Login
Subscribe
Recent Comments
- Lee Campbell on Uncovering the History of the Secret Garden
- Kelja on Uncovering the History of the Secret Garden
- Sylvia Walker on Irvine Housing by the Numbers - May 2012 Update
- Casual Observer on Irvine Housing by the Numbers - May 2012 Update
- Astute As It Comes on Open House Review: 35 Bella Rosa
- Sylvia Walker on Open House Review: 35 Bella Rosa
- Darin on Open House Review: 35 Bella Rosa
- Sylvia Walker on Investors Are Busy in Irvine's Low-End Housing Market
- Casual Observer on Investors Are Busy in Irvine's Low-End Housing Market
- irvine_home_owner on Tustin, but Irvine Schools
Recent Posts
- A Review of The Field Tract at Lambert Ranch
- Open House Review: 34 Redwood Tree Lane
- Uncovering the History of the Secret Garden
- Closed Sales from 5/10/2012-5/16/2012
- Open House Review: 52 Secret Garden
- Irvine Housing by the Numbers - May 2012 Update
- Paired Living with Privacy in Woodbridge
- Beige Ruth Sisters
- Closed Sales from 5/3/2012 to 5/9/2012
- Open House Review: 35 Bella Rosa
Categories
Archives
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- Rest of archives
Browse Homes
Irvine Homes
- Airport Area Homes
- El Camino Real Homes
- Northpark Homes
- Northwood Homes
- Oak Creek Homes
- Orangetree Homes
- Portola Springs Homes
- Quaill Hill Homes
- Rancho San Joaquin Homes
- Turtle Ridge Homes
- Turtle Rock Homes
- University Park
- University Town Center Homes
- West Irvine Homes
- Westpark Homes
- Woodbridge Homes
- Woodbury Homes
Newport Beach Homes
- Newport Coast Homes
- Crystal Cove Homes
- Corona Del Mar / Spyglass
- East Bluff / Harbor View Homes
- Lower Newport Bay / Balboa Island
- Balboa Peninsula Homes
- West Bay / Santa Ana Heights
- West Newport / Lido Homes
Other Cities
- Aliso Viejo Homes
- Anaheim Hills Homes
- Brea Homes
- Costa Mesa Homes
- Coto de Caza Homes
- Dana Point Homes
- Huntington Beach Homes
- Ladera Ranch Homes
- Laguna Beach Homes
- Laguna Hills Homes
- Laguna Niguel Homes
- Lake Forest Homes
- Mission Viejo Homes
- Orange Homes
- Rancho Santa Margarita Homes
- San Clemente Homes
- San Juan Capistrano Homes
- Santa Ana Homes
- Tustin Homes
- Villa Park Homes
- Yorba Linda Homes
Contact
.(JavaScript must be enabled to view this email address)
Foreclosures
Housing
- Talk Irvine
- IHB Forum Archive
- OC Housing News
- Coto Housing Blog
- Housing Kaboom
- Patrick.net
- Housing Chronicles
- Housing Doom
- Dr. Housing Bubble
- Manhattan Beach Confidential
- Burbed
- SoCal RE Bubble Crash
- Professor Piggington
- Real C'ville
- Westside Bubble
- Bubble Meter
- Portland Housing Blog
- Sacramento Land(ing)
- OC Register Blog
Econ/Finance/Other
- Calculated Risk
- The Big Picture
- Economist's View
- Mish's Blog
- Matrix
- Bakers' Stock
- ML-Implode
- Eschaton
- Best Mortgage Rates
- Crackerjack Finance
Latest REOs
- $199,900 :: 3125 Watermarke Pl, Irvine CA, 92612
- $349,900 :: 10 Greenleaf 16, Irvine CA, 92604
- $439,900 :: 61 Olivehurst, Irvine CA, 92602
- $889,900 :: 14 Upland, Irvine CA, 92602
- $429,900 :: 56 Great Lawn, Irvine CA, 92620
- $465,000 :: 212 Garden Gate Ln, Irvine CA, 92620
- $329,000 :: 1006 Terra Bella, Irvine CA, 92602
- $579,900 :: 8 Star Thistle, Irvine CA, 92604
- $750,000 :: 69 Lakeview 6, Irvine CA, 92604
- $499,900 :: 84 Deermont 51, Irvine CA, 92602
What all real estate bloggers fail to understand is that at some point the bond bubble (The Mother of All Bubbles) will burst and interest rates will soar to 18-20% for a time. Just pause for a moment and think about what values will be if RE loans start out at about, say, 16% or so. It is an inevitability given $1.5 trillion annual deficits and socialization of blank-check banking losses.
When rates his 16%, THAT will be the time to buy, but you’ll need cash. Another 50-70% drop in home prices is virtually assured.
It depends on inflation. Will you exchange green paper to a house when the interest rate is 16% but inflation is 25%.
Gold price: $400 in 2000, $1,600 in 2011, $2,000 in 2012.
What happened to those folks in here who were saying that gold was going back to $800?
What the “H” does the price of gold have to do with the relationship of income to house prices?
Chinese investors, who own 50% of Irvine houses, can buy gold instead.
But gold won’t get their children into an IUSD school.
That, in a nutshell, is at the core of the problem in Irvine and why sales of new homes, sales of resales are stalled and will remain stalled. Residential properties are not meant to be investment vehicles.
So then Steve, is it fair to ask if your entire portfolio is short US Treasuries? You’re so sure, that you should be borrowing to leverage this certain bet.
This is unfortunately the problem facing RE in CA and elsewhere. Rates have dropped pretty consistently for 20-30 yrs driving prices up… then bubble / crazy financing put another 200% appreciation on things since 2000.
We are most definitely going to get higher rates.. in the next 5 years and they could keep slowly rising for as far as we can see or until we get our debt and deficit under control i.e., never.
Leveraged investments like housing will be consistently destroyed for the next 10-20+ yrs as rates rise. Remember for every 1 point rise in 30 yr rates you loose 10% in purchasing power and house prices.
Finally, we have lots of ugliness on the horizon… declining conforming loan limits, probable reduction in mortgage interest deductability coming in tax reform (prob to 500K or less). BTW, someone tell me why renters should subsidize million dollar home owners on the mortgage interest??? This is coming… I will never buy until I can buy for less than it cost me to rent EXCLUDING my 20% down.
The future….
BD
Welcome to my town, Fresno. Much more cheaper to own then rent..
Or, all the cash sitting out there could pour into houses first. Just because Joe Average doesn’t have much doesn’t mean the hedge funds etc don’t. Got to be a he’ll of a lot of it out there for CA to get a rate like this recently.
California gets $5.4 billion bank loan at an annualized interest rate of 0.237% to bypass U.S. debt drama
http://latimesblogs.latimes.com/money_co/2011/07/california-bank-loan-lockyer-revenue-notes-cash-debt-ceiling.html
I’m wondering if we are not going to see a whole new round of ‘strategic defaults’ that will happen to properties purchased in the first batches of foreclosure offerings, coming on the back of what has already been identified as shadow inventory.
Banzai: Oh, Scar, it’s just you.
Shenzi: We were afraid it was somebody important.
Banzai: Yeah, you know, like Shadow Inventory.
Scar: I see.
Banzai: Now that’s power.
Shenzi: Tell me about it. I just hear that name and I shudder.
Banzai: Shadow Inventory!
Shenzi: Ooooh! Do it again!
Banzai: Shadow Inventory!
Shenzi: Ooooh!
Banzai: Shadow Inventory, Shadow Inventory, Shadow Inventory!
Shenzi: Ooooh!
[breaks into laughter]
Shenzi: And it tingles me!
Scar: I’m *surrounded* by idiots.
While I don’t doubt the presence of shadow inventory, I’m still waiting for huge price drops they are supposed to trigger. It seems like kicking the can is having some effect.
With all this intervention, high interest rates, resetting ARMs and shadow inventory have lost their “power”.
Booboo: Scar, come over here.
Booboo: Get away from these idiots, Banzai and Shenzi.
Booboo: Basic economics is all about the balance of two things.
Booboo: Supply and demand.
Booboo: Desire is not demand.
Booboo: Shadow inventory is not supply.
Scar: Now, I understand why shadow inventory does not affect the market.
Banzai: We are only as smart as our creator.
Shenzi: Gee! That means our creator is an idiot.
Booboo: Yes, he is an idiot.
Scar: <shrug>
If you mean “kicking the can is having some effect”....yes…the effect is that prices are not dropping as rapidly as predicted. But, look at the sales rates! Without the no-down, no-doc loan, REAL people are not able to qualify for financing. You simply cannot have it both ways. As financing has tightened to at least 10% to 20% down and actual income required…that formula simply works OK on product priced at under $400K.
It’s too early on the bond bubble trade, but it will happen. The point is, it is a shitty time to buy a house. When interest rates are flying high, get your checkbook out. Quit extrapolating out interest rates at 4% forever and ever, amen.