Normally, I shield readers from posts from The Housing Bubble Blog. It features news stories from newspapers all over the country, and the tone of the articles ranges from “somewhat bad” to “pretty desperate”. Generally speaking, one has to wade through quite a few listings to have a sense of the whole.
This post, “Will There Be a Tipping Point?” is unusual in that it offers an overview. Readers discuss whether the distress in housing could lead to a panic. The very fact that that question is even being debated says that things are more desperate than the mainstream media has led us to believe.
From the site:
Readers suggested a topic surrounding the idea of a “tipping point.”….My question is this: At what point does market frustration morph into a full blown panic? Is it quantifiable? Should we keep an eye on some key numbers/metrics that can predict the tipping point?
Or, Is an inevitable panic ephemeral in nature? In other words, will it just arrive out of nowhere, without warning, tsunami style?
One from New York. “Denial is very powerful. Especially on Long Island. No set of numbers or talking heads are going to effect the way Mr. and Mrs. Jones spend or sell for that matter. They want what they want and housing bubbles don’t happen here. They happen in places that are building tons of houses without secured buyer and hell, L.I. is all used up….hell, they’re not making any more land here. Hence, the tsunami.”….
One had a timeline, “It has to warm up (in areas it is cold) and when that happens more signs will be in the yards. Once the signs are in the yards and people note that nothing is selling, or that the only thing selling is a comp similar to theirs going for 10% less or larger. I say June.”
A reply, “I’m still surprised during conversations at parties, bars, etc., that many people either a: unaware, b: in denial because ‘it’s just a media creation being hyped.’”
“The people on this board, I think, assume that everyone knows what actually, only we know. And those whose business it is to know, but aren’t telling. The comparison made here before to a car crash in slow-motion is appropo. In your cross-section of friends, aqaintances, folks you strike up conversations with, what percentage know what you know?”
And another, “I prefer the continuously zoomed out image of a snail moving toward a buzzsaw accompanied with dramatic music.”….
One had a specific example, “Was just talking to a friend who told me about a guy who bought a 500k house at the top of bubble 2005 in Bakersfield. Now does not like it and wants to move but won’t sell because he doesn’t want to lose money, already refusing an offer (and only offer by the way) 60k below asking. Trying to rent it (he moved to Fresno) for $1,600. no takers. Very sad but starting to be more common.”….
One pointed to this contradiction, “I would watch how the tug-of-war plays out between the bleating ’soft landing’ mantra raining down from on high and the steady stream of MSM (and non-MSM) evidence regarding the magnitude of the subprime implosion.”
“Also keep your eye on a growing awareness that in the absence of massive government intervention, the collapse of subprime implies residential real estate price deflation.”
“Finally, look for reflation (aka govt intervention) efforts to either never materialize, to result in higher long-term Treasury yields (another stake in the bubble’s heart) or (worst case scenario!) to successfully respike the punchbowl, enabling liquidity-drunk builders to add further to 2.7m vacant homes already for sale.”
One looked at history, “We probably won’t get wholesale panic, nationwide that is obvious. We might get pockets, mainly in heavy investor infested communities. Most will just be too focused on making a living and their families.”
“This will evolve slowly over the next two years into a full fledged meltdown like Austin in the late 1980s. In 2009 (maybe 08, but more likely 09), we will see large numbers of foreclosures advertised at 50-60c on the 2005 $1 in overbuilt bubble markets especially. Some areas will not get hit this hard (most will likely see 20% at least though).”
“This will continue in 2010 which perhaps will be the bottom; thing is in the 50c on the $1 areas, even the 20% down payment people will end up having to walk (or stay till 2015+).”