You’ll probably be hearing a lot of the “Great Depression” comparisons with regards to house values in the coming days and weeks. That’s because in a report just released by Zillow.com, its Chief Economist, Stan Humphries, wrote: “With home values 25% below their peak and 51 consecutive months of declines, the length and severity of the current downturn is fast approaching the length and depth of the Depression-era housing declines.”
And just what was that depression-era housing decline? According to Robert Schiller, nominal home values fell 25.9% during the period of Great Depression.
The report, It’s Going to Be Another Long, Hard Winter in Housing, released yesterday on Zillow.com, states that foreclosures reached a new peak, 1.17 out of every 1,000 homes in the U.S., at the end of the third quarter; the highest number in Zillow’s foreclosure database.
Those figures are for the nation as a whole. Looking at Zillow’s most recent number for Reno, NV, Zillow reports a foreclosure rate 0.224 percent, or 2.24 out of every 1,000 homes. Though nearly twice the nation’s rate, Reno’s foreclosure rate is only half of Las Vegas’ rate of 0.443 percent.
According to Zillow.com’s September 2010 Real Estate Market Report the month-over-month change to its Home Value Index for Reno, Nevada is -1.1 percent. Reno’s year-over-year change to the index is -9.9 percent. See Reno Metro.
When will the declining house values stop? Mr. Humphries prediction: “Nationally, we now don’t expect home values to hit bottom until first half of 2011 at the earliest due to continuing increases in foreclosure volumes.”
skeptical
Thanks for the pickup, Guy. But someone needs to explain to me how this is news.
Perhaps it is noteworthy that a highly trafficked site such as Zillow has put the words housing and depression together. One need only google “renorealtyblog” and “depression” to realize that no one on this blog would classify it any other way, even the permabull emeriti, who we have all grown to know and adore.
FWIW, I find Zillow’s estimate of a 9.9% decline in Reno home values over the last year to be just about spot on. I understand that they use a similar methodology to that of Case-Schiller, and, in this case, they appear to be right.
The tracking of the median home price just doesn’t capture the continuing decline in home values that anyone active in the market (buying or selling) observes. The median price of ~$170k over the last 2 years has bought ever increasing quality. It’ll probably continue to be the case until the mountain of demand starts to shrink, or jobs are created in the local area.
Meisner
House values down 25% from the peak?
Uh, looks like those two numbers need to be reversed for here in Reno. 52% down from the peak is actually exactly spot on.
Just proves that right here in good ol’ Reno we had one of the biggest housing bubbles in the US of A.
Chase
Yea, no kidding. House values in Reno were down 25% within two years of the peak, and have dropped almost another 30% since then.
Maybe by 2030 we will back to where we were in 2005.
MikeZ
FWIW, I find Zillow’s estimate of a 9.9% decline in Reno home values over the last year to be just about spot on. I understand that they use a similar methodology to that of Case-Schiller, and, in this case, they appear to be right.
I’m not sure where you got the idea that the methodology used by Zillow is similar to Case-Shiller Index, but Case-Shiller uses repeat sales while Zillow’s valuation methodology is based on localized comps, without detailed property condition information.
The latest Case-Shiller data is here: http://tinyurl.com/ydrbsa2 and as you can see, Case-Shiller claims a reasonable 4.4% YoY drop for Las Vegas … so you seriously think Reno home values dropped twice as much as Las Vegas?!
skeptical
“Zillow and Case-Shiller are fairly similar to each other with a correlation of 95% and median absolute error of 1.5%.”
http://marketpipeline.blogspot.com/2008/03/zillow-home-value-index-compared-to.html
MikeZ
Skeptical, the methodologies are dissimilar, this is a fact.
Your “fairly similar to each other” quote refers to the comparative results of a small sample of data from 2007, not the two methodologies. Tch, tch.
And finally, the citation compares 1 data point from 10 selected markets in the year 2007. And even then, with such a narrow sample, 2 of the 10 markets differ significantly. Zillow Las Vegas is 29% off and Los Angeles is off by 31%.
With all due respect, did you read and understand the citation or just Google and cut/paste?
MikeZ's Vanishing Credibility
I have to hold my nose and agree with MikeZ here. The methodologies are indeed dissimilar, as is pointed out in the fourth paragraph of the cited article: “The Zillow Home Value Index takes a different approach to constructing its market index.”
The similarity discussed in the article is with regard to the product produced for the years highlighted. One should keep in mind that different models that produced the same or similar results in the past may not do so in the future.
The article smacks of Zillow attempting to justify for an inferior methodology by pointing out that the product may (at times) correlate to the product of a superior methodology.
MikeZ's Increasing Credibility
If you keep agreeing with him, you’re going to have to change your name.
skeptical
Mea culpa. Now, pardon me while I go eat a bit of crow….
MikeZ's Vanishing Credibility
@MikeZ’s Increasing Credibility,
As I have written before, I mainly agree with MikeZ’s conclusions — it is his ineffective support for those conclusions and habit of changing terms and premises mid-argument that are problematic. Further, when his conclusions are in and of themselves problematic, he loses all credibility by advancing arguments chock-a-block full of hyperbole, orthogonal data, and, worst of all, straw man arguments. His inability to support his conclusions effectively and his frequent unsupportable comments have a deleterious impact on the rest of us who share his conclusions. Thus, my gadfly role is to point out when he “jumps the shark” so that the rest of us who have similar conclusions/ideas do not suffer from association.
Sully
MVC:
Which conclusions are you referring to? As far as I can tell he has never concluded a damn thing. He has, however, managed to dispute just about every poster that offers an opinion and/or data. Unlike smarten, who offers a bit of insight (whether or not you agree with him).
The only comment I can think of that is not arguable, is the fact that median sales have been in a 20K trading range for the past 18 months. However, this is not his conclusion as Guy is responsible for posting this information. As far as calling this a stable “market” I still disagree.
So, once again, which conclusions are you referring to?
MikeZ's Vanishing Credibility
Sully,
Thank you for reminding me that one of the things about MikeZ that annoys me is his tendency to be hypercritical without suggesting alternatives (although, as this is the strategy I have chosen to employ under this identity, albeit with a specific target, I may be being somewhat hypocritical).
As for conclusions to which I am refering, I believe you may be taking a slightly unfair stance. MikeZ has advanced several conclusion, among them: (1) we are in a stable period; (2) buying now could produce positive results in the long run; (3) falling asking prices are not necessarily indicative of a falling market; (4) qualitative assessments of “more house for the money” are not supported other than by anecdotal evidence; (5) median prices fall 5% to 10% in winter months; etc. Now, other than #5, which is demonstrably false, I tend to agree with these conclusions (although #2 involves more risk than is my preference). I know you do not agree with some of these assertions, but that does not mean they are not conclusions based on an analysis of the data.
Let’s take a closer look at the analysis of the data. True, Guy provides the data, but posters provide most of the analysis. Now as you write, you disagree with the conclusion that the data show the market is in a stable period, a conclusion expressed by MikeZ. On the other hand, I agree with the conclusion that the market is in a stable period, especially relative to the bubble buildup and the subsequent fall. Further, you would agree with me, I believe, that the data do not support a conclusion that the market is healthy. What does this mean, if we agree that the market is not healthy but disagree as to whether it has reached some period of stability (or perhaps a period of stasis)?
I believe that it has more to do with how the stability conclusion was first advanced here (which did not make clear that stability does not equal vitality) than with the actual analysis of the market. Had the “stability” of the market been presented for what it is – an extended period of relatively minor fluctuations – rather than an indicator of the vitality of the market, which is how many seem to have taken it, then I doubt we would be disagreeing that we are in the midst of a stable period. The data are clear – the market has experienced only minor quantifiable change in the past 18 months. Further, as RI pointed out in a different thread, even the percentage of distressed sales/REO sales/short sales, as well as the sales per price band, have been stable for the past 18 months as well. Now, RI was, I think, making a point about the vitality, or lack there of, of the market, but the cited statistics also support the analysis that the current market is stable (i.e. unchanging). Personally, I like the term “stagnant” for the stasis we are witnessing rather than “stable,” but I did not frame the terminology for this debate.
passerby
MVC,
I never tire of reading your posts. A bit pedantic at times? Perhaps. But considering your raison d’etre (vanquishing the credibility of a moron), totally understandable — fight total and complete lack of substantiating facts and logic with comprehensive fact presentation and sound logic.
However, you seem here to be arguing that the market has been stable and that prices have been in stasis. I disagree with that. I agree with the contributors who posit that the same $400k (or $250k, or $150k), buys a much better house than it did 18 months ago, 12 months ago, or 6 months ago. I further opine that in 6, 12, and possibly 24 months time, those same amounts will buy even better houses.
This, to me, is the crux of the issue here in Reno. What incentive is there to buy a house when you believe your same dollar will buy better and better houses going forward at least to the intermediate term?
It is the reason why deflationary spirals can be so destructive. This particular spiral is the result of a bubble of monstrous proportions that will be reckoned with for still years (possibly decades?) to come. And yet, the bubble makers (Greenspan, Bush, Bernanke, FNM, FRE) who ought to be pilloried (if not in jail), have been held to no account.
Back to the thesis at hand. Why buy a house in a market when you perceive that your dollar will pay for an ever increasing value in a home? This is a question that I have not heard answered in the annals of the RRB to date. Until that question is answered, there will be no health in the Reno RE market.
passerby
Second sentence of last paragraph should be amended to read:
“Why buy a house in a market when you perceive that your dollar will pay for a better home with each passing quarter going forward for at least the short to mid-term timeframe?
Raymond
The answer is that it depends on what price point one is at. If one has $50K to spend on a Smithridge condominium, then one could go ahead and spend it now. The likihood that Smithridge condos are going to experience any further significant price reductions (they are down almost 75% from the bubble high) is very small.
However, if one has $400K to spend on a house, then you are quite correct that there is a very substantial liklihood that if one waits for a year or 18 months he will be able to buy a nicer house for the same money. When only 5% of all sales are for more than $400K, the liklihood is that serious sellers in that price range and above will have to reduce their asking prices to attract a buyer.
Some on the blog have referred to the so-called “bifurcated” market, including Guy, where in one strata prices have pretty much bottomed out and in the other strata prices are still dropping. I don’t know if “bifurcated” is necessarily the best word to use, but I think anybody paying close attention to this market has to acknowledge that yes, at the bottom prices are probably done falling, and yes at the top, they are not. Where exactly that point of demarcation is is open to reasonable debate.
Your point, however, is really pretty much unassailable. Only a fool would argue that a buyer with $300K today can buy a much nicer house than a buyer with $300K could have bought 2 years ago.
MikeZ's Vanishing Credibility
passerby,
I thought about that situation a great deal when it was addressed here some time back. Unfortunately, I had to conclude that objective evidence for your thesis is thin on the ground. The problem is that it is almost impossible to quantify a qualitative measure such as “a much better house.” Yes, anecdotal accounts suggest this may be happening, but the objective data (such as price per square foot) do not capture this phenomenon, which is rather subjective in nature. For example, your much better house may not be much better to me, and my much better house may have been holding steady in the last 18 months whereas your much better house may have fallen in value. This is a much different condition than the overall market run-up and then freefall of the past several years.
Additionally, even if we are seeing a downward price/quality trend, at present it is still seems minor (unless Zillow’s 9.9% figure is accurate, of which I am skeptical, given the methodology), especially compared to the crash. Whether it will remain minor or will blossom (or perhaps collapse is a better metaphor) into a deflationary spiral depends on many factors, not the least of which is local employment conditions. Thus, at present I would classify the market as stable in the same way a critical patient whose condition is not deteriorating may be called stable even if life threatening conditions still exist (on a side note, the AMA has asked that medical professionals not use the term ‘stable’, an admonition from which we might want to learn in order to avoid some of these semantics debates).
Now, would I purchase a house in today’s market? I am a tad too risk adverse to invest in real estate here right now. But if I were in Smarten’s position – I found a great home (that I intended to live in for some time) for a price I was willing to pay – I would consider buying a primary residence.
Anonymous Coward
Re: passerby at 2:30pm
I agree with your (and MVC’s, and everybody else’s) conclusion that the market is not healthy.
But I am surprised by your assertion that “the same $400k (or $250k, or $150k), buys a much better house than it did… 6 months ago”. I’ve been looking at houses on and off over the last 8 months or so (and tracking closing prices on stuff that seemed attractive to me) and personally I’m not seeing deals being “much better” than earlier this year. A few years ago, sure, but 6 months? What do you base that claim on?
If you wanted to convince me that prices have slid by some single-digit percentage over the last 12 months, then sure, I’d have a time arguing they’ve been stable at that level. But I don’t see that as buying a “much better” house, and – compared to what was happening over the previous few years – that’s pretty stable. Or, to use MZVC’s coinage, stagnant.
smarten
Passerby asks, “Why buy a house in a market when you perceive that your dollar will pay for a better home with each passing quarter going forward for at least the short to mid-term timeframe?” The answer is you shouldn’t. But why? Because it’s YOUR perception. One man’s “perception” is another’s…well you know what I’m talking about.
Anonymous Coward provides part of the answer to your question. He tells us that he has targeted a certain price strata and monitored what’s been going on [in that strata] for the last 8 months or more, and reports there’s been no appreciable price/value depreciation within the last year or so.
Another part of the answer is provided by Raymond. If the price strata you’re interested in purchasing has ALREADY dropped 75% from its bubble high, realistically, how much more is there to drop? Stated differently, your upside risk of waiting is far less than your downside risk of doing nothing.
Another part of the answer is mortgage financing [assuming you’re not making an all cash purchase]. Let’s assume the mythical home you’re interested in purchasing drops 10% in value within the next 12 months. Let’s also assume that you require 80% purchase money financing and the mortgage interest rate today is 1% lower than it will be in the next 12 months. Thus on a $250K purchase although you may have “lost” by buying at today’s versus a year from now’s price, you’ve gained by locking in a lower long term fixed rate mortgage [on a $200K mortgage, a 1% differential in fixed interest rates = $2,000 difference/annually (which pays back your overpayment in 12 years)] .
Another part of the answer is what MVC observes: your particular idea of a your “much better house” is too subjective [because it may not be much better to me].
Finally, what happens if Passerby’s perception is wrong?
If you’re in the market to purchase a principle residence, IMO, it may not make sense to avoid making a purchase today based upon the expectation it might be priced lower tomorrow; especially if you come across something you feel is special, and you can afford [are comfortable with] the price.
MikeZ
Had the “stability” of the market been presented for what it is – an extended period of relatively minor fluctuations – rather than an indicator of the vitality of the market, which is how many seem to have taken it, then I doubt we would be disagreeing that we are in the midst of a stable period.
Actually, it was presented that way:
MikeZ says:
July 5, 2010 at 7:23 PM
…
Is the Reno/Sparks RE market healthy right now? I would say: No.
But “health” is terribly subjective. To me, a healthy real estate market is appreciating and growing and this market isn’t.
…
MikeZ
Why buy a house in a market when you perceive that your dollar will pay for a better home with each passing quarter going forward for at least the short to mid-term timeframe?
There’s another reason to buy now: mortgage rates.
Bankrate.com quotes 30 yr fixed at 3.55%. That’s a spectacular interest rate. It won’t last forever and we’ll probably never see fixed rates that low again, in our lifetime.
Think about that … $200K at 3.55% is just $900/mo. You can now buy a $200K home for the price of renting an apartment, half the size of the house.
If you wait and pay 15% less for the house, but end up with a 5% mortgage rate, you’ve lost money.
smarten
MikeZ –
Although I support your reasoning, I disagree with your assertion one can get a 30 year fixed rate mortgage with a 3.55% interest rate [even if he/she pays a boat load of origination fees]. Further, you can’t get a $200K mortgage with no money down [and even if you could, your mortgage interest rate would be even higher]. Rates are actually up about .5% in the last several weeks [although some experts I follow think it will soon be going back down]. If you’re lucky, maybe 4.25%-4.375% and quite possibly a 1% origination fee. But let’s not cut hairs. The monthly payment on a $200K 4.25% 30 year fixed rate rate mortgage is still a very reasonable $984. That makes MikeZ’s assertion, IMO, credible.
Smarten's Vanishing Equity
MikeZ says:
November 15, 2010 at 7:46 PM:
“There’s another reason to buy now: mortgage rates.”
This is, has been , and will always be, a fools argument. Low rates are a reason NOT to buy, because they are juicing prices. That’s why the Fed is keeping them so low. As rates increase, house prices decrease as the interest eats up more of the monthly payment, and the buyer can afford less house. In turn, down payments go further, the principle is smaller, and one can pay off the house faster.
MikeZ's Vanishing Credibility
Oops, my bad, MikeZ. I did not realize that you had presented your version of the market is stable thesis on July 5, 2010 at 7:23 PM (after Longerwalk presented the great analogy of “a boat that has sunk is stable” and after you admited that you might have been unclear before). I had thought you had first advanced the notion of stability months earlier. That must have been a different MikeZ, one that failed to make it clear that current market health and market stability are not one in the same (although he did admit such when backed into a corner, which is not the same as presenting that a stable market is not necessarily a healthy market). Silly me.
CommercialLender
MikeZ,
Your note above “30 yr fixed at 3.55% …. If you wait and pay 15% less for the house, but end up with a 5% mortgage rate, you’ve lost money” needs to be refuted. Here are your numbers on paper:
When to buy? Now: 12 mos from now:
house price $200,000 $170,000 (your 15% decline)
down 20% $(40,000) $(34,000)
mortgage $160,000 $136,000
P&I pmt per mo $718 $730
your rate 3.5% 5.0%
Balance after 5 yrs: $143,515 $124,887
Balance after 10 yrs: $123,883 $110,625
Balance after 15 yrs: $100,502 $92,322
In each period of time tested above, using your numbers, the borrower / home owner is better off by waiting to buy 12 months from now than buying now ostensibly due to low rates. Additionally, waiting saves 15% in property taxes, saves $6K in down payment, results in lower debt ratio assuming one’s income is flat or increasing in the year, allows one to save up another year for the purchase, allows one to invest the down payment another year (that could go either way!), gives one more time to watch the market and jump opportunistically. Buying now alleviates rent payments, hedges your rate and price against future movements up or down, results in potential tax savings immediately, etc. But if you truly think prices are coming down next year, you would NOT hurry up and buy simply because rates are low – this is false.
Now, I assume you actually meant to compare these 2 exact rates/scenarios – if you were just talking in the theoretical, then you should not include a definitive statement like “you’ve lost money”. I also assume one can wait to buy and does not otherwise have a ‘need’ to buy such as a wife nagging!
Being simple math, its easy to calculate at what point interest rates would need to rise to in order to make it better for one to buy now versus waiting a year. The rate between ‘now’ and ’12 months from now’ would have to rise to a whopping 10.11%, to make buying now at 3.5% at the higher home price worthwhile over 10 yrs (forgetting prop taxes, income tax adjustments, etc.). Problem is, if rates rise to 10.11% in a year, bet your life housing values will plummet more than 15% over that 12 month period. Inflation will raise interest rates much faster than it will raise paychecks, so inflation will ravish on the short term home prices en masse.
Do the math, people, and don’t let a Realtor or mortgage broker talk you into such a mistake.
MikeZ
But if you truly think prices are coming down next year, you would NOT hurry up and buy simply because rates are low – this is false.
I certainly would … depending on how far I expect prices might fall, or rates might rise.
Now, I assume you actually meant to compare these 2 exact rates/scenarios – if you were just talking in the theoretical, then you should not include a definitive statement like “you’ve lost money”. I also assume one can wait to buy and does not otherwise have a ‘need’ to buy such as a wife nagging!
Being simple math, its easy to calculate at what point interest rates would need to rise to in order to make it better for one to buy now versus waiting a year. The rate between ‘now’ and ’12 months from now’ would have to rise to a whopping 10.11%, to make buying now at 3.5% at the higher home price worthwhile over 10 yrs (forgetting prop taxes, income tax adjustments, etc.). Problem is, if rates rise to 10.11% in a year, bet your life housing values will plummet more than 15% over that 12 month period. Inflation will raise interest rates much faster than it will raise paychecks, so inflation will ravish on the short term home prices en masse.
Do the math, people, and don’t let a Realtor or mortgage broker talk you into such a mistake.
Smarten, I swear it was there a couple of days ago.
4.290% is the lowest right now, 30 yr, 20% down, $950 fees, $984 payment.
The numbers have moved but the back-=of-thepoint remains valid. Very low mortgage rates
MikeZ
This is, has been , and will always be, a fools argument. Low rates are a reason NOT to buy, because they are juicing prices.
Welcome back, Bantering Bear.
I had an inkling that it was you who was my Secret Stalker.
MikeZ-BanteringBearsStalkingVictim
What the … ? Something went wrong in that edit/post two back.
Should be:
But if you truly think prices are coming down next year, you would NOT hurry up and buy simply because rates are low – this is false.
I certainly would … depending on how far I expect prices might fall, or rates might rise.
realtor
MikeZ is an idiot.
Now, can we just not read anymore of his posts and get back to what was a relatively interesting thread?
Thanks.
Smarten's Vanishing Equity
“MikeZ says:
November 16, 2010 at 5:12 PM
This is, has been , and will always be, a fools argument. Low rates are a reason NOT to buy, because they are juicing prices.
Welcome back, Bantering Bear.
I had an inkling that it was you who was my Secret Stalker.”
Pardon me, but you’re mistaken.
BanteringBear's Vanishing Credibility
Sorry. BUSTED. Two things gave it away, Bear.
Smarten's Vanishing Equity
You’re quite paranoid, aren’t you MikeZ? You can’t attack the message, so you attack the messenger (the wrong one at that). You’re out of ammo. You should probably just quietly disappear for a while because you look the fool now.
smarten
MikeZ –
We’ve had a very volatile week [to the worse] in mortgage rates. Even with several points, I don’t think 30 year fixed rate conforming mortgage rates have gotten much below 3.875%. 15 year fixed rate mortgages yes.
Nevertheless, I concur with your assertion that interest rates can be an important factor [not the only one of course] in the decision to/not to purchase anything on credit [not just real estate]. If you believe Mr. BB’s assertion that you’re a fool to purchase real property on credit, for the very same reasons, you’re a fool to purchase anything on credit. But obviously, you and I are not in his camp – wilderness if I’m not mistaken.
And I thought we had established some time ago that Mr. BB and SVE are one in the same poster? Kind of sad that the person who was most critical of Derrick for hiding behind different monikers after announcing he had left, has done the very same thing because he just can’t stand to stay away.
Smarten's Vanishing Equity
You haven’t “established” anything, Smarten. You may think you have (like when you said I was Mike’s Vanishing Credibility only to be refuted), and MikeZ as well, but the fact remains that the two of you throw around baseless allegations about the identities of certain posters who you know nothing about. As long as I have been posting to this blog as Smarten’s Vanishing Equity (I cannot even recall how long that is), I have posted under ZERO other monikers. This leaves dozen of other posters who see right through MikeZ and his failed market analysis, and continue to speak up about it.
smarten
Give me a break Mr. BB. When it became apparent that you and SVE were one in the same, do you think the only evidence I had was “suspicion?” As Sharron Angle told Harry Reid, it’s time for you to man up!
And no, I didn’t accuse MVC of being you. I raised the question, and he answered it. When he did, and not having other evidence to definitively tie him to you, I was convinced otherwise and apologized if he had taken my words to be an accusation versus question.
I agree with you that at the very least since you’ve been posting as SVE, you haven’t been posting as Mr. BB. But that only perpetuates the farce. If you must, just come back as BB and show yourself for who you are.
smarten
And, I love the “baseless allegations” complaint. Who else on this blog has used these words in the past? So I guess according to you, it’s coincidental?
Smarten's Vanishing Equity
Who else hasused “baseless allegations” before, Smarten? Do you care to share a link, or are you just blowing more hot air? Actually, you just said “give me a break.” I think Derrick said that once, too. You must be Derrick. Why don’t you come right out and admit it, now? Silly, huh? Do you now understand how ridiculous you sound?
I think the problem with you, as well as MikeZ, is not only your rose-colored view of the housing market, but your pompous attitude. You assume that everyone who disagrees with you is BanteringBear under another moniker, failing to realize that there is a veritable army of posters who take issue with you.
smarten
Keep talking Mr. BB. The more you speak, the more you reveal yourself. Who else demanded links to prior posts as evidence that he had before said something he had denied? If I were able to search this site for the words “baseless allegations,” that’s exactly what I’d do. So if someone else out there is better at finding your prior posts under the identity BB where you’ve used the term, please feel free to jump in.
And no, I have no problem differentiating you from Wazoo, Skeptical or Insane Economist [whatever happened to him anyway?]. So just because someone disagrees with me doesn’t mean I accuse them of being you. Again, you continue to flatter yourself – another classic Mr. BB trait.
Have a nice night Mr. BB.
bob_c
the egos in here are so fragile it has lead to mental illnesses
BanteringBear's Vanishing Credibility
You’re quite paranoid, aren’t you MikeZ? You can’t attack the message, so you attack the messenger (the wrong one at that). You’re out of ammo. You should probably just quietly disappear for a while because you look the fool now.
Giggle.
Professionals call that behavior “Projection,” Bear. Go find a mirror and take an honest look.
hmmm
Lot’s of people look like dopes in the above, but I seem to remember Mr. Smarten promised several weeks ago that he was done with the ad hominem attacks and personal invective that he had sunk to.
Obviously, that is not the case. I don’t know who is who at this point. They have a right to pick any name they want. But one thing is certain. Smarten is hyper-critical and hypocritical.
BanteringBear's Vanishing Credibility
We’ve had a very volatile week [to the worse] in mortgage rates. Even with several points, I don’t think 30 year fixed rate conforming mortgage rates have gotten much below 3.875%. 15 year fixed rate mortgages yet.
Mea culpa. The more I think about it, I may have been surfing 15 yr rates that evening. Anyway, the fundamental point remains: a lower cost to finance can offset a drop in value.
And I thought we had established some time ago that Mr. BB and SVE are one in the same poster?
I recall that it was discussed, but I wasn’t convinced at the time. Well, I am now.
I see he’s switched back to stalking you for the time being. Personally, I find it more than a little creepy that a grown man would have such an obsession with me.
BanteringBear's Vanishing Credibility
This leaves dozen of other posters who see right through MikeZ and his failed market analysis, and continue to speak up about it.
Dozens of others? Like “realtor” and “passerby” and “hmmm?” Drive-by posters we’ve never seen before, who stop by, agree with you, insult those disagreeing with you … and then vanish?
I dont think you understand just how transparent you are.
smarten
hmmm says “I seem to remember Mr. Smarten promised several weeks ago that he was done with the ad hominem attacks and personal invective that he had sunk to.” First of all, I haven’t said anything along those lines in at least 8 months to a year. So now I’ll pull a Mr. BB – if you have evidence to the contrary, please share it. Second of all, calling out a poster for who he/she really is does not represent an attack. I might be “hyper-critical,” but where’s the hypocrisy? Now had I decided to call myself something like…”hmmm” and self-bolster any of my arguments, I could see where you’d be coming from. But I’ve always been just “smarten” and BTW, that’s with a small “s.”
RenoRealtyBlog's Vanishing Identifiable Posters
Well, I am as guilty as some others at coining pithy monikers, so this may be a hypocritical comment, but I respect smarten (small ‘s’ in place, and an apology for using capital ‘S’ in the past) for maintaining one identity, even after he was “outed” (as Mr. BB once called it).
As for the interest rate issue discussion, I found CommercialLender’s analysis interesting, to say the least. Unfortunately, his point has been buried by a landside of vitriolic invective (I don’t know if SVE is Mr. BB, but he (or she) certainly has the same effect). smarten and MikeZ, what say you with regard to CommercialLender’s calculations? Is he wrong?
Yours truly,
RRBVIP (aka MVC, but not MVE, as should be obvious to anyone based on the rhetorical competence of the respective posters)
Sully
vitriolic invective – What is that? Abusive language squared or times two?
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Squared (at least in effect)! It is fun because it works on two levels. ‘Vitriol’ refers to abusive language metaphorically (the literal meaning of ‘vitriol’ is sulfuric acid, at least in its primary usage), whereas ‘invective’ is literally abusive language (or perhaps better put, antagonistic rhetoric). So, the adjectival form of ‘vitriol’ (‘vitriolic’) intensifies ‘invective’ by making it ‘acidic’. But since ‘vitriol’ has also been metaphorically extended to by synonymous with ‘invective’, the phrase ‘vitriolic invective’ has an added intensifying effect that is akin to apposition (without being an actual appositive).
Oh, and before any Latin scholars call me on it, I know that the source word for ‘invective’ only metaphorically referred to antagonistic rhetoric in Latin (the literal meaning of ‘invect?vus’ is something carried in; the metaphoric usage referred to things carried in from outside the argument, especially insults). However, its literal meaning in Modern English involves antagonistic rhetoric and its ilk.
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Well now that is odd… the ‘?’ mark in ‘invectivus’ should be an ‘i’. I suppose that is what I get by writing in a word processor and cutting and pasting into the reply box. Obvioulsy WordPress did not recognzie a character (although why it would be ‘i’ I do not know).
Hmm… perhaps this admission has blown my cover. Yes, I admit it — I am indeed Derrick, and I cut and paste my posts from a word processor under my MVC and RRBVIP idnetities so that my charateristic spelling infleicities do not give me away!
Nah — I am just messin’ with ya’ll. I ain’t Derrick.
smarten
RRB VIP [note the space between the letters which kind of puts your new name into context; don’t you think?] –
Funny; thanks. You’ve asked what some of us think of CL’s mortgage interest rate analysis so with that said; as is usually the case, I found it was pretty darn right on. But like many of the things we talk about on this blog, its impact differs on the strata of the audience which is reading it.
No, I do not think that someone should make a decision to purchase anything founded upon the cost of financing [such as a car with special 1.9% or free financing]. Because there always IS a cost. But I certainly feel that the cost of financing is a legitimate component that should always be considered along with others [such as the former first time homebuyers’ tax credit]. Unfortunately, I’m going to use me as an example. When I made my purchase 1-1/2 years ago, I couldn’t afford to pay all cash – I was forced to secure purchase money financing. Now had the cost of that financing been a 10% or greater interest rate, that fact would probably have been enough for me to nix my purchase. Had it been 1%, I wouldn’t have doubted my decision in a heartbeat. Some may recall how I agonized with the cost of a fixed versus variable versus combination of the two [and then whether a 3/1, 5/1 or 7/1 ARM (each having its own cost)] mortgage. If I committed to a 5/1 ARM [which I did], what did I think might happen with interest rates within the first 5 year period? Could I get out of my mortgage w/o a penalty? Was I better off locking in a higher 30 year fixed rate because of the certainty it provided? What were the income tax benefits I would be getting as a result of committing to a mortgage at the initial interest rate? And what was my Plan B if a cost effective replacement didn’t come along as I thought it might within that 5 year period? All very valid questions, but very much unique to my particular situation.
And that’s my point with respect to CL’s analysis. You know it may be right meaning he wins the battle. But you know, it may be at the expense of losing the war. What happens if his belief that the cost of his mythical house will drop 15% in value over the next year turns out to be wrong? What happens if the actual drop turns out to be 7% instead of 15%? What happens if there’s no drop in value at all, but then within 15 months, there is a drop? What happens if the price for the type of house CL is looking to purchase actually increases over the next year? What happens if what he can purchase today, although comparable to what he can purchase tomorrow insofar as square footage, style and location [in a vacuum] is concerned, is really superior because it exhibits subjective features which just don’t show up in a CMA? What is the cost to take a chance on the future even though prices may remain flat?
What happens if interest rates go through the roof over the next year [which they could] so we’re not talking about the difference between 3.55% and 5% mortgage rates, but really 3.55% and 8% mortgage rates? What happens if CL’s income goes down [or is eliminated] and he can’t qualify for the purchase money loan he may want in a year? What happens with the additional taxes he has to pay next year because of Obamacare or whatever? What happens if it’s likely CL may [but he may not] have a job change in two years and be forced to sell his recently purchased home? What happens if he ends up living in his home for the next 20 [versus initially projected 10] years?
These and many other questions have to be answered, and each of us is going to have our own particular answer[s]. However to say that the extremely low cost of purchase money financing for a home purchased today compared to what it has been historically and likely will return to sometime in the relative near term future is irrelevant, is IMO wrong.
So bottom line, although it may cost more to purchase now with a lower interest rate mortgage [3.55%] than to purchase tomorrow at a 15% lower price and higher interest rate mortgage [5%], is it worth the gamble [and to me, that’s exactly what it is]? You’ll never in your lifetime ever again see 30 year fixed rate mortgages at 3.55% or 3.75%. However, you will in your lifetime again see SFR median sales prices in Reno/Sparks above $350K. If you’ve got the time, it will heal all of your wounds [including the ones you would develop if you purchased now and prices went down another 15% (even though you had no plan on selling during that time frame)]. If you don’t have the time, then maybe you should continue renting.
Does that answer your question?
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smarten,
Thanks for taking the time to share your analysis of the interest rate vs. sales price issue. Posts like that were why I started reading this blog.
As for my name, I thought about RRB VIP (I noticed the possibility when I first used the initials above), but I was worried that it might be a tad pretentious.
Smarten's Vanishing Equity
Who’s the stalker here? Let us take a look:
stalk- to pursue persistently, especially out of obsession or derangement.
Now, let’s take a look at all of the posts above. If anyone fits this description, it’s MikeZ. The posts back it up. Not only is he hung up on me, but he’s seemingly obsessed with a poster who has not commented here in the past six months if not longer. The same goes for Smarten. Let’s call a spade a spade.