Another Housing Crash

[Amy Perkins]

Lets Talk about the real issue here, Appraisals!

 

[djd09]

BOA. Check.
WF. Check.
JPMadoff. Check.
Goldman Sachs - Check
Citigroup - Check

Yep all the ingredients for a large bubble.

 

[Randolph Kinney]

Subprime auto loans are defaulting at a higher rate than 2008 crash with same structure of bundling to give AAA rating.

http://link.mail.bloombergbusiness....lcmdkYWlseQ/5918dc406ce9543f3d8b543eBcbc75574

 

[Randolph Kinney]

This chart shows delinquency rates for the largest 100 banks (blue line) and for the remaining 4,788 banks (red line):

But among the remaining 4,788 banks, the charge-off rate spiked to 7.99%, the highest since Q2 2010. The rate among smaller banks had peaked during the Financial Crisis in Q4 2009 at 8.78%:

In the overall scheme of things, these 4,788 smaller banks hold only a small portion of all banking assets, including credit card balances. However, these are the good times with unemployment below 4% and a growing economy.

What happens when the economy turns south?

 

[Terrel L. Shields]

How do you think supply and demand comes into balance then?

Demand disappears when the price is too high. You cannot increase home prices faster than the buyers wages for long. They simply cannot make the payments. The lack of wage growth puts pressure on builders. Smaller lots, smaller houses are needed. Anyone in the 1950s with over 1200 SF was living large. Who builds for that market now?

 

[Joe Flacco]

Demand disappears when the price is too high. You cannot increase home prices faster than the buyers wages for long. They simply cannot make the payments. The lack of wage growth puts pressure on builders. Smaller lots, smaller houses are needed. Anyone in the 1950s with over 1200 SF was living large. Who builds for that market now?

Yeah but that's not right now. What i am saying is that when that starts happening you will see closed sales declining, dom increasing and active listings building. Then it is time to get cautious. We are not anywhere close to that.

What are tax cuts and more favorable trade deals going to do? There is a lot of things going on right now that can keep demand strong in coming years.

 

[gregb]

Yeah but that's not right now. What i am saying is that when that starts happening you will see closed sales declining, dom increasing and active listings building. Then it is time to get cautious. We are not anywhere close to that.

What are tax cuts and more favorable trade deals going to do? There is a lot of things going on right now that can keep demand strong in coming years.

Agree! For my Santa Barbara market. It is like one flea on an elephant, the alarm expressed by others that more are moving out of California than moving to California.

 

[Terrel L. Shields]

What i am saying is that when that starts happening you will see closed sales declining, dom increasing and active listings building.

Did that happen in 2006? In my area we were late to the party as we saw other places decline. But when it hit and prices were actually beginning to fall, we saw builders trying to double down, fraud etc but the actual fall was basically a six week event and Dom went from 40 to only. 60 days the market simply froze in place. From then on it was slow decline, slow sales, etc. It started no differently than a normal market hiccup.

 

[Joe Flacco]

Did that happen in 2006? In my area we were late to the party as we saw other places decline. But when it hit and prices were actually beginning to fall, we saw builders trying to double down, fraud etc but the actual fall was basically a six week event and Dom went from 40 to only. 60 days the market simply froze in place. From then on it was slow decline, slow sales, etc. It started no differently than a normal market hiccup.

I don't have data to look into it but I would bet data showed active listings building starting 2005.

We have more data to look at now that wasn't available before like active listings. Who was able to track active listings before? The first time I was able to see it was when my MLS came out with a separate service.

 

[Joe Flacco]

You don't think active listings built up to that level? It had to be over a year or two or three building up to that level. Making higher highs and higher lows.