Agreed. Wachovia loaned me money using the equity in a rental property at 90% LTV to put down payments on more properties. I personally would never loan someone money to do that. (I bought more rentals on fixed notes) With respect to the "smear on credit rating" comment. Well, it saddens me that people walk away from their obligations instead of working through them, but I guess I can understand when there isn't enough money, there isn't enough.
Pretty hard to draw conclusions from some of these charts that you post, along with the statements that you make. Prices are up, but what we don't know is for what? Are the houses the same? Bigger? Built differently? There is no doubt that San Diego has appreciated. But the comparison with incomes is hard to make without knowing more about the type of houses we're talking about. No where do I see any information about that. Obviously too as prices do appreciate it gives equity with which to acquire a larger home. That home helps to skew the bias upward in pricing. OldTrader
UK Bank fears housing crash http://news.bbc.co.uk/1/hi/business/2435763.stm "The Bank of England is poised to warn of the dangers of a collapse in house prices. " The article was published in Nov, 2002, so the crash must be coming real soon.
UK housing crash fears diminish http://futures.fxstreet.com/Futures...omicnews&pv_noticia=1107427356-c00e0f08-22477 LONDON (AFX) - Concerns that the UK housing market is poised to experience an early 1990s-style crash diminished this morning after a closely-watched survey pointed to a solid increase in prices in January. Ooops, the experts are wrong again. :eek:
Interesting article: Some Housing Markets Are Grossly Overheated Notice on this chart with some aspects of income and such taken into consideration, San Diego doesn't seem as wildly overvalued as some on here make it out to be.
Incomes are not going higher, thet are falling.. I do not know the exact timing for the housing crash(may be after FED raises 50bps more), but when it happens it will be very messy. Everything goes back to fundemantals.. U.S. January Spending Unchanged; Incomes Fall 2.3% (Update1) Feb. 28 (Bloomberg) -- U.S. personal spending was unchanged in January after rising a month earlier as people bought fewer automobiles, a government report showed. A gauge of prices rose. The $8.473 trillion in January spending followed a 0.8 percent rise, the most since July, in December to $8.477 trillion, the Commerce Department reported today in Washington. Incomes fell 2.3 percent after a record 3.7 percent gain that reflected a one-time $32.6 billion dividend payout from Microsoft Corp. Sales of new vehicles declined in January from a month earlier as automakers reduced discounts. Employment that has rebounded above pre-recession levels will fuel spending on other consumer goods, helping lift first-quarter economic growth, economists said. Wages and salaries rose 0.6 percent, the most since July, after rising 0.5 percent. ``Even though the consumer paused in January, we think we'll see a rebound in February,'' said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado. Englund correctly forecast January spending. ``Higher prices had a very real effect'' on vehicle sales. ``People pulled back because of higher prices.'' Economists forecast spending to rise 0.1 percent after a previously reported 0.8 percent December increase, according to the median of 56 estimates in a Bloomberg News survey. Incomes were forecast to fall 2.6 percent following a 3.7 percent increase. Prices of goods and services bought by consumers rose 0.2 percent last month after no change. They rose 2.2 percent from January of last year compared with a 2.4 percent year-over-year rise in December. Prices The report's gauge of prices tied to spending, excluding volatile food and energy prices, rose 0.3 percent after no change. The gauge is tracked by Fed Chairman Alan Greenspan and other policy makers. Consumer purchases fell 0.2 percent after a 0.9 percent rise when adjusted for changes in prices, the government reported. Spending on durable goods such as autos, furniture, and other long-lasting items, adjusted for inflation fell 4.7 percent after rising 4.4 percent. Purchases of non-durable goods rose 0.8 percent after rising 0.4 percent. Spending on services, which account for almost 60 percent of all purchases, rose 0.2 percent after increasing 0.4 percent. Disposable income, or the money left over after taxes, fell 2.6 percent in January following a rise of 4.1 percent the previous month. Savings Rate The personal savings rate fell to 1 percent last month, compared with 3.6 percent in December. The indicator weighs current income from wages, salaries, dividends, businesses and government payments against spending. It doesn't account for borrowed money, income from investments, or withdrawals from prior savings. Consumer spending rose at a 4.2 percent annual rate in the fourth quarter after a 5.1 percent gain the previous three months, the latest Commerce Department data showed. The gains are the strongest back-to-back since the six months ended in March 2000. Cars and light trucks sold at an annual rate of 16.2 million last month, down 12 percent from 18.4 million in December that was the highest since October 2001, industry figures showed. General Motors Corp., the world's largest automaker, earlier this month added rebates of as much as $1,000 on its newest models to help spur sales.
Ought to get some better news Excluding effects of the one-time Microsoft payment, incomes rose 0.5 percent in January after a 0.6 percent gain in December. Compensation from wages and salaries increased 0.7 percent, the biggest increase since July. Wages rose 0.6 percent, while supplements, such as fringe benefits, increased 1.1 percent. Proprietors' income increased 1.7 percent, while rental income fell 2.6 percent. Income from assets fell 17.3 percent in January after rising 22.1 percent in December, again on the Microsoft dividend. --------- Nothing wrong with that picture.
Well home prices are extremely high for an average income earner. Real estate is a cyclical business and I assume very few of you have experienced the downturns in the real estate market. It may be very ugly for the new home buyers who are paying the irrationally exuberant prices at the moment.
People are taking out no doc loans, lying their asses off, hoping to hold onto an overpriced property for 6 mos and flipping it. Wages are not keeping up with prices. When prices fail to raise then home buyers will no longer be willing to take extreme budget measures in order to control a house which is out of their reach. Its getting so bad that investors are forming groups to buy houses together because the prices are so high. On mortgage apps there are spaces for up to 6 borrowers now.
A steal at US$134,478,992.83 http://news.bbc.co.uk/2/hi/uk_news/england/southern_counties/4304553.stm