[airics]

Originally Posted by tony soprano

. It's been spotty the last 24 hours due to torrential downpours.

.

thats the weird thing about Vegas, you are getting downpours and all i've seen is a 15 minute light drizzle.

[tony soprano]

Okay Ocean, here are my thoughts - this is sure to be anti-climatic because my perspective hasn't changed much since I was asked by the serial prognosticator months ago to go on the record. Plus, my prediction doesn't offer the granularity you're looking for.

Handicapping the macroeconomic inputs and their respective impact on the housing market is its own challenge, but to me, the even trickier part is something that JohnG72 referenced in a recent post - it's impossible to know the lengths to which the govt. is willing to go to put a bottom in the housing market.

The amount of govt. intervention that's been enacted in an effort to jump start the housing market is staggering: tax credits, then extended tax credits, funding mortgage modifications, jawboning lenders to enact foreclosure moratoriums, the purchase of $1.25T of agency MBS, legislation to lengthen the foreclosure process, the $100+B cash infusion to Fannie/Freddie to prop them up, etc. Who can possibly know what they might do next?

I can offer an opinion on where the Vegas housing market is headed over the next year with a reasonable belief that the already once extended tax credit will be allowed to expire this summer. That, and the Fed will cease their quantitative easing (money printing) this March. But, maybe they extend the tax credit yet again. Maybe they actually increase the credit. Maybe they continue the quantitative easing. Maybe they enact a 6 month foreclosure moratorium. It's a crapshoot.

The fact that some housing markets have barely managed to tread water in spite of the massive intervention we've experienced is an indicator of just how weak those markets really are. The question is what happens to the Vegas housing market once the intervention ends and stimulus is removed?

In any event, right or wrong, I'll stick with the same sentiment I expressed back in July of last year -

Originally Posted by tony soprano on 7/23/09

My position has been that the turn will be very protracted. Extrapolate the current price trend since your bottom call in April for another 18 months or so, and there you have it. May was a slight drop from April. Followed by a flat June. I think we have months and months of that in store.

One thing I want to point out - in 2007 there were three instances of month-over-month prices, yet the year closed markedly lower. Even 2008 had at least one instance of a month-over-month price increase while prices cratered. So, I won't be surprised to see the same thing happen in 2009. When all is said and done, when adjusted for inflation, I believe housing appreciation between now and next Easter will be bupkis.

[amolon]

tony
ok, but what is your poll vote?

[asd123]

I see it only going down...into distant future. Reasons????

1) Super majority of home owners under water (~70%)
2) 20% real unemployment
3) Economy based on discretionary spending

"You can now purchase some properties for the true cost to build them."
What if the average wages go down. They already started to go down. Cost to build in 2012 would be much lower than Cost to build in 2004.

"Instead of renting you can buy."
What if the rent goes down. They already started to go down.

[airics]

Originally Posted by asd123

"Instead of renting you can buy."
What if the rent goes down. They already started to go down.

condo, townhouse, apartment Yes... House - depends but not in my area.. it went up

[dmilll]

Originally Posted by tony soprano

The amount of govt. intervention that's been enacted in an effort to jump start the housing market is staggering: tax credits, then extended tax credits, funding mortgage modifications, jawboning lenders to enact foreclosure moratoriums, the purchase of $1.25T of agency MBS, legislation to lengthen the foreclosure process, the $100+B cash infusion to Fannie/Freddie to prop them up, etc. Who can possibly know what they might do next?

I agree with your take and don't think you will see much movement between now and the midterm elections. However, if Congress is able to pass something major that is signed into law then all bets are off...

Next January, I think a lot will depend on the unemployment numbers from the BLS:
Table A-12. Alternative measures of labor underutilization

As of December, the U6 number is at 17.3%. If this does not improve significantly, I don't see how prices can rise much from where they are now. That's why I mentioned the midterm elections earlier. IMHO, hiring is down because there is a lot of uncertainly about the related costs companies will have to bear.

Just my $.02

[JM95]

If you can buy at $50 square foot, and get a rental income of 10% you will do ok, as long as you can hang on next 18-24 months with rental turmoil.

That being said, the other shoe is about to drop on the economy. What we saw over the past 9 months was the quite before the storm. Stock prices will now resume their collapse heading into October 2010. "Strategic foreclosures" will increase dramatically putting lots of houses on the market. This is like the "false ending" in horror movies where the vilain is supposedly dead, and we all breathe a sigh of relief...Then he jumps out of the closet with a machete.

The good news is there will be plenty of bargains in 6 months.

How do you know the TRUE BOTTOM? It's when there is utter capitulation by all the realtors on this board. When they throw in the towel and leave the game in disgust.

The long term picture - after 2012 when a Reagan Republican becomes president - is great.
You can bet on this if Meg WHitman becomes governor of California. That will be the dawn of a new golden age.

[JM95]

The government is *done* messing with free market in real estate. They have blown their load. Fed did a great job of pumping up stocks, which allowed the banks to get some fresh capital in, and get the smart money liquid. Classic pump and dump.

There is less need for manipulation now that the panic phase is over. Prices can now settle down to natural levels.

Originally Posted by tony soprano

Okay Ocean, here are my thoughts - this is sure to be anti-climatic because my perspective hasn't changed much since I was asked by the serial prognosticator months ago to go on the record. Plus, my prediction doesn't offer the granularity you're looking for.

Handicapping the macroeconomic inputs and their respective impact on the housing market is its own challenge, but to me, the even trickier part is something that JohnG72 referenced in a recent post - it's impossible to know the lengths to which the govt. is willing to go to put a bottom in the housing market.

The amount of govt. intervention that's been enacted in an effort to jump start the housing market is staggering: tax credits, then extended tax credits, funding mortgage modifications, jawboning lenders to enact foreclosure moratoriums, the purchase of $1.25T of agency MBS, legislation to lengthen the foreclosure process, the $100+B cash infusion to Fannie/Freddie to prop them up, etc. Who can possibly know what they might do next?

I can offer an opinion on where the Vegas housing market is headed over the next year with a reasonable belief that the already once extended tax credit will be allowed to expire this summer. That, and the Fed will cease their quantitative easing (money printing) this March. But, maybe they extend the tax credit yet again. Maybe they actually increase the credit. Maybe they continue the quantitative easing. Maybe they enact a 6 month foreclosure moratorium. It's a crapshoot.

The fact that some housing markets have barely managed to tread water in spite of the massive intervention we've experienced is an indicator of just how weak those markets really are. The question is what happens to the Vegas housing market once the intervention ends and stimulus is removed?

In any event, right or wrong, I'll stick with the same sentiment I expressed back in July of last year -

[tony soprano]

Originally Posted by JM95

How do you know the TRUE BOTTOM? It's when there is utter capitulation by all the realtors on this board. When they throw in the towel and leave the game in disgust.

The fat lady might be tuning up in the wings - we haven't heard a "something's got to give" or "present trends can't be maintained" for a few months now.

[airics]

im still thinking the govt is going to do something about the upside down homes... or at least give current homeowners a bone.. a nice large stimulus check would do...