,000 homes actively in foreclosure.  The number today?  2,000,000.  The Catch 22 of the giant bank bailouts and financial shell game was the bet (hope) that housing prices would have gone back up after five years especially with trillions of dollars funneled into the banking sector.  I mean what can go wrong when you trust banks with housing right?  The reality is sinking jimmy buffett tour dates in that home prices are going nowhere but down unless household incomes rise and that is why we saw foreclosure starts surge last month.  The shadow inventory is coming online jimmy buffett tour dates and that means lower prices.  Don’t think this is a shell game?  Over 40 percent of the 2,000,000 foreclosures have not had a payment in two years.  This isn’t even factoring in the 4 million delinquent loans that are working their way into the REO side of the equation.
Over 2 million loans are actively jimmy buffett tour dates foreclosed (ether with a notice of default jimmy buffett tour dates filed, scheduled for auction, or flat out owned by the bank as REOs).  Another 4 million are delinquent bringing the total distressed inventory pipeline to over 6 million jimmy buffett tour dates .  This number sounds jimmy buffett tour dates familiar because it really hasn’t moved in well over a year (like pretending the toilet magically unplugged itself if you simply choose not to flush it).
You see the orange and blue above?  This is what happens when your strategy involves ignoring the problem.  Home prices are still largely inflated in many parts of the country including California.  Take a look at how backed up things have gotten:
“( Chicago Tribune jimmy buffett tour dates ) Almost three years after she last paid the mortgage, Linda Ganguzza remains in her New Milford, N.J., home, one of many troubled homeowners caught in a drawn-out foreclosure process.
I have no idea where I stand, how much longer I have, said Ganguzza, a 58-year-old nurse, who says her divorce left her unable to afford jimmy buffett tour dates the home where she raised three children. Do I move, do I hang tough, do I talk to the bank?
Trillions of dollars to banks and the best strategy they came up with was simply ignore the problem and keep paying those big bonuses to all those investment bankers that setup this mess.  We’ll talk about the collapse in the mid-tier for California shortly but let us keep breaking down the distressed pipeline.
Foreclosure starts jumped up by 28 percent showing a sign of some movement in 2012.  Keep in mind that foreclosure sales typically sell for lower prices.  This is what banks have been trying to avoid for half a decade now.  This is also why we have millions of homes in the shadow inventory in spite of trillion dollar bailouts and artificially low interest rates .  What good is a low interest rate if household incomes are stagnant or falling?
Tens of thousands that bought in the summer of 2010 thinking jimmy buffett tour dates it was bottom missed the second round.  Take a $400,000 home bought with a 3.5 percent jimmy buffett tour dates FHA insured loan .  Not only is that down payment jimmy buffett tour dates gone, but where will that 5 to 6 percent come from if they decide to sell?  They are merely one of the 35 percent of California jimmy buffett tour dates homeowners that are in negative equity or near negative equity.  The property ladder jimmy buffett tour dates days of the last decade are long gone.
All of this of course makes sense.  Those that try to ignore area incomes are delusional and drinking their own Kool-Aid.  Of course local household incomes count and when ratios get out of whack like they did, prices will adjust even if it means severe corrections (the Case-Shiller LA/OC data set is down 40 percent from the peak by the way).  Buying volume is low because people need only look at their wages or bank accounts and home prices in certain areas will appear expensive still.  People fall into manias in a lemming like pattern but gain their sanity one by one.
The housing pipeline is beginning to unclog and shadow inventory jimmy buffett tour dates in mid-tier markets is likely to depress prices well into 2012.  The only thing that will change this is a sudden surge in good paying jobs and wage increases.  Nationwide with a median price home of roughly $150,000 prices may dip slightly this year but they are more in line with household incomes.  In mid-tier jimmy buffett tour dates markets like the Los Angeles/Orange County jimmy buffett tour dates Case-Shiller range prices are very likely to fall yet again as it is clear a movement in shadow inventory jimmy buffett tour dates is now starting and prices have a good way to go before they are in line with local income metrics.
Will 2012 begin the unclogging of 6,000,000 distressed properties? Over 40 percent of the 2 million active foreclosures stand with no payment in over two years and some with three years and more. Foreclosure starts surge 28 percent in last month of data. Mid-tier markets in Los Angeles and Orange County contract severely in 2011.
Doc, keep up the great work. Your post and numbers are dead on. Thank you for gathering, organizing, jimmy buffett tour dates and presenting this solid information jimmy buffett tour dates post after post. You are a beacon of (quantitative) truth in a financial and housing world of b.s.
People who are making predictions about the housing market often cite past recessions or housing market examples as the basis for their opinions. Problem is they are assuming those models will hold up in the future, and they are ignoring the fact that this time really is different; jimmy buffett tour dates we ve never seen a bubble that big. What will happen? We don t know. But Calculated Risk and others are overly optimistic about things recovering in an orderly manner ( just because they always have ). That s not how financial markets work; that s not how humans psychologies work. My guess? The housing market will disappoint many on the downside. It ll drag on longer and be worse than most had hoped / expected / modeled for. Best, Tom in San Diego
Prediction: jimmy buffett tour dates Case-Shiller at 125 in one year from today. I keep saying this, but history is on my side: Bubbles normally give back 80% of their gains. See Nasdaq 2000, Nikkei in the 90s, Silver in 1980, etc. Case Shiller jimmy buffett tour dates should bottom at approximately 85 within jimmy buffett tour dates a few years.
Hi, I am not disputing your numbers, however, the 1 percent through hedge funds is buying up an enormous amount of low end real estate. jimmy buffett tour dates So, at the low end, landlords will be competing with the 1 percent and that could be problematic. How long they continue to buy massive amounts jimmy buffett tour dates of housing is unknown.
I say we go back to 3.5-4.0 home price/income ratio. We are not going to 3 which is the approximate national average because Californians still have a location premium and interest rates are still quite low.
I don t know what the price income ratio in the 70 s was but I declined my sisters offer to buy a 3 bed rancher on the ocean in La Jolla for 60,000.00. Working ordinary blue collar jobs we could have afforded the house. There is nothing you can buy there today with out a pile of cash or mid to high 6 figure incomes.
Thanx for your amazing work dr. I believe we will drop 3 to5 percent more and that when the election is clearly seen as the lock it is for Obama, prices will soon bottom and begin to rise. With so much capital pumped in to the financial system there is no doubt there will be inflationary pressures during Obama s second term. We ll see! Thanx again for your work.
Inflation will affect prices in mid-tier bubble areas like the 310, 714, 626 and 818 area codes. With wages stagnant or declining, jimmy buffett tour dates inflation in the non-housing sector means less money available for spending on housing. So inflation in non-housing items will lead to deflation in housing costs so long as wages are flat or declining.
Inflation will only affect necessities only. Food, Energy, etc. It will NOT affect home prices this time around as there are NO JOBS. In addition, we will have higher taxes, more unemployment, Austerity like they are having in Greece. Home prices will drop at least another 20%.
This is what I ve always thought, but working west of the 405 I am losing hope. It seems absurd that $500k homes within an hour from here (and NOT in crappy south LA neighborhoods where I ll feel afraid to walk outside at night) are all fixers or tear downs. For a decent house you re looking at $650k at least and for something I consider nice on the westside, more like $800k. Who the hell is buying this??? When you see the median home income here being in the $65k range, it seems absurd that this is sustainable or rational in any way.
But recently I ve heard the argument that median income does not matter, that it is artificially brought down by the high number of low income earners in high density housing (1960 s apartment buildings of crammed shoeboxes all over the westside). That there are enough rich people in LA wanting to live on the westside, who have enough money already or jobs that pay highly enough to support these prices forever. Could this be true? I suppose even if you don t work on the westside, but elsewhere, you d STILL want to live close to the beaches, so perhaps there is something to this argument after all.
As a single earner with an income just above $120k,