RE: Goin' Deep

[don]

Negative equity is a polite way of saying someone over paid for a home. The technical term takes away the actual visceral reality of being underwater on a mortgage. Empirical research has come out of this nationwide housing crash and the number one predictor of foreclosure is negative equity. Now this is obvious on the surface but it is good to have actual data validating this reality. Being underwater puts many Americans in a negative net worth situation. Most Americans do not participate in any significant way in the stock market. The vast majority derive a large amount of their net worth from the equity in their homes. So the current nationwide housing crash has wiped out over $6 trillion in real estate wealth from the peak. Was this even wealth to begin with? Of course not but psychologically people were spending as if equity gains of 15, 20, and even 25 percent per year were a new paradigm. With the ability to leverage housing purchases for an entire decade we are now dealing with the unfortunate repercussions. As one would expect, home prices are now at a post-bubble pop lows.

Home prices reach a new low


Source: Calculated Risk, CoreLogic

As the chart above highlights home prices nationwide have reached another new low for the crisis. Keep in mind this new low has occurred even with the Federal Reserve pumping trillions of dollars in loans, bailouts, and other gimmicks into the banking industry. The end result was that banks solidified their balance sheets while home prices saw a brief respite that is now coming to an end. This would be expected since people pay for their home mortgage with a job. Jobs are harder to come by as noted by the current civilian participation rate in the employment market:



The last time we had an employment-population ratio at this level was back in the early 1980s. The recent jobs that were added were largely lower paying work. So how are you going to pay for a $500,000 home working at Wal-Mart? Most in the country realize this unsustainability and that is why in places like Nevada, Arizona, and Florida with incredibly large housing bubbles, prices have fallen across the spectrum as the market adjusts to the new reality. Here in California aggregate prices have fallen dramatically but the delusion runs strong in certain niche areas. People find it hard to believe that a place like California can see another 15 to 25 percent cut in prices. Yet this is exactly what will and is happening and we have shown many examples in mid-tier markets of homes that serve as tipping points.

The big future losses come from severe negative equity


Source: CoreLogic

Not all negative equity is created equal. Say you have a home in Alabama that is underwater by 5 percent. This might translate into being under by $5,000. This is likely to have little impact on a family moving out. However, try a home in California with an option ARM that is underwater by 30 percent and was purchased for $800,000 at the peak. You are now talking about being under by $240,000 which is enough to mentally encourage you to walk away. $240,000 does make a decision easier. Psychologically many of these people have walked but are simply staying put enjoying the rent free aspect of the bubble bust. Keep in mind it is your taxpayer dollars paying for these people since the banks that allow this to happen would not even be in existence today without the trillions of dollars in various bailout programs. Banks are the largest beneficiary of the bailouts and the biggest culprits of the crisis.

States of negative equity


Source: Calculated Risk

Over 35 percent of California homeowners are in a negative equity position or near negative equity (within a 5 percent range). This is an enormous number of mortgage holders:



What this translates into is 1,880,000 California mortgage holders have no equity in their home. They are essentially in a worse position than a renter and could be deep underwater if they used one of the common toxic mortgages that we are all so familiar with. Many of these people would walk today if given the chance or if forced to pay their mortgage. Psychologically it would make sense. Take the hit, rebuild your credit, and buy a home in this much cheaper environment.

Banks now have years of shadow inventory in their balance sheets and it has gotten to the point where Bank of America, the largest U.S. bank has discussed creating a bad bank to place $1 trillion of legacy loans in it to clear out over the next three years. Guess where a large number of these homes reside? In bubble states. Bank of America now owns Countrywide Financial which was notorious at making bad loans in California.

Never in our history have we had so many people underwater. So think of the psychology of those 1,880,000 Californians with no equity in their home. As of latest count 277,000 homes are in the process of foreclosure in California. Do you think 1.5 to 1.6 million people will simply keep paying their mortgage as charity? Of course not. Many can’t pay even if they wanted to because of lack of cash. We don’t have data on how many people have stopped paying yet banks simply continue to ignore this and allow them to live rent free. You have the corrupt banks helping the irresponsible. The large prudent majority in the U.S. is starting to wake up and realizes this is one large shell game and is essentially a Ponzi scheme. Banks are hoping there will be enough new suckers that will jump in at current prices to rescue their balance sheet but also the current buyer who willingly signed the paper to buy the home.

I don’t buy the tear jerking stories especially here in California. Are you going to shed a tear for the million dollar home owner who lives on the beach but has stopped making payments? Maybe you feel bad that they can only drive one Mercedes instead of two. Scams like this can only go on for so long and banks realize the quicker they can erase the past the better. After all, if they can hedge taxpayer money and speculate on global stock markets and make more money they can afford to unload property and rid themselves of the negative publicity. Think of BofA’s announcement were they plan to unload $1 trillion in legacy loans over 3 years.

Keep in mind many of these people will not be put on the street. They have an option that many Californians currently participate in. It is called renting. Nothing wrong with that.

People will walk away in many cases in California. There is no shame in walking away. The banks have set the moral standard so low that it would be ridiculous for someone to keep paying on a massively underwater property. Why continue paying on that tulip bulb? Manias are fascinating case studies in herd behavior and even logically minded people get swept up in it. Even today, you have people trying to justify bubble prices in many California cities. Prices will fall and fall hard because you have to have a steady source of income to support current prices. In many areas that is not the case. The only reason someone would pay today’s price in many markets is the belief that the bubble day appreciation gains are only one day, month, or year around the corner so it is time to get in.

Some in California keep talking about the million dollar market. Last year 22,000 homes sold for $1 million or more in the state. That is great but California sells about 546,000 homes a year. So now that we’ve addressed 4 percent of the market, what about the other 96 percent? Bubble markets have a long way to go before any bottom can be called.

http://www.doctorhousingbubble.com/f...f-real-estate/

[housingcrashsurvivor]

Re: Goin' Deep

"Was this even wealth to begin with? Of course not"

If my three dollars from last year does not buy a loaf of bread now, did I ever have three dollars before?

Since it was not "wealth to begin with", I anticipate a refund on the excessive tax money paid on properties appraised higher than what they are worth today.

Perhaps that will buy me a wealthy loaf of bread.

[don]

Re: Goin' Deep

"Was this even wealth to begin with? Of course not"

If my three dollars from last year does not buy a loaf of bread now, did I ever have three dollars before?

Since it was not "wealth to begin with", I anticipate a refund on the excessive tax money paid on properties appraised higher than what they are worth today.

Perhaps that will buy me a wealthy loaf of bread.

The bread bubble is coming, be patient

[housingcrashsurvivor]

Re: Goin' Deep

lolololol

[c1ue]

Re: Goin' Deep

'Negative equity' sounds so sterile.

A friend of mine has lost $250 a day for every single day since he bought a home in the middle of 2007.

Think about that. He isn't negative equity only because he put mid-six digits down.

[lektrode]

Re: Goin' Deep

The bread bubble is coming, be patient

lookin like there'll be a 'bubble' in everything, cept houses that is

just heard on NPR: housing starts off 22% last month

and confirm via wsj:
U.S. wholesale prices surged last month on the back of higher energy and food prices, but underlying producer prices increased only moderately.
Separately, home construction in the U.S. took the steepest monthly plunge in nearly 27 years in February and new building permits set a record low, an indication that the battered sector is a key source of weakness for the economy.
The index of producer prices, which measures how much manufacturers and wholesalers pay for goods and materials, rose a seasonally adjusted 1.6% in February, the Labor Department said Wednesday. That's the biggest increase since June 2009.


------


The Federal Reserve kept its easy-money policies intact as markets reeled from a series of global shocks, but it also offered reassuring words about the economic outlook and signaled vigilance on inflation.
The economy is on a "firmer footing," while the labor market is "improving gradually" and household spending and business investment are expanding, the policy-making Federal Open Market Committee said in a statement following its one-day meeting. Cautionary words about the economy from previous statements were pared back. Meanwhile, energy-price increases have put upward pressure on inflation, the FOMC said. It expects this to be transitory but "will pay close attention," it said.


Fed Chairman Ben Bernanke and his colleagues are moving toward important decisions in the months ahead. The central bank's $600 billion Treasury bond purchase program is scheduled to be completed in June. The program will be an important subject of discussion at the next FOMC meeting in April. Officials will decide whether to let the program run out as planned, as many seem inclined to do. A debate about when and how to exit from their easy-money policies by raising interest rates seems to be taking shape for the second half of the year.
Global turbulence in recent weeks shows how the economic outlook, and thus the outlook for Fed policy, can change quickly. "Concerns about global supplies of crude oil have contributed to a sharp run-up in oil prices in recent weeks," the Fed said in its statement.
Higher oil prices are creating competing problems for the central bank—less purchasing power for consumers and thus the risk of slower growth on the one hand, and more inflation pressure on the other. One problem calls for lowering interest rates and the other calls for raising them.
Commodity-price pressures, Fed officials have found, are becoming uncomfortable to look past, in part because they resonate deeply with the public. Federal Reserve Bank of New York President William Dudley drew skepticism Friday during an appearance in Queens, N.Y., by saying he believed underlying inflation was low despite rising food and energy prices. One member of the audience responded, "When was the last time, sir, you went grocery shopping?"
Despite the rise in oil and food prices—and a recent increase in an indicator of where consumers see prices in the years ahead—the Fed said Tuesday that underlying inflation was "subdued" and repeated that "longer-term inflation expectations have remained stable."
Japan's earthquake and tsunami complicate matters. Financial markets have been severely affected, which could dent consumer and business confidence in Japan and abroad, holding back global economic growth. While the Fed didn't mention Japan's situation directly, the natural disaster has added to the list of potential risks to U.S. growth prospects. Meantime, Europe's sovereign-debt concerns persist.
U.S. stocks recouped some of the day's losses after the Fed upgraded its assessment of the U.S. economy and oil prices retreated from recent highs. Earlier in the day, the Dow Jones Industrial Average dropped nearly 300 points, the biggest intraday loss this year, as global stock markets reacted to fears of a nuclear-power crisis in Japan.
Analysts came away with different interpretations of how far the Fed is from raising interest rates in the U.S.
"When the Fed says the economy is on firmer footing, you can start counting the months if not the weeks until they take their foot off the gas and start to normalize interest rates," said Christopher Rupkey, economist at the Bank of Tokyo-Mitsubishi.
Ethan Harris, head of developed-markets economics research at Bank of America Merrill Lynch Global Research, drew the opposite conclusion. "There is no signal that they are anywhere close to an exit," he said. "I think they're right that serious inflation is a distant concern."
Fed officials voted unanimously to continue with their government bond purchases. They also maintained an important line in their post-meeting statement, saying they expect to keep short-term interest rates close to zero for an "extended period," which means at least several more months.
Since Friday's quake in Japan, financial markets have reset their expectations for when the Fed could increase interest rates. On Thursday, trading in futures markets implied investors saw a 50-50 chance that the Fed would raise its benchmark interest rate—an overnight bank-lending rate called the fed funds rate—to 0.5% by February. Futures prices now imply investors see just a 30% chance that the rate will rise to that level by then.


and what about the sitch in japan?


http://blogs.wsj.com/economics/2011/...tion-of-japan/


By Michael S. Derby

Federal Reserve policy statements are supposed to outline the forces that will drive monetary policy over coming months, so while it wasn’t unexpected, it’s nevertheless puzzling central bankers omitted the biggest risk of all: Japan.
It is true economists are still trying to come to terms with the fluid and very unpredictable course of events coming out of Japan in the wake of last week’s earthquake and tsunami, which has turned into a humanitarian catastrophe and metastasizing nuclear disaster. No forecasters can say with any reliability what impact Japan will have on the world economy, or on the U.S. economy.
And yet, for a Fed that likes to weigh all the risks to the outlook, one of the biggest ones out there is the impact Japan might have on the U.S. Economists have flagged the automotive and technology sectors as potential problem spots, but Japan’s tragedy has the potential to go further and strike at financial markets. That could have knock-on effects on the growth outlook and how the Fed pursues monetary policy.
As it stands now, Fed policy makers see a recovery standing on “firmer footing” amid labor markets that are “improving gradually.” While it expects inflation to remain contained, it nevertheless notes rising commodity and energy prices are “putting upward pressure” on inflation, even as policy makers see the gains as “transitory.” Most Fed watchers had anticipated the Fed would say that, as much as they also saw the central bank continuing forward with its $600 billion bond-buying program.
Fed watchers looked to what the central bank said and saw it as evidence the Fed is growing more confident in the recovery. “Our expectation for a mid-2012 rate hike is not changed by this statement” and “it does point to the Fed beginning the baby steps required to exit from its current strategy,” said Eric Green of TD Securities.
And yet, Japan has the potential to change this outlook, in very significant ways. For one, the powerful downdraft swamping global markets is a problem for the Fed. If stock prices fall significantly, the Fed may have to react by providing more economic stimulus. Central bank officials have pointed to the rise in equity prices since embarking on QE2 as a signature success of the policy.....


success?
theres more to that one, but you get the idea.... QE3 anybody?


http://inflation.us/tsunamijapan.html


Tsunami of Inflation to Hit U.S. with Japan Crisis

The earthquake, tsunami, and nuclear disaster that hit Japan this past week and the destruction that it caused is nothing compared to the tsunami of inflation that will soon hit the U.S. as a result of this crisis. A tsunami of inflation in the U.S. will mean a complete collapse of our monetary system, which could lead to millions of deaths due to a lack of food and heat. 44 million Americans are now dependent on food stamps, but when the U.S. dollar becomes worthless as a result of hyperinflation, the government will no longer have the power to support these Americans and many of them will simply starve to death.

Japan's citizens were smart enough to save up $885.9 billion in U.S. treasuries to spend in a situation like it finds itself in today. The U.S. has no such savings and is the world's largest debtor nation. Our ability to survive depends on our ability to print money that has purchasing power. The only reason the U.S. dollar still has purchasing power is the dollar's status as the world's reserve currency.

All Japan has to do is sell their U.S. treasuries and they will have the financial resources necessary to rebuild the parts of their country that were destroyed by this past week's disaster. However, U.S. Treasury Secretary Timothy Geithner said on Tuesday that he doesn't think Japan will unload their $885.9 billion in U.S. treasuries. It remains to be seen if Japan will do the right thing and sell their U.S. treasuries or if they will make the mistake of continuing to artificially prop up the U.S. economy.

The Central Bank of Japan (BOJ) in recent days has already been repeating many of the same mistakes the Federal Reserve made in the U.S. After this past week's disaster, the BOJ printed hundreds of billions of dollars worth of yen in an attempt to prop up their financial markets. Japan's central bank should be raising interest rates, which would encourage its citizens to increase their savings so that they have more resources to rebuild their country and invest into the production of clean energy. By printing trillions of yen out of thin air, the BOJ will cause prices to rise for the very building materials the Japanese need to purchase in order to rebuild.

Although the yen has been rising in recent days, it would be strengthening a lot more if it wasn't for the BOJ's actions. In fact, NIA believes that while the yen may continue to rise in the short-term, the yen is now likely to lose a substantial amount of its purchasing power over the long-term. Instead of allowing the yen to strengthen so that it is cheaper for the Japanese in import copper, iron, steel, oil, natural gas, and other commodities needed to rebuild, the BOJ's actions are actually hurting the Japanese and having the effect of propping up the U.S. economy in the short-term.

The mainstream media frequently talks about Japan's national debt and how it is 225% of their GDP. However, Japan owes most of their national debt to themselves. We have a much worse national debt crisis here in the U.S., where we owe half of our debt to foreigners. Not only that, but once you include America's unfunded liabilities for Social Security, Medicare, and Medicaid, along with its debts for Fannie Mae and Freddie Mac (which are now government backed entities), total U.S. debt obligations now exceed $76 trillion.

The Japanese economy reached peak consumer spending in 1990 and entered their "Lost Decade" of deflation with a balanced budget, high savings rate of 15%, low unemployment rate of 2%, and a net debt to GDP ratio of less than 20%. The average American peaks in spending at age 46 and the last babyboomer just turned 46 in 2010. This means the U.S. economy just passed peak consumer spending, similar to Japan in 1990. Instead of entering this decade from a position of strength, the U.S. has entered it with a real budget deficit of $4.3 trillion, a savings rate of only 4%, a real unemployment rate of 22%, and total debt obligations that are 5 times higher than GDP. We won't be so lucky to escape this decade with deflation, but will instead be faced with hyperinflation as the world loses confidence in the U.S. dollar and rushes to dump their dollar-denominated assets.


and then theres this:


http://www.washingtonpost.com/busine...hqZ_story.html

By Ylan Q. Mui, Tuesday, March 15, 7:33 PM


Overshadowing the nation’s economic recovery is not only the number of Americans who have lost their jobs, but also those who have stopped looking for new ones.


These workers are not counted in the Labor Department’s monthly unemployment rate, yet they say they are willing to work. Since the recession began, their numbers have grown by 30 percent, to more than 6.4 million, amounting to a hidden labor force that could stymie the turnaround.
Adding these workers to February’s jobless rate pushes it up to 10.5 percent, well above the more commonly cited 8.9 percent rate. An even broader measure of unemployment, which includes people forced to work part time, stands at nearly 16 percent.
Economists say the longer these workers stay out of the job market, the harder it will be for them to find employment, creating a vicious circle that can spiral for months or longer. Meanwhile, their delayed entry into the job market means smaller paychecks in the future. And if these ranks remain high, economists worry that it will signal a much deeper and more troubling problem for the country: Workers’ skills don’t match the jobs available.
“It can be a self-reinforcing problem, where it just gets worse over time,” said Burt Barnow, an economist and professor at George Washington University.
Part of the reason these workers are not factored into the unemployment rate is a technical quirk: Workers are counted as unemployed only if they are actively job-hunting. Otherwise, they are considered outside of the labor force altogether.


[never mind the millions of guys like me, the self employed, who've seen our biz/incomes _slashed_ over the past 3 years... but since we aint union members, we dont count.]




http://blogs.wsj.com/economics/2011/...nt-changed-14/

• March 15, 2011, 3:09 PM ET

Parsing the Fed: How the Statement Changed


By Phil Izzo

The Fed’s statement following the March meeting noted no change in policy, but the central bank upgraded its assessment of the economy and expanded its discussion of inflation pressures. (Read the full March statement.)
March statement:
Information received since the Federal Open Market Committee met in January suggests that the economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually.
January statement:
Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions.
The overall assessment of the economy notes that the recovery is on firmer footing and employment data have shown improvement.
March statement
Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed.
January statement:
Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed.
Concerns about the job market were played down in the most recent statement as policy makers noted expansion in consumer and business spending. The real estate sector continues to be a dark spot in the recovery.
March statement:
Commodity prices have risen significantly since the summer, and concerns about global supplies of crude oil have contributed to a sharp run-up in oil prices in recent weeks. Nonetheless, longer-term inflation expectations have remained stable, and measures of underlying inflation have been subdued.
January statement:
Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward.
The Fed notes that the increase in crude prices have partly been driven by supply concerns. This is something it has no control over. The language on its closely watched measures — core inflation and expectations — is unchanged. The bottom line here is that policy makers aren’t overly concerned about inflation right now.
March meeting:
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.
January meeting:
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.
The Fed’s assessment of its dual mandate — full employment and stable prices — is unchanged: the jobless rate is too high and underlying inflation is low. This allows it to keep policy unchanged.
March meeting:
The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.
January meeting:
Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.
The Fed nods toward concerns about inflation, but says it expects the effect will be “transitory.” Policy makers also no longer describe progress as “disappointingly slow.”
March meeting:
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4% and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.
January meeting:
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4% and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.
The paragraphs on policy are identical to the January statement. It will continue QE2 through June and interest rates aren’t going anywhere.
March statement:
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.
January statement:
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Governor Kevin Warsh, who announced he would step down from the Fed Board at the end of the month, didn’t attend the meeting.

[don]

Re: Goin' Deep

Why do I suspect the Japanese calamity will be used to "explain" every economic downturn for the next year or more.

[don]

Re: Goin' Deep

'Negative equity' sounds so sterile.

A friend of mine has lost $250 a day for every single day since he bought a home in the middle of 2007.

Think about that. He isn't negative equity only because he put mid-six digits down.

Negative Equity

the Wealth Effect

Flippers

Negative Amortization

ARMs

HELOCs

We should start a Devil's Dictionary of Real Estate. Maybe we can get the National Association of Liars to fund us.

Or maybe not

[lektrode]

Re: Goin' Deep

We should start a Devil's Dictionary of Real Estate. Maybe we can get the National Association of Liars to fund us.

allready been done apparently: http://blogs.bolderrealestate.com/20...ate-buzzwords/

heres a few: http://www.investopedia.com/categories/buzzwords.asp for the FIREbrigade

[lektrode]

Re: Goin' Deep

Why do I suspect the Japanese calamity will be used to "explain" every economic downturn for the next year or more.

or more precisely: QEIII, IV, V, VI....

[stealthcat]

Re: Goin' Deep

A friend of mine has lost $250 a day for every single day since he bought a home in the middle of 2007.

Think about that. He isn't negative equity only because he put mid-six digits down.

I remember reading many news articles in 2005 about how people in San Diego were sitting pretty because their houses were "earning" $8k / month. Surely they must have suspected that the opposite, which you point out here, would happen eventually...

[don]

Re: Goin' Deep

I remember reading many news articles in 2005 about how people in San Diego were sitting pretty because their houses were "earning" $8k / month. Surely they must have suspected that the opposite, which you point out here, would happen eventually...

Then there's the adjunct to the wealth effect crowd, the wealth effect nostalgia group. Smaller than the original wealthers (think birthers . . . of the housing bubble mania), these folks never bought or drew heavily, if at all, on their fantasy equity lines. But boy, do they sure miss those house numbers. Theirs in particular

[flintlock]

Re: Goin' Deep

Bbbbbbbut, what about all that money I was promised flipping houses?

[dcarrigg]

Re: Goin' Deep

Bbbbbbbut, what about all that money I was promised flipping houses?

[don]

Re: Goin' Deep

Now on sale, deeply discounted!

(During the Carter years, when conventional lending was out of sight, there were seminars where you were urged to amass credit cards - this coincided with the enormous plastic debt drive - and take all the cash advances you could to invest in real estate. Then hold on until interest rates came back to "normal". I kid you not.)