Record Affordability / Numeric Bottom?

[Derek W.]

There have been many article and posts lately about the faltering economy. We will/are seeing record foreclosure numbers, record descent in home prices, and giant losses of equity everywhere. But with all of the turmoil and grief won’t there also be record opportunities? All economic indicators point to us heading for 1970’s era stagflation, recession, inflation, and eventually rising interest rates. It seems that in 1977 in California we had very high affordability at 45%. By mathematically calculations, we should pass this sometime in 2009-2010. If prices continue to fall 1-3% in most California Counties, we will achieve 50-55% affordability by 2010. And since foreclosures aren’t doing anything but increasing, and unemployment is increasing to double digits we aren’t going to stabilize anytime soon. With these new foreclosures, prices are continuing to be driven down. For instance, in Palmdale, California according to krunching.com there were 110 new REO listing on the local MLS in December 2008. But there were 893 trustee sales. That means there are 783 new foreclosures that haven’t even hit the market yet! So prices will continue to go down until the volatility is decreased. When do we hit a numeric bottom? I thought it was when houses were sold cheap enough to cash flow. But I am finding tons of property that meet the B.P 50% rule and still no takers because people believe things will continue to go down. It feels like we are entering a reverse bubble on Real Estate where houses have become the turd in the punch bowl. Where are the positives and what are are the opportunities that come out of such an historic crash?