Are these scary numbers lying to us?

Question

"There are three kinds of lies: lies, damned lies, and statistics." - Mark Twain
          
          I ran across this collection of charts about the U.S. housing market and have drawn my own conclusions but Iâ€™m looking for comments and reactions from the BP community as well:
          
          http://www.doctorhousingbubble.com/housing-market-non-payments-foreclosures-10-financial-charts-united-states-housing-problems/
          
          Shoot holes in the figures, dismiss this as internet fearmongering and damned lies, or confirm and discuss, folks...
          
          I found charts 7 and 9 shocking simply because they made points that I hadnâ€™t considered before - the massive amounts of people 12, even 24 months delinquent on their mortgages, but still in their homes, happily spending away the money that they should be paying on their loans, and artificially stimulating the economy in the process so that our current administration can spin this into good news - consumer spending is up!  It must be the light at the end of the tunnel!

(edit) I asked the mods to move this post if possible, placed it by accident in the wrong category, clicking too fast while taking a break here, sorry folks

Account Closed · Answer

I don't expect housing to come back up to top-of-the-bubble prices any time soon when priced in inflation adjusted dollars.

However, government claims aside, the dollar has been losing purchasing power for a number of years now and I can't see how anything currently happening is going to stop it from getting worse.

Anyone who buys groceries or gasoline or heat for their house knows that inflation has been with us for years. The government can change the items in their "basket" all they want to, to try to convince the population that there is no inflation, but that doesn't change the fact that my favorite bread was $1.75 just a couple of years ago, and it costs $4.50 now.

How can we not end up with serious inflation when the government is spending so much money that doesn't exist?

Shanti S. · Answer

Definitely a biased site but biased how?  Toward a realistic discussion of the housing market as related to the general economy, or does anyone feel that these stats are twisted for some purpose whether profit or politics?
                    
                    8 to 12 billion per month in discretionary spending from those not paying their mortages currently is nothing to sneeze at.  However, if they're not paying because they simply don't have the money, then it's obviously not going to be spending after all.

Personally, I do believe that the economic crisis has been fairly effective camouflage for the greatest transfer of wealth in our history - not just in the US but worldwide, leading in to virtual economic slavery to come for the majority of the world population

Jon Klaus · Answer

Rich, I don't expect much appreciation in some of those cites, I was just pointing out that they are not presently in a bubble, They can cash flow well  and are quite affordable for OO's..  Dr. Bubble argues that SoCal is still in a bubble and uses national stats to support his position.  He also suggests the bubble is a huge problem, even though it never was in some places, and has been deflated in other places.

Rich Weese · Answer

Jon- we normally agree on most things, but not this time. According to some sources, Moodys, Realty Trac and others, you listed some cities that won't regain what they've lost for OVER 20 years.
    I still believe we are in for a horrible ride and yes, I believe like dominos falling, the perfect storm WILL affect all areas. Time will tell. 
     I remember lots of my Utah friends telling me they were insulated from the oncoming housing problem several years ago. They weren't. It just started later and is now arguably one of the worst.
     I continue to hope for the best but plan for the worst. There are too many tenous items out there to affect RE. Logic says some will happen. I just hope that not all will hit, or we're screwed, imo. Rich

Shanti S. · Answer

I agree with both of you that real estate is always local and it's of limited use to discuss the "US housing market" as if it's a homogenous entity - yet that's what you always see and hear discussed on the mainstream media, and to some extent I think that news drives a lot of decisions on the local level.
          
          I'm still looking to buy myself, and lock in some 30 year fixed mortgages at these rates and these affordable prices.  Wish I had adequate time to explore some of the few areas of the country that are doing well and invest there.
          
          What's the definition of affordable, though?  For those with good salaries or for those who have invested well and have discretionary funds, it's very affordable.  For the many, many folks who are unemployed or underemployed, and/or have poor credit, it doesn't really matter if the market drops even further - they're not getting a loan.
          
          By the time we get back to solid employment numbers and people are repairing their credit and building up down payments, I'm thinking it's a good bet that inflation will be in full swing, today's low fixed rates will be gone, and home prices will be shooting up again.  Those folks once again will find it epically difficult to improve their standard of living or graduate from being tenants.
          
          Investors are going to do very, very well....I'm just concerned about the long term effects of this wealth transfer.

Account Closed · Answer

I have a problem with using national statistics and inferring general trends affecting local areas.  National number blend the good and the bad.

There may be some areas that will take many years to recover, but other areas of the country that will experience some form of recovery in the near future.

I think it is very important to understand your market and those factors that may effect in the future.

Jon Klaus · Answer

I am not saying we have a great housing market, but to read Dr.  Housing Bubble you might think that the housing market continues to be in a massive bubble with no sign of affordability for a long time to come.  This, when housing has never been more affordable in many parts of the country.  I looked at the last 4 months worth of articles and they were all negative, all arguing that the bubble exists and is dark and gloomy.

If you say the focus is just on SoCal, the article you linked to argues that it is a national problem.  Perhaps it is in some ways, but my market, Dallas is a world apart from the OC, and so is Houston, San Antonio, Birmingham, Cleveland, Chattanooga, Tulsa, St. Louis, Pittsburgh, Omaha, Phoenix, and on and on.  These cities all offer decent homes for sale for  24-48 months typical income.  These cities are not in an ever expanding bubble.  OO's should be buying with the 4-5% mortgages now.  Investors should be buying following fundamental rules of REI.  I am still looking to buy now.

Jon Klaus · Answer

OK,  to start with, this is a biased site and you would expect maximum doom and gloom from it.

Those in default, but not yet foreclosed on create part of the shadow inventory.  We know it's out there, but not when it is coming to market or exactly how big it is.

You'd think those that have been living in homes for 1-2 years without making mortgage payments would have discretionary income to drive other parts of the economy.  Or are they jobless and living on unemployment benefits a a free house?  They point this out after chart 9.

Your Mark Twain quote was appropriate.  Lots of charts and stats supporting their position only.

Rich Weese · Answer

Lots of us have been warning about the second wave, bubble or "perfect storm" as I call it. Some of the charts are worse than I thought, but the overall concern stays in place. Everyone needs to have a back up strtegy and not count on the unknown. Dow only down 134. I thought it'd be higher today, but thats' why I don't invest there. Rich

Are these scary numbers lying to us?

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