Great posts Housing Bubble. I’d love for you to touch on Colorado housing prices at some point.

My first comment though is about data and charts. They are all very interesting and can be helpful. But please remember an old saw that says “data is like a prisoner..it will say anything you want it to if you torture it long enough”.

Case-Shiller is widely respected. I give you that. But alost insisting that prices “need” to drop another 50% (even in non-California markets)” might not be realistic.

I live in Metro Atlanta, GA It is a very vast and diverse metor area of some 5 million people. There has been intown (flip this house type) speculation of 1930′s bungalows, rampant builder-kickback frauds in very upscale golf communities, ALT-A daydreaming fanatasy buying in caucasian heavy McMansion laden exurbs, etc. But as always, real estate is still local. In many parts of this city, owing to the lack of natural barriers for development, many SFH prices in existing neighboorhoods barely appreciated at CPI. (I know CPI is baloney, but our house averaged the typical 2-3% tops per year)
And this is sensible. Buffet likes to say that a house has no intrinsical value. In other words, the same three bedrooms and 2 bathrooms are only as valuable today to a family as they were 20, 30, 40 years ago. No more no less, after inflation. Like the 50 cent gallon of milk in the 40′s, the only reason they appreciate or should appreciate, is to keep pace for inflation (income growth etc) . After that, the more esoteric elements such as schools, transportation access or lack of, architectures, etc etc can come into play for any additional value-add.
To think that almost ALL housing or areas “need” to drop by another 50% doesn’t reconcile to some or many areas and neighborhoods.
The principal and almost exclusive reason SFH’s in my area (an area in the 200K range) have dropped is the significant number of bank-owned foreclosures. Fire selling. 50% are REO’s and the other poor 50% have to compete against them. This gives a very false image of the actual state of affairs, other than the obvious which is that a bunch or actually a few dolts took on craptastic term mortgages. This won’t last forever and these REO houses will eventually get sold at these fire-sale prices.
One thing I do appreciate is the recognition that when the foreclosures start to decline, and significantly, I think you will not only see a so-called bottom, but a meaningful uptick in pricing, since people who either bought at fire-storm price levels, or the avg Joe, will or can now sell for a realistic price.
I also appreciate how Doc has sometimes tried to apply some sort of SWAG factor to ferreting out the Big 4 (CA, FL, NV, AZ) I think it would be great if Case could not only start to report two headlines, but MSM et-al report the two sets of numbers. We should all start to take a deep breath and consider that even in a local 20% down “overall” market, thereare a “few” pockets and idiots responsible for the destruction.
Now as to this Renting vs Buying. I’m sort of this type who adheres to the “can’t make matter from nothing” type thinking. Matter to energy, vice versa, but it has to go somewhere, in some form. So, if some or many people turn into renters, SOMEONE or SOMETHING must own the SFR that they rent. I really doubt the banks will turn into giant REITs or landlords. Nope, some-one, usually private investor, will buy these houses and if necessary rent them for the short or long term. But to say, “well there was time long ago in land far away where only two people owned their house” is not coming to grips with the fact that someone (ok or something) owned the renter occupied houses. They were in fact ALL owned.
AND..this nonsense of misusing the word “OWNED” or “OWN”. How many times have you seen that used in the blogs, on a credit application etc? 2 out of 20 “owned” their own homes? Free and Clear? Had a mortgage burning party? (Anyone remember those?) Don’t know, but I personally think we should start to make a distinction in the way this word is used and mis-used. (Yes I OWN my own home, not “buying” my own home) There should be “OWN”; “PURCHASING” and “RENTING”. Unless you live with mom and DAD.
And last but not really least. I’m not a flamer. But when some write “Try-100%.Societal-collapse,dollar-collapse,US-Debt-default.Starvation.” is that really helpful? Do you really BET against the house on this one? I wouldn’t. Do I like this situation. NOPE. Do I beleive we’re headed for “100%.Societal-collapse,dollar-collapse,US-Debt-default.Starvation”? Not in this country. Anecdotal as it is, I still have to sit in almost grid-lock like traffic moving around a very typical exurban county. Yes, it’s a “downturn”, a “recession” “worse” if want, but societal collapse and starvation do’t look likely to me while I’m waiting through 3 traffic lights behind tens of relatively shiny cars jockeying for the correct angle to enter neighborhoods, shopping centers, schools ballfields, etc

All the end of the world talk to me is over the top cynicism and shows a slightly paranoid schitzophrenic propensity that is alowed to emerge in these admitedly very trying times. On the flip side, I laugh when guys on CNBC like Cramer profess that “one day things will get better”. Ha! Of course they will. Will they get worse? Who knows. How long? Dunno. Tommorow? Ain’t likely. Next month..naw. This year..can’t be sure..Next year? Hmm..now maybe.

But my point is eventually these things work their way out. If it were a worldwide plague of say Influenza or disease sweeping the planet I might be a little more pessimistic, but this is more or less monopoly paper we’re talking about here.

I know this was not the most intellectual post or supported by lots of facts or figures. Much more of a rant I grant you. But so many of the blogs are becoming so dark and so gloomy my fear is that they are self-fulfilling.
I used to like a car oriented blog called “The Truth About Cars’. It was filledwith a little or a lot of tell it like it is factoids and such. But in the last 6 months, it has turned into a viscious viceration of anything GM or Big 3. There seem to be scores of people (usually the posters) that are almost salivating for a bankruptcy / collosal meltdown. I sometimes sense a little of tis on some of the replies on Doc’s blog. I see he is quite passionate about his reporting and blogging, but always remember the top banner ” How I learned to Love So Cal and forget about the housing bubble”

There are still a ton of people (like me) who will just hunker down for a little while, years or whatever, and let all these storms rain themselves out. Trust me, eventually they will.

Curious to see what you guys might think of Rep. Speier’s amendment to make the housing bailout extend to those that took out larger loans, jumbos. I for one do not support this as I’d like to see the value of homes continue to drop, and I’m not in favor of helping out those that over extended and bought high.

Here is an article describing Speier’s plan:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/25/MNSB165AQU.DTL&type=politics&tsp=1