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floridabuilder2 (99.67)

Chapter 2: Builders - The $8,000 Tax Credit Question + Did Land Prices Just Double?

Recs

69

October 09, 2009 – Comments (32) | RELATED TICKERS: XHB , BAC

Thoughts of a chimp

Since October 2008 the blog posts here were just unbearable (no pun intended).  I mean you really thought it was the end of the world.  I would have rather been strapped to a wool chair nude and forced to watch From Justin to Kelly 500 times than have to read every ultra bear blog post between Sept 08 to Mar 09.  At least I could fantasize that Kelly were actually hot and I was making it with her.

When I last blogged in the Spring we were in the rebounding stage of this mega rally and there were a lot of things happening.  However, it was pointless to even post only to get shouted down that i was "to close to housing and didn't really know how bad it was"...........  Oh yea, the more you know the less smart you are.  WTF?  Maybe in Bizarro world.

So I decided to check out and let the bears figure out the hard way what I was hearing and seeing and driving the market higher.  Now, being the fool I am I actually bought long and short, but sold my longs during the rally and kept my stupid short ETFs (which I am going to complain about again).  Even though I was hearing and seeing things, I know that this is not a V shaped recovery as many of you do and this is what the market is pricing in.  I also understood the things I was hearing and seeing were one time shots of Monster and not longer lasting Dbol tabs. 

Obviously my subject title provides insight into two of these drivers, but we need to some quick mental gymnastics before we dive into these subjects.

The majority of you who actually do research probably know that housing historically has led us into and out of recessions.  Housing is one of the biggest assets a person owns and is owned by a signifcant portion of our population.  You can't buy a house if you don't have a job (unless it is made by Beazer Homes).  The amount of capital spend in housing when you consider land, overhead, COGS, etc... is easily in the hundreds of billions.  If housing is more affordable it takes less of your paycheck allowing you to spend on other things, save or invest.  I mean the list goes on and on and on....  People say healthcare or consumer spending drives our economy, but those are expenses that one can choose to consume more or less of at any particular time in most cases.  Housing is a major asset, that is highly leveraged even if you put 20% down and even after you take on all that debt and lay down equity the continuing costs still are a huge part of your budget (including repairs and upkeep).  If you don't buy into the philosophy that today and historically housing isn't going to lead us out of the next recovery I really don't want to know what you do think will.  Mainly because I don't care and you are not going to change my mind.

This is important because I blog about housing and going forward banking.  I am in the trenches with real time information from too many sources in building and now banking and the goverment (FDIC).  If housing is a massive part of our economy that leads us into and out of recessions then what is banking which loans 80-100% of the home value.  The market talking heads may say "look at Alcoa, look at Cash for Clunkers, look at health care reform"...... but behind the scenes it is only "what is going on in housing and banking."  Period.  End of story.

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The $8,000 Tax Credit

Let me be clear on this.  As clear as Lake Geneva.  As clear as a punch in the nose.  As clear as two chimps fighting over a banana.  The $8,000 Tax Credit was a significant driver in home sales.  The $8,000 Tax Credit pulled future sales forward.  The $8,000 Tax Credit is priced in FULLY into builder stocks.  If the $8,000 Tax Credit is not renewed builder stocks will drop faster than a flashers pants.  The ramifications of not renewing this Tax Credit will be very bad for builders until... well until Congress brings it back.

The only thing taking builder stocks higher is an overall market rally (thus why I recently red thumbed the builder index XHB).  However, builder stocks are fully pricing in an extension.  There is limited upside and a lot of downside.  You are probably saying "well if you knew this in the Spring why did you keep your red thumbs on all the builders?"  Because I am only flipping from red to green thumb once and then they are perma green thumbs when all builders have turned the corner.  I don't trade the builder green/red any more.  They only go green once and they stay green until the next housing builder stock bubble.

I know the tax credit was a significant driver in home sales because I called enough people at the public builders.  I know the tax credit pulled future sales forward because as I posted in previous blogs I used to work for one of the auto companies who loved to give huge discounts and then watch future sales dry up EVERY FRICKING TIME.  Idiots.  I know that builder stocks have FULLY priced in an extension of the tax credits because I indirectly know someone that knows every builder analyst on Wall Street and the investment companies that invest in homebuilding stocks EXPECT an EXTENSION.  Thus FULLY priced in.

Let me make it perfectly clear for you Capuchin Monkeys.  I never share opinions.  I share facts real time.  I can't control the markets reaction to facts 100% of the time, but in this case I have enough facts from enough angles to say look out below if there is no extension.

This market rally looked at housing, because housing leads us out of recessions, but housing was being primed by tax credits.  The hangover occurs when they end.

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Feeling 7 Up I'm Feeling 7 Up

Feeling 7 Up I'm Feeling 7 Up

It's a Crisp Refreshing Feeling

Crystal Clear and Light

America is Feeling 7 Up and it sure Feels Right

Feeling Lucky 7, Feeling 7 Up

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Favorite Chimp Motivational Speech and Video

That is right your favorite Chimp is back... I am holding back no punches, I am throwing the poo like never before, I am doing back flips like Nadia Comanichi at a Prague Disco

If this video doesn't fire you up then you are a lifeless zombie waiting for death like Captain Crunch waiting to meet Moby Dick

Motivational Video

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Did Land Prices Just Double?

You know I'm getting kind of tired, let's save this for chapter 3.  Rest assured that what happened in the land market the last 6-9 months drove this market higher.  However, people are only getting part of the story.  As a primer please read this quick blog post in August 2007, why is BAC a 4 star stock.  On August 27th 2007 BAC was 50.68 a share and a four star stock by our beloved CAPS community.  Why did I question the might CAPS community.  Because I value distressed assets 24/7 and that is ground zero for what plagues the economy.  I have important news on land prices and its implication both good and bad. 

My blogs are meant to educate and give you data points and information that the news wires don't give you.  I'm still waiting for my case of Monster TDRH

32 Comments – Post Your Own

#1) On October 09, 2009 at 1:05 AM, floridabuilder2 (99.67) wrote:

Seriously though let's not monkey around.  Please read the BAC is a 4 star link.  It is a quick read and very important as a lead in to the next chapter

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#2) On October 09, 2009 at 1:51 AM, Tastylunch (99.64) wrote:

FB

any thoughts on about Lumber prices and their relation to builder stocks?

I know seasonality is at play here but lumber prices seem like they are really sliding of late.

I would assume that's indicating slackening demand from builders

anyway appreciate the insight as always. I look forward to your news on land prices.

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#3) On October 09, 2009 at 2:38 AM, awallejr (79.38) wrote:

"The $8,000 Tax Credit was a significant driver in home sales."

Helped but was not the driving force in my opinion. I do alot of real estate closings.  Price and mortgage interest rates were the driving forces.  Remember, the credit only applied to new home buyers.  There is talk of extending it and beyond just new buyers (principal residence perhaps?). 

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#4) On October 09, 2009 at 2:46 AM, QualityPicks (94.42) wrote:

Nice to have you back FB. I remember when you were discussing the different type of bears. I wrote I was very bearish, but not the "end of the world" bearish. I have to say, from looking around me (between friends and people I know) we only had a "mild" recession. I have to say that the dot com bust bear market looked to me at least twice as bad. Markets went down to the same levels, but more of my friends were unemployed or affected in the tech bust. The unemployment level is much worse right now, but not among the people I know. Rents are higher than back then, home prices are almost 100% higher (at least here in Irvine). Of course, listening to the news, it seems this was much worse. Anyway, I was way off, at least so far regarding how much we were going to correct. I'm still expecting we will get hit hard(er) again in the coming years (months?), but right now, things haven't even corrected to what it was my "optimistic" scenario.

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#5) On October 09, 2009 at 9:09 AM, floridabuilder2 (99.67) wrote:

Tasty,

Lumber prices were sliding because of slackening demand, but that is slackening new home demand since 2006... so we have been going down pretty much in a straight line trajector since then through the summer of this year.  The question is if demand keeps slackening do prices continue to fall?  Probably not that much farther as producers are and can take more supply off the market quickly.  A major mill out west with a billion board feet capacity was taken down most recently.  This has caused a slight bounce in pricing.  If demand picks up 20% (e.g. 20% more homes built next year vs. this) pricing probably won't go up much if at all because right now the industry is significantly under capacity.  Lumber is pretty much controlled by 3 entities one of which is WY.

Awallej,

I can respect your opinion and it is a common opinion.  However, in talking with a lot of people with influence in the industry (new housing) the tax credit was an enormous driving force.  Information in the industry is bottom to top, so sales people have been pushing this tax credit and buyers have been responding.  Every buyer looks at the interest rate as a given.  If you used a mortgage interest calculator on the internet with a $180,000 mortgage, drop the rate from 6% to 5% and you save approximately $100/month.  On a present value basis is an $8,000 tax credit worth more today or $100/month over years and years and years. 

Trust me on this, every industry insider I know says that the tax credit all the way down from the salespersons mouth IS the driving force of we just saw in new housing.  There is a secon driving force too, but I won't discusss that for another chapter or two.  The point of this blog was to show you what drove builder stocks higher.  As I stated analysts are all saying their clients who hold builder stocks believe that the tax credit is going to be extended and that is why they are still holding builder stocks.

QualityPicks,

ah yes my Koala bear, black bear, brown bear, grizzly bear blog.  I am not sure what your definition of "mild" is, that is why I tend to use terms such as V, W, U, and the dreaded L... If you expect us to get hit harder then I guess you are probably in the W camp.  I'm bearish too, we aren't in a V but the capitalist system is going straight into the tube and us living in caves again.

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#6) On October 09, 2009 at 10:16 AM, ocsurf (62.81) wrote:

Thanks for the education FB ;)

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#7) On October 09, 2009 at 11:50 AM, anchak (99.76) wrote:

My friend ...you should come and do my job....honestly.....I'll be out of work - because I cant do yours .....but I think overall economy/banking would be better off!

Housing forms about 45-55% of GDP by our estimates - and with a lot of indirect impact.

The tax credit is the single largest driver of sales this year - and YES - the expectation is of an extension. In fact there's some worry about the 1 month possible gap - due to Congressional hiatus/sessions etc.

The other thing from a residential perspective is the Obama MHA program. Maybe we can talk about that someday!

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#8) On October 09, 2009 at 12:45 PM, tonylogan1 (29.11) wrote:

nice post... I stick by my original prediction on the housing credit extention...

I don't think they get it done before Oct 31st, so it is going to get delayed to next year.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=266393&t=01009588614429498823

 

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#9) On October 09, 2009 at 12:55 PM, bigcat1969 (98.24) wrote:

Thanks for the post.  Very well written.  A couple questions.  Right now we have, as noted, government incentive, low interest rates and good deals thanks to foreclosures and short selling.  How long will these factors go on and what happens when they cease?

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#10) On October 09, 2009 at 1:13 PM, cthomas1017 (30.77) wrote:

May I ask a question from the standpoint of risk analysis?  Agreed that stock prices for real estate & banking have factored in a 100% chance of the $8000 credit extension.  But there is still a chance (no matter how slim) that the extension doesn't get renewed immediately (or at all).  If you were in Vegas setting the odds, what percentage would you place on the extension not being renewed at all?  A one month laspe?  A three month lapse?

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#11) On October 09, 2009 at 1:24 PM, floridabuilder2 (99.67) wrote:

anchak,

Nothing happens without real estate/banking healing.  If one were to actually look at the assets (loans banks own) and the categories they are in.  Things like consumer credit cards are gnats a$$ compared to residential housing, land, construction real estate.  I am not even talking about commercial/industrial!  Whenever I see something about Walmart sales up or Intel I just laugh.  Chinese made shirts and PC chips aren't going to lead us out of a recession.

Tonylogan,

Data is everything.  I think a lot of institutional investors would be holding builder stocks if they understood the dynamics of what is going on.  Again, many people believe it is interest rates driving builder stocks and that is not the case. 

Bigcat,

I don't think anyone has ever said I wrote something well, you must be a gorilla?  foreclosures and short sales will last for years because that is how the banks are releasing them rather than toss everyone out at once.  As far as interest rates are concerned, I don't blog about predictions.  Too many factors.  A lot of CAPS players like to discuss predictions about Gold, Unemployment, SPY, Deficits, etc... and how they will effect things such as interest rates.  However, it is all speculation and things can take anywhere from days to years to play out. 

I bringing up the gov't incentive because that decision will happen instantly and have major ramifications.

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#12) On October 09, 2009 at 1:29 PM, floridabuilder2 (99.67) wrote:

ctthomas,

I would rather bet on football games than gov't decisions.  I will say this, if there is no extension housing will suffer and so will builder stocks....  which means some time in 2010 it will come back because as housing goes so goes our economy.  Housing pricing stabilized between March-August of this year and I actually saw some improvement in a few markets i track at the micro level.  Improvements in pricing and sales pace.  However, as this post claims it is being driven by gov't incentives more than anything.

In 2010 a number of my builder red thumbs will go green.  Of all the trillions our gov't is blowing out the window, they are too stupid to realize the billions propping up housing is the best bang for their buck.  Idiots

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#13) On October 09, 2009 at 1:49 PM, EnigmaDude (35.24) wrote:

FB,

As a potential home buyer (currently renting) I am curious as to what is your opinion on whether next spring will turn out to be a good time to buy a house?  My guess is that they will extend the credit. Do you think the trend in pricing and pace of sales will continue, or will it revert back to a downward trend over the next 6 months or so?

I realize that there are many variables at play and you don't do predictions - just give me your macro view, if you would.

And thanks for blogging again - I was also getting sick of all the ultra-bears on this site!

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#14) On October 09, 2009 at 2:08 PM, d1david (99.90) wrote:

what, you are giving us homework?, i think i read the BAC blog post, but will have to re-read it... i am sure it was entertaining

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#15) On October 09, 2009 at 2:28 PM, Tastylunch (99.64) wrote:

hey thanks FB I appreciate it.

what you say makes sense. Lumber does has it's own set of players

It would make sense that Lumber prices would have too external factors to be a reliable predictor for homebuilder/home sales

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#16) On October 09, 2009 at 2:33 PM, cthomas1017 (30.77) wrote:

FB!
I figured you'd answer that way, but gave it a shot anyway.  Love the football comment.  I have a better track record predicting government decisions than football.  In football, there only seems to be one constant, "never bet against the Lions".  In that vein, here's a hilarious video about the Lions... http://www.youtube.com/?v=G14QA6YBHgQ

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#17) On October 09, 2009 at 2:51 PM, outoffocus (23.72) wrote:

EnigmaDude

I'm a little confused by your question.  Are you saying that if prices are going up that its a better time to buy? Wouldn't it be a better time to buy if the prices are contracting or flat?  Contraction means you have a better chance at getting your house at a lower price and you have more bargaining room with the seller. Unless you plan on using 90%+ leverage on your mortgage, what difference does it make if houses continue to go down in price over the next 6 months? 

A house is supposed to be a long term investment in 1. a roof over your head, and 2. a chance at owning your own piece of real estate.  Therefore if you are absolutely ready (financially and emotionaly) to buy a house, short term market movements shouldnt make that much of a difference. 

Having said that, you didnt ask me you asked Floridabuilder.

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#18) On October 09, 2009 at 4:17 PM, floridabuilder2 (99.67) wrote:

Enigma,

You need to fill in some gaps for me.  Are you buying new or resale.  Foreclosure only or will you do traditional (consumer to consumer), what MSA (metroplitian area) do you live in.  Fill in these gaps and then I will provide more visibility.

D1david,

Actually there was no humor in that post just a paragraph that never seemed to end... I guess I was drinking that night.  However, when you consider the timeframe it was written... well hindsight is 20/20.

Cthomas,

I used to enjoy watching the NFL and I Lions fan since I was originally from Detroit.  However, after close to a decade of one big major fail with that organization i can't stomach anything but college ball today.  The Lions ruined me for football just like the Tigers did with all their losing in the 90s

Outoffocus,

You are correct in many respects.  However, if I know the MSA I can provide better visibility.  If he lived in DC I would have said he should have already bought already, if he lived in Orlando I would say buy within the next year and if he lived in Maricopa County AZ I would say move or don't buy for the forseeable future.

 

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#19) On October 09, 2009 at 4:32 PM, HooDaHeckNose (99.51) wrote:

Welcome back! What a breath of fresh air.

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#20) On October 09, 2009 at 6:56 PM, awallejr (79.38) wrote:


Well I am only going to comment on NYC and surrounding area real estate market since that is where my experience lies.  The "problem" with the credit is it only applies to new home buyers who earn under a certain amount.  Additionally that money is an "after the fact" event, meaning it is money not usueable for the transaction (well assuming no "creative" financing).  While it might be a way of getting people into "the showroom,"  it is having $400,000 houses now selling for $250,000 at historically low mortgage interest rates that is the real driving force at least in my area.  Odds are the real beneficiaries of that credit will be the furniture stores or home depot.

 

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#21) On October 09, 2009 at 9:07 PM, RandolphFL (< 20) wrote:

....

>>>>'.........V, W, U, and the dreaded L... ...'<<<<

...worse than the 'L' is the 'Bizzarro - N'... ( the mirror image of an italicized 'N')

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#22) On October 10, 2009 at 2:31 AM, Lordrobot (90.02) wrote:

Hard to read al the cryptic and I suppose amusing posts about housing. Housing has never lead anyone out of recession and this one will drive us to a second leg recession why:

1) The mortgage market is disconnected from reality. The only way banks are lending at the present "rate" is if they can unload the deadly mortgage on fannie or fredie. There is no way that a banker even with a fed window of zero is going to live with 5% interet when the dollar has already lost 15% in a basket of currencies which are all inflating just at differnt rates.

2) when the gov declared housing the de facto investment class in 1995 with the new tax provision allowing for no capital gains on a two year flip up to 500K, the inflation sent the housing market straight up. This so-called de facto investment class was nothing more than a highly leveraged play on housing. Banks took the morgtages Fair Market Value or intrinsic value to heart and disposed of the more intelligent cost accounting methods. The net result was a fly away inflation in housing by people who were novice in investment.

3) presently every home mortgage since 2000 is under water. There can be no market in housing until there is equity. PERIOD.

4) IRS made it possible for every citizen to walk away from their mortgage without the occurance of income through the discharge of indebtedness. To explain for the tax novices. A buyer buys a home for $400K puts down 100K gets a mortgage for 300K. The house declines in value to 200K and he walks away. In the past, the 100K of the mortgage - house value would be taxed as ordinary income. Now it is not taxed. So from de facto investment, we now have a de facto excape hatch.

5) Building materials in spite of the recession have not declined due to inflation and the idea that one can wait this thing out. But that just makes the affordabity index go off the map. And unlike the desktop computer that you have on your desk which would have sold for 100 million dollars in 1963 if they could even build such a thing, is now a couple of hundred bucks. But housing the anomoly has has continued to resist production reduction costs though the technolgy remains the same since the late 1700s.

6) Housing will eventually capitulate. "The zombie banks that are trying to light the fire under the bubble will eventualy fail. Every time the gov prints more money the affordabiltiy index goes higher.

7) Housing as a pure investment class is lousy. Every transaction costs 6% in broker fees on a highly leveraged investment. If I have a highly leveraged tading account, I pay a single 7.99 fee to liquidate. On top of the commission on sale, houses need maintanence, and there is a tax bill due. The traditional appreciation line before 1995 was roghly 1% per annum for the prior 80 years. And there were bigger booms in the 50s without the inflation.

9) What you think is a present bottom in housing is nothing mroe than inflation or a false bottom. Without equity there is no market PERIOD. Nobody is going to buy inflated housing or land on some silly notion that inflated assets are a hedge against inflation. That is purely stupid reasoning.

10) Housing will not bottom until it capitulates and the gov pumping up the liquidity is only forestalling the inevitable. Capitalism is a stern master, and it will destroy any system that violates the rules of survival. The government is destroying the dollar and housing which remains inflated will go down with the dollar implosion. It will not be a hedge against a dollar collapse.

11) during the bush years the dollar declined by 20%, housing roared up by up to 200% in some regions. With obma, at just 8 months into his term, the dollars has lost 15%. So in real terms when a house declines by 10% year over year, if it is adjusted for inflation it is going down more like 25% per year. So the downpayment is gone forever. Homeowners would be wise to walk away from mortgages or all stop paying them and squeeze the banks into collapse. That is the only way that this game by the gov will be brought to a hault. Otherwise homeowners will continue to be hammered because there is no equity. Under inflation condition, owning money is bad and borrowing is good because you pay back in cheap dollars but in this case, the assets were bought at bubble prices so there is no advantage to inflation on those loans.

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#23) On October 10, 2009 at 6:40 PM, awallejr (79.38) wrote:

"Housing as a pure investment class is lousy" 

This is too simplistic a comment.  It really depends on what "housing" you are referring to.  Owning multi-family homes and apartment complexes can be an excellent investment even in today's market if run wisely.  Of course location plays an important part as well.

And as for "capitulation" in housing that kind of event is inapplicable.  Everyone is suppose to say "we give up" and then move out of all their homes and on to the streets?  Of course not.  Houses are homes first, above all else.  It is a place to live in and to raise a family in.  While people might be under water if they tried to sell their house today, that doesn't necessarily mean they, however, want to sell today.  Affordablity dictates ultimately.  Those that lost their jobs got hurt.  Those who bought with "teaser" rates which can't be refinanced got hurt.  Those now entering into the market have a great opportunity.

 

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#24) On October 11, 2009 at 10:12 AM, TDRH (99.98) wrote:

The tax credit for housing and cash for clunkers program are designed to create an artificial shift in qualified demand to delay/slow what is a natural correction in the market.   Even with the slowing rate of job losses, real income will contine to be squeezed as will tax revenue in municipalities and state budgets.    I see a long L.......and a second leg down for the market.  Valuations are not support by current or expected earnings.

 

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#25) On October 12, 2009 at 3:23 PM, EnigmaDude (35.24) wrote:

FB,

If you are still reading/commenting here are the details:

I'm looking at buying a resale home, probably traditional (rather than foreclosure or short sale, unless I find a great deal).

The area I am looking in is Denver metro (Golden, specifically).  The last home that I owned was in Boulder County and over 12 years (from 1992-2006) it doubled in value.  I don't expect that to happen during the next 12 years, do you?

And regarding outoffocus' comment, I agree that short-term market swings don't matter much in the grand scheme. If prices continue to trend down for the next 6 months that should put me in a better position as a buyer.  On the other hand, if the trend will continue for another 2-3 years or more, then perhaps I should continue to rent for a while.

Thanks for all your feedback!

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#26) On October 14, 2009 at 10:56 AM, floridabuilder2 (99.67) wrote:

awallejr,

I can appreciate what you are saying, however, virtually all new construction is in the smile states from DC, down through the Carolinas, GA and Florida, across to Texas and up AZ, NV, and California.  So when the industry talks housing they really don't care about the Northeast, Midwest or Central states.  Population growth is occurring in the smile states

lordrobot,

1) disconnected from reality?  Fannie and Freddie are picking it up, so your point is moot.  What you think isn't reality, what is happening in the market is reality.

2) more complicated than that... although housing was looked at as an investment, there were many other factors such as not having to put as much money down, demographic trends in the smile states, ability to get easy financing, etc...

3) every home mortgage since 2000 is underwater?  So if someone put 50% down in 2000 in Des Moines Iowa they are underwater....  ok, I don't think I can read any more of your macro views since they are really just opinions not based in fact or out right lies... come on, every mortgage since 2000 is underwater regardless of how much a person put down and in any area of the country.... do you take people on caps as idiots?

see even awallejr is shaking his head

TDRH, although I agree unfortunately as you know you can't fight the trend...  I see a long L myself, my partner sees a U in housing... either way you can make money if your patient.  Once I get out of my two short positions, I am done with the market.  It is so rigged.  The major players on Wall Street can keep a trend going for a long time

Enigmadude,

Housing in Denver never caught on fire like Florida, Nevada, Arizona and California.  So the peak median prices around early 2006 were about 240,000.  Denver bottomed from a pricing standpoint in Mar of this year and actually has bounced back up.  Correct me if I am wrong but wasn't unemployment higher in the April May timeframe vs. now? 

I think the key is to buy when a tax credit is offered for people who are not first time buyers.  I would jump on something like that immediately because a credit is a lot more powerful as you know than a deduction.  To make it worthwhile you want at least an 8,000 credit.  Although it appears that prices have actually increased in Denver since March, I still think they pull back.  The lowest the Denver area got in median pricing for 2009 was 170k and that was in March.  No coincidence that is when the stock market bottomed.

If you ask me every month I will tell you which way the indicators are going in Denver. Like I said, Denver actually bounced since March.  Building permits for single family homes are around 3,000 which is probably 25% of the peak.  This is key, because if Denver is still getting in migration, the low level of building permits will put a floor on housing prices and the excess inventory will be eaten up much faster than the rest of the country.

Like stocks, March was a good time to have bought, but in today's environment you should have more opportunities to buy.  Wish I could help you on submarkets, but I don't travel to value real estate in Denver.

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#27) On October 14, 2009 at 11:36 PM, jesusfreakinco (31.59) wrote:

Enigma,

You are a fool to sink money into R/E now IMO.  The USD is about to fall off a cliff and perhaps a currency crisis is only weeks away.  If that happens, bonds will sell off dramatically causing itnerest rates to  soar and housing prices to plunge.

Seriously, I know this sounds crazy, but do your research of the macro level before you make a micro decision like buying a house.

Look at gold as a leading indicator.  Read blogs and articles from the following: Jim Rogers, Jim Sinclair, Nouriel Roubini, Peter Schiff, Nassim Taleb, Max Keiser, Ambrose Evans-Pritchard and Gerald Celente.  These are the ones that called the financial crisis.  These are the ones saying to avoid any USD based investments right now.

My two cents... FWIW.

JFC

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#28) On October 15, 2009 at 9:29 AM, alexxlea (73.02) wrote:

http://money.cnn.com/galleries/2009/real_estate/0908/gallery.first_time_homebuyers/6.html

 

Well, it's been nice knowing you guys. Zimbabwe, Germany, Argentina are not out of the question. 

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#29) On October 15, 2009 at 4:26 PM, jesusfreakinco (31.59) wrote:

FB,

Article supports your assertions that foreigners are buying US R/E.

Global Investors Following Decline in U.S. Property Values with Growing Interest

http://www.costar.com/news/Article.aspx?id=967AEF654FB8FA5C536699C261C14585

The theory of the greater fool is alive and well.

JFC

 

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#30) On October 15, 2009 at 4:28 PM, EnigmaDude (35.24) wrote:

FB - thanks for your input. I work for the water utility and we have seen the decline of new residential development but things do seem to be picking up again.  Also, your summary of the market matches what Zillow shows.  Home prices have been rising since March but I think will start to decline again over the winter (which is looking like it will be cold and snowy - 2 ski resorts are already open!)

JFC - more doom and gloom.  I'm not planning on doing anything for 6 months or so.  By then we will know whether the USD has fallen off the proverbial cliff.  And I don't see buying a house as purely a financial investment.  If I did, I would be buying in Detroit looking to flip it in a couple of years when Ford comes roaring back!

Alex - good for you! Pay no attention to the doom and gloomers...

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#31) On October 17, 2009 at 1:55 AM, ikkyu2 (94.77) wrote:

Glad to see you again, FB - and glad you didn't have to gnaw off your own leg to survive the last 9 months!

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#32) On October 28, 2009 at 9:56 AM, FSaucy (99.70) wrote:


With the renewed extension of the tax credit, what does that imply about where the smart money is?  The market has proven you right about being fully priced in, because there was not even a blip on the home builders when the extension was announced.  So that means the powers that be were not taking a shorting opportunity, which is probably because they are already long and the industry can't afford the implications of not extending the tax credit.

I'm trying to read a bit deeper into what this means for the likelihood of another dip in the market.  I don't see it happening.  But then as soon as average Joe doesn't see it happening is when it happens.  Seems like the wealth transfer is over, now the rest of the world is playing catch up.

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