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Monday, June 19, 2006

Seattle Soft Landing: Do The Math

A while back, a commenter made the following claim:

What history tells us will happen is that prices will level off, and appreciation rates will reflect your average inflation rates (on average) until wages catch up with home prices and the fundamentals start to match back up.
As most of you know, this scenario is commonly known as the "soft landing." Actually it's a slightly harsher version of the traditional soft landing, in which appreciation rates dip down to 5-6% as opposed to falling all the way down to the level of inflation (traditionally 2-3%). So if this version of the soft landing is true, just how long will it take for wages to "catch up with home prices"? For the answer, let's get our Excel on.

To begin, we need some good starting data. Let's assume for the sake of this argument that in the first quarter of the year 2000, homes were "affordable." The Washington Center for Real Estate Research (WCRER) "affordability index" for Q1 2000 was 96.6, so this is likely a fairly accurate assumption. So, let's take a look at the housing market vital statistics for the year 2000:
Q1 2000
Median Home: $245,000
Median Household Income: $54,590
Interest Rate: 8.21%
Affordability Index: 96.6
Tim's Affordability Index: 93.0
Since I don't know how WCRER calculates their affordability index, I created my own. The calculation I used is simply 30% of the median monthly income divided by the monthly payment on the house (assuming 20% down and a 30 year mortgage). So, what does the situation look like now? Here are the most recent numbers:
Q1 2006
Median Home: $399,500
Median Income: $60,700
Interest Rate: 6.15%
Affordability Index: 77.1
Tim's Affordability Index: 77.9
Ouch. Not so affordable anymore. Home prices have increased an average of 8.5% per year, while wages only increased an average of 1.8% per year! No big deal though, right? Prices will just "level off" and wages will catch up.

Let's make some (relatively optimistic) assumptions and see what the "wages will catch up" scenario would look like. Let's assume home prices "level off" to 2.5% annual increases. Furthermore let's assume that interest rates increase just 0.125 points each year until they top out at 8.00%. Lastly, let's assume that wages increase at 5% per year. Under that scenario, my affordability index reaches the 2000 level of 93.0 in the year 2021. That's fifteen years of stagnant home prices, under a relatively rosy set of numbers.

What if interest rates go up 0.25 points each year and top out at 10%? Look to afford a home in 2029. What if instead wages only increase at 4% per year? Homes become affordable again in 2031. What if I tweak the numbers ever so slightly and assume 3% home price gains, 4% annual wage increases, and a maximum interest rate of 9%? Don't expect to afford a home until 2053.

Keep in mind that these figures totally ignore the already high and still increasing expense of the 20% down payment. Inherent in the calculations is the optimistic assumption that people will somehow manage to come up with the money. In the first scenario I outlined, the affordable home in the year 2021 would cost $578,595, requiring a $115,719 down payment. The median household income would be $126,191.

Maybe I got the formula wrong. Or maybe the "soft landing" scenario is a steaming pile of... well, you know. Honestly I have no clue what's going to happen. Maybe it really will be 10-20 years before homes become affordable again. For your enjoyment, I have added these calculations to a new sheet in the big Seattle Bubble spreadsheet. Feel free to download it and play with the numbers yourself. If I'm way off base and making inappropriate assumptions or using stupid equations, please let me know.

Sources:
(Home Prices & Affordability: WCRER)
(King County Incomes: King County Government)
(Interest Rates: Federal Reserve)
(Inflation: InflationData.com)

50 comments:

Eleua said...

I'm under the opinion that the Bi-Coastal Bubble, and Seattle in particular will have a very hard landing. It would appear that even the most rosy scenarios would cut prices 50%. If the economy slips with housing, you can bank on a 3/4 cut.

Bainbridge Island sales data for May 06 shows a 13% to 16% Year-over-Year slide in median and average home prices. Keep in mind, absolutely nobody predicted the numbers to show this early.

There will be no soft landing.

Anonymous said...

I've calculated out the "break even" point on a number of condos, to figure out when I could realistically rent the place out at a profit if I bought today.

Even with 10% rent increases every year (historically unlikely), I'd have to live there for minimum 7 years before rents caught up to the payment - assuming taxes, hoa dues and the mortgage pmt all remain at 2006 levels.

Anonymous said...

San Diego cruised along for multiple years at 15% affordability...and CA as a whole isn't much better now.

Also, who is to say that affordability ever has to return to a specific level? Even with 70% affordability, people still seem to be buying and selling houses.

I don't believe the recent appreciation level is sustainable, but I'm not convinced of an impending "crash" (50%?! Get real!) just because housing isn't "affordable."

Remember long ago how people could buy houses even without a high school education? Then a high school education became a requirement for middle class life. Now it is a college degree; however, just like previous generations, having the higher education doesn't guarantee home ownership.

Mortgages used to be 5-10 years, then extended to 15, then 30, now ARMs and 50 year mortgages.

I'm not saying these examples are good things, I'm just throwing out there that we may need to adjust our previous beliefs/expectations. The rich are getting richer...

Anonymous said...

Starting today, there's been talk of a "hard landing" all over CNBC.

IMO we'll be hearing more and more of this in the next couple weeks on a broader scale (ie. not just the "stuffy" financial news stations) until the "soft landing" talk will be a distant memory.

whetherforecast said...

With the end of creative financing, with mortgage interest rates rising, with ARMs adjusting, with wages basically stagnant, and with inflation creeping into day to day goods - demand will fall & supplies will rise, thus leading to prices that tumble. How far? I wouldn't be surprised by 30-50%. But only time will tell.

Anonymous said...

50%?! Get real!

A 50% decline sounds about right to me. Historically, Seattle median prices have been below $200,000 in inflation-adjusted 2006 dollars. We're at twice that level now. Prices almost always revert to the historical mean.

Who knows how we'll get there. It'll be a combination of price drops and inflation. It took us 8 years to get to these levels, so I wouldn't be surprised if it took us 8 years to mean revert.

Anonymous said...

Remember long ago how people could buy houses even without a high school education?

Where I live, even doctors and lawyers have trouble affording a house. A 1000 sqft post-war cottage approaches$1M--a very poor reward for our hard work. Prices have gotten so crazy that I'm questioning every assumption. After all, houses are built/priced to a market of buyers--and not for future revenue-generating potential. At least that's how it was in the past, and that truth will reassert itself.

Anonymous said...

The Seattle Times ran an article yesterday saying that Seattle is 34% overvalued.

And that was when everyone was still talking about a soft landing.

Now that people are starting to talk about a hard landing, does it really seem so absurd to imagine a 50% drop in RE prices?

Wow people, WAKE UP! This is historical, off the charts appreciation we've seen! Is the reverse so hard to imagine?

Prepare accordingly or keep on dreaming- it's your choice.

Anonymous said...

Since a huge part of the run-up was due to a new paradigm in the way people thought about "the monthly payment" rather than COST of home, here's an interesting tidbit from yesterday's Seattle Times "About Real Estate" column:

Q: We have a mortgage for 220K with fixed rate at 6.5% and monthly payments of $1,391.

If we pay an extra $75 towards the principle each month, how much will we save in interest payments over the life of the loan? If we add $150/mo?

A: You'll pay 280K in INTEREST (!) on your 220K loan if you stick to the full 30 years.

Adding an extra $75/mo. "principal only" will reduce that 280K to 235K- a savings of 45K.

Adding an extra $150/mo. will save you 77K.

There was a time, not so long ago, when this was how most people looked at home-buying.

That model flew so far out the window the past several years that it looked like it might be dead forever.

Finally, it might be gaining some traction again.

Anonymous said...

seattle price drop:

I'd love to see a return to that kind of sanity. This is one of my favorite online calculators, which shows the effects of prepayments on your total interest for the life of the loan:

HSH Mortgage Payment Calculator

Anonymous said...

Anon, that mortgage calculator is awesome!

Tim- maybe you could make a permanent link of that?

It could really help people figure out quickly how much they can afford/are willing to spend.

Seems like appropriate info for a housing blog.

Anonymous said...

It is possible real estate goes nowhere for the next 10 years instead of crashing outright. The Dow went sideways in late 1960s to early 1980s.

Is affordability a reliable indicator? The rich are buying second and third home, in a sense doing the consumption for the poor who can't afford to do their part. Unemployment and rates are more important factors.

Anonymous said...

People keep talking about historical pricing, but I don't think historical pricing is relevent as long as Microsoft, Amazon, Adobe, etc are making money. Don't get me wrong, Microsoft is going to go through some painful quarters and I suspect that will effect their compensation, but I'm not sure history in this area before circa 1995 is meaningful.

Assuming that 50% of the Microsoft people in this area are smart when it comes to personal finances, nevermind, we'll say 40% of them are smart and have diversified their portfolios that means there is still a lot of money to spend in this area.

I have to agree with the other people that I don't see a 50% decline. Maybe I'm the guy who is going to get hit over the head with reality...

Anonymous said...

Is affordability a reliable indicator?

Not during a speculative bubble. People will chase assets that they think are appreciating, but it'll only take a year or two of zero appreciation to wring out all of the speculative excess.

When the speculators are gone, houses will just be seen as a place to live. Historically, houses have been priced at around 3X family income. Today, Seattle median prices are nearly 8X income. Some places in bubbly California are over 10X income.

Never in history have those kind of multiples been sustained. Never.

Anonymous said...

Anon 4:22:28 - This is not the case:

Are the rich that stupid? (If they are, they don’t deserve to be rich!) Actually, the wealthy Americans are quite negative about RE:
http://money.cnn.com/2006/06/05/pf/affluent_attitudes/index.htm

The smart ones are bailing out:
http://www.pimco.com/LeftNav/Regional+Market+Commentary/Global+Credit+Perspectives/2006/Kiesel_For_Sale_06+2005.htm


Second home housing glut:
http://www.realestatejournal.com/buysell/markettrends/20060601-blumenthal.html

Anonymous said...

Is affordability a reliable indicator?

It certainly is when it concerns the middle class, which happen to comprise the majority of housing demand in a normal market. Sure there's wealthy people who buy homes, but they don't buy homes targeted towards the middle class. And when consumer spending declines, the wealthy won't pull the slack there either; there simply aren't enough of them. Just watch what happens to luxury boutique stores in inflated areas when the credit bubble contracts.

marine_explorer said...

I don't think historical pricing is relevent as long as Microsoft, Amazon, Adobe, etc are making money.

That reminds me of the "new paradigm" up to 2000. Then relevancy had its way with the stock market. Are home prices really irrelevant when a company makes money--but employees still can't buy? Will the higher-paid execs prop up the whole market?

Anonymous said...

And then let's consider this:

A lot of people who I'd consider wealthy (> 300K/yr) are just as deep into debt as anybody else.

Anonymous said...

Do people really believe that the 1.5 million dollar plus homes/condos in Seattle were all bought by "prudent" and/or "wealthy" buyers?!

If sby. making 50K a year will stretch to get into a 400K house, how much stretching does sby. do who makes 300K a year?

I would LOVE to see a breakdown of loans people have taken out to buy these places.

Anonymous said...

anon@Mon Jun 19, 05:15:46

A lot of people who I'd consider wealthy (> 300K/yr) are just as deep into debt as anybody else.

I wish you'd name names. I've no credit card debt, only a mortgage and $5K left to go on a vehicle payment and I feel so skint.

Cheer up a fellow nonny mouse, won't you?

Anonymous said...

I'm not going to name names, but I do know wealthy people who are struggling financially.

It's a combination of medical bills, college costs and overpaying for a house.

Also know some of those (former) microsoft millionares who ran through their riches buying fancy toys. Silly.

Anonymous said...

Assuming that 50% of the Microsoft people in this area are smart when it comes to personal finances, nevermind, we'll say 40% of them are smart and have diversified their portfolios that means there is still a lot of money to spend in this area.

I'm "Microsoft people" with a decent salary and low expenditures, but I can't afford a house in this area on a single income, unless I get one of those crazy loans. You pretty much need two married Microsoft people to be able to afford right now.

Anonymous said...

capitalistchristian-

You are a hoot! What makes you think that homes in Seattle WILL NOT go down by 50%?

That, my friend, sounds as silly as someone who says they WILL go down by 50%.

Ever heard the word "uncertainty"?

Are you a psychic?

Let's get something straight right now: NOBODY knows for certain what is going to happen. Got that?!

And people who claim to know "for certain" are full of it.

Anonymous said...

Housing typically tracks inflation, more or less.

Here's a graph of northwest (including Seattle)housing appreciation since 1975.

PacNW

What's wrong with this picture?

The Tim said...

Capitalistchristian,

When you refer to "assumptions being made on this blog" are you referring to the blog author (me), or those who comment here? As far as your lesson in bad assumptions goes, I don't think anyone here made the first one, and I would argue that the second one is a matter of personal preference.

Everyone deserves to own a home and the affordability index should be 100.

No one here, including me, has said that everyone deserves to own a home. In fact all that most people deserve is a swift kick in the crotch, but that's a subject for a different day. I also did not say that the affordability index "should" be 100. What I said was that as recently as 2000 the affordability index was near 100. In fact, from 1994 through 2004 the affordability index has been above 95 (see for yourself at WCRER). (Granted, it was primarily held up by ridiculously low interest rates in '03 and '04.) Keep in mind that this does not consider "first time buyers." This is how affordable houses are to those that already own a home.

Whether the affordability index "should" be 100 is a subject up for debate, but your comment that I quoted was that wages would "catch up with home prices" and that the "fundamentals [would] start to match back up." Now, since you didn't specify just what you mean by "fundamentals" I chose to look at the affordability index. I even spotted you a few points, since historically it has been above 100.

Assumption #2 is that we should all try to pay off our mortgage as fast as possible. Again a bad idea.

I love the false dichotomy you presented to back that up. Yes, it is good to have liquid reserves, but it's also good to be debt-free. It's true that "A home appreciates/depreciates at the same rate whether you have $400k invested in it, or $10k invested in it." But a $400k home paid off in 30 years is $958,000 out of my pocket, while that same $400k house paid off in 5 years is just $478,500 out of my pocket (according to the mortgage calculator linked by the anon above). There's no way you're saving $480,000 in interest tax deductions over the full life of that loan. Like I said though, it's a matter of opinion which one you're more comfortable with.

Lastly, I find it amusing that one moment you admit that "its all a guessing game" and in the next sentence you make a firm prediction that "what we won't see in the Seattle area is a 50% price drop." I'm not saying I expect a 50% drop, in fact the only prediction I've made on the record is roughly 35-40% reduction over the next 4 years (a return to '02-'03 prices). But even that is tempered with the statement that it is "impossible to really predict with any certainty."

What I've been saying all along is that the only thing anyone can say for certain is that the madness of the last few years cannot possibly continue.

john_law_the_II said...

wow, this blog has grown since I was last here. looks like some good stuff.

a 20% down payment, with a negative savings rate? it's going to take an even longer time than we think at those rates of savings. who is going to save that much money?

Anonymous said...

Obviously, for that to happen (20% DP) the price of houses would have to come down.

I'm all for it.

China just increased their DP from 20% to 30% to cool the RE market there. Maybe, since China is holding so much of our mortgage debt they could "force" us to be more responsible? Who knows, just a whacky little idea.

The 20% DP used to be standard in the US. Back when Americans saved money and paid off their mortgages.

Back when paying rent to the bank was considered a form of servitude.

Back when paying 500K in interest over the life of a loan for a 300K home was considered stupid.

Anonymous said...

Tim, I've given you (and some of your posters) crap for ignoring objective data, but I must salute you for an excellent spreadsheet. Nice job.

Anonymous said...

One of the core assumptions in any future price guesstimate is the inflation rate.

One concept I'm struggling with is what will happen to prices if we have higher than expected inflation. Historically it's been around 4%, but what would happen if we were to have 6%, 8% or even 10% in the next couple of years? This would obviously do some interesting things to the bond market, and would push up mortgage rates as well. Wages would theoretically follow. Would this close the affordability gap sooner than expected? My head hurts. Can someone help me here?

The Tim said...

...I don't think any serious reader of the board is making hardedged predictions.

Well, there might be at least one...

Anonymous said...

Anon 10:40pm - great question regarding bonds.

A good read regarding bonds and it's influence on longer term rates: mortgages for one. See this Blog. Quote below is a snipit.

".....As this chart shows, bond yields tend to run in cycles of about 20 years. Clearly, the bottom is in and rates will rise--perhaps for as long as the next 20 years.

To recap: this is what we know:

Inflation is real and rising.
Housing is rolling over, as is liquidity and loose lending standards; as a result, the "wealth effect" which has powered the housing-dependent U.S. economy is reversing.
The national wealth so beloved of rah-rah pundits is concentrated in the hands of a relatively few consumers; as housing prices level off or decline, the majority of American households will suffer a corresponding decline in wealth and the borrowing power they've been living off of via re-financing of their home equity gains.

The Fed does not set long-term interest rates; the buyers of Treasury bonds do.

If they decide not to indulge in low-yield U.S. bonds (which barely keep ahead of official inflation and which would plummet precipitously should the dollar decline), then the long-term interest rate could rise dramatically, regardless of Fed actions or wishes.

Do you bet that inflation is benign and will fall? Do you want to bet that bond yields and therefore interest rates will fall? Do you bet the U.S. economy will prosper even as its primary prop, housing, rolls over? If so, you have to ask yourself: Why?

------------

What an amazing week closing purchase and refinance deals. Stories later. Market stress is not only here, it's manifesting within the ranks of r.e. professionals.

Anonymous said...

We cannot wait to hear your stories S Crow.

Eleua said...

Yes, I am very hardedged about my predictions. 20 cents on the dollar by 2010 has been my insane rant on this blog for some time.

I do remember saying the NAZ would sell for 50% back in November '99. It ended up being 15%. Not that the prediction was anything to write about, but the reactions to my 50% cut prediction were just as incredulous as my 80% housing haircut is today.

Hint: it is all about the amort formula. Raise interest rates, back out the spec premium, divert more money to food and energy, and run the amort formla backwards.

I guarantee you won't like what you see.

5/06 Y-O-Y sales data for Bainbridge Isl. shows a 13-16% rollback in prices. This is an earlier start to the downside than I expected. Granted, the June data may just dash this on the rocks, but if the June/06 data show a continued slide, then it would be a wonderful opportunity to panic.

E

Anonymous said...

I hope you're right Eleua! That would put an end to State sponsored "affordable housing" right there.

Anyone with a lick of sense could afford to save and buy.

Anonymous said...

seattle price drop - you can download the calculator here:

http://www.hsh.com/hbcalc.html


capitalistchristian - your name is an oxymoron; either you're a lousy capitalist or a lousy christian (most likely both), and regardless it ably demonstrates your incapacity for logical thought. Jesus would puke.

Eleua said...

anon 5:18...

Not to start a holy war, but why can't one be both a capitalist and a Christian?

Why would Jesus puke? Do you have some special insight into how He looks at the marketplace?

Eleua said...

billruben,

Bernanke will very likely fight inflation very aggressively, and very probably overshoot. This might actually throw us into a deflationary recession.

I could not disagree more.

B-52 Ben is looking for any, and I mean ANY, opportunity to ease and print. Look at all the money injections that have taken place in the past few months, even in the face of inflation data. The FED's inflation data are skewed to not count: food, energy, and home prices. This accounts for 2/3 of the family budget. Even NOT including food, energy, and homes, the inflation is getting pretty uppity.

No, Ben wants to ease. When he does, and the bond market sells off to compensate, confidence will be lost in the FED. That is when the real fireworks begin. Bond traders will crank up mortgage rates, not the FED.

There is a difference between tough talk and tough action. Don't pay any attention to Maria Bartiromo, CNBC, or anything the FED says. Watch the money injections, and the funds rate.

The FED is trapped.

Anonymous said...

capitalist christian-

Your reasoning for not having a 50% drop is a bit fuzzy. "People won't sell"

Uh, yeah, but what about those who DO sell.

Like those that have been in their homes for 10 or more years and DIDN'T pull out equity?

You base house prices on those who DO sell, not those who DON"T!!

Anonymous said...

The reason why the Seattle market won't see a 50% price decline though is that people will simply choose NOT to SELL!

Sorry, this doesn't fly for two reasons:

1) Home values are set by those who do sell. It doesn't matter how many people sell. Those few (less than 5% of owners per year) who sell are the ones who establish the prices for everybody else.

2) Something like 60% of home owners sell their home within 7 years. The last decline lasted 6 years, and this one will likely last longer. It'll affect almost every home owner by the time it's over.

The Tim said...

Capitalistchristian,

In your first comment, you said:

...we have to look at some of the assumptions being made on this blog.

1) Everyone deserves to own a home and the affordability index should be 100.

Not everyone should own a home. In fact of the 65% of the population that currently owns a home, many of them shouldn't have one.


Then, in your second comment, you said:

The biggest housing issue for Americans is affordability. Wages need to catch up with home prices in one way or another.

Please explain to me how these two statements are not contradictory.

Anonymous said...

Isn't it starting to seem like the ONLY way to talk about housing NOT crashing is to think non-sensically and illogically?

Just a thought but it does seem like the bubble people use logic and the anti bubble people use contradictions and wishful thinking.

Anonymous said...

capitalist christian-

It feels like the kind of gloomy scenario you've just painted out (where people don't/can't sell because they are strapped into their homes) is exactly the kind of scenario that leads to the "Sick to Death of RE-Wouldn't Touch it with a Ten Foot Pole" mentality that can, in fact, lead prices to drop further than they otherwise might.

Anonymous said...

Pay to Ceaser what is Ceaser's and give to God what is God's.

Think about what that actually means, in the historical context in which it was said, because it is not in any way a justification of personal enrichment.

eleua - it's called the New Testament. His statements are clear; people just misinterpret them to justify their myopic, secular self-interest.

The Tim said...

Capitalistchristian,

Okay, I'll spell it out for you. In your first comment you appeared to be taking issue with the metric I used in the post. Namely you appeared to be saying that it was an improper assumption to say that affordability should return to where it was in 2000 (which was already a low point compared to the previous 6 years—as far back as the available data goes). So basically what you came across as saying was that it is not a true assumption that homes should be affordable.

Then, in your second comment, you referred to affordability as "the biggest housing issue for Americans" and said that "wages need to catch up with home prices in one way or another." My entire post was an exploration of what that might look like. Will home prices stagnate? Will wages skyrocket? Or maybe, just maybe, will home prices *gasp* significantly decline?

I was exploring those questions, and you came in and basically said "affordability doesn't matter," and then followed it up with "affordability is the most important thing." So which one is it? 'Cause it sure as heck can't be both.

Anonymous said...

re: the Ceasar and Lord thing;

Yeah I always thought "Caesar" referred to taxes and "Lord" meant, well whatever, gratitude, etc.

Not sure how it's an endorsement for "go out and make yourself a bundle".

Eleua said...

anon,

I'm pretty familiar with the NT. If you equate capitalism with dehumanizing exploitation, cheating, and lording your money over the powerless for your own temporal dieification, then you have a point.

Merely using inefficiencies in the marketplace to make a comfortable living is nothing of the sort.

Taking a vow of poverty, or equating the New Covenant with socialist liberation theology has nothing to do with being a Christian.

Eleua said...

Capitalist Christian,

You are on the right track, but I believe that prices will be set by buyers, not sellers. This recent runup in RE prices has been fueled by buyers that are flush with borrowed money.

I will grant that many will attempt to stay in their homes and ride out any RE storm that befalls them. However, most will have some intense motivation to relocate or sell at some point during the recession.

If your monthly payment goes up 40%, and you can't refi, you have to cough up a chunk of dough just to stay put. Many will not be able to do so - Sheriff sale.

Many will be forced to relocate. If they are upside down, they will either have to carry two mortgages, or capitulate to buyer expectations. Either way, it will be dramatically lower prices.

Sure, the market will be very sticky on the way down, but it will be on the way down. Once sellers panic, prices will have to come down to where the buyers are. Buyers will have the upper hand.

Think how many buyers will be knocked out by requiring a 20-25% equity stake from the buyer? Think how many buyers will get knocked out because they can't sell their current house and transport any equity. Think how many buyers will be knocked out by reducing the spec premium due to market fears. Spec premium may actually be negative.

Buy and hold will not be the paradigm during the next leg down. The next leg down will be a standoff between "panic-and-sell" owners and "wouldn't touch RE with a ten foot pole" buyers.

Sounds like very low prices to me.

Eleua said...

Oh, yeah...one more point...

In addition to the "panic and sell" owners, and the "wouldn't touch RE with a ten foot pole" buyers, the entire transaction will be governed by "burn me once, shame on you... burn me twice, shame on me" lenders.

Tomorrow's borrowers will undergo such a thorough vetting, they will feel like they just got a prostate exam with a beach umbrella.

Axe yourself...how many people have the 20% down in liquid (not RE equity) assets? I doub't seriously that anyone has $60K today. Given all the short sales that are in the future, how many will have $40K during the next leg down?

Not many.

The next generation of sellers will kiss major a$$ to find someone with $40K to put down. That's a $200K house.

Anonymous said...

Biliruben-

I'm in the deflation camp too- maybe it has to do with spending too much time Upstate?!

Conspicuous consumption seems to lead to lack of community and connectedness.

I'd be very happy to see people go back to connecting with people rather than things.

If deflation is a way to get there, then I'm all for it.

And, as a side benefit, it would make property really cheap!

The Tim said...

Capitalistchristian? Are you out there? I'm anxiously awaiting your reply. Of course, I suppose you did say that you were "all ears," which isn't exactly a promise to reply. In any case, I'll be out of town for the next few days, so if you do reply I probably won't see it until I return Sunday night.