Interesting read on the "reality" of the housing market...more about resetting ARM's coming next year, and the number of homes being kept off-market by banks who don't want to write down their equity positions....comments invited...

Housing "bottom" a folly? (http://seekingalpha.com/article/160954-housing-bottom-oh-really?source=article_sb_picks)

Yep, yep, yep

Housing Crash Continues, Bubble Pops (http://patrick.net/housing/crash.html)

Interesting, karried...

Must admit though, I'm a little wary of some of the points the author makes in that article......I'm not sure I believe in the notion of a "normal" house price...a price is whatever the market will dictate IMHO...I also think the author oversimplifies the rent-vs-buy equation - there are favorable tax consequences for purchasing that are seemingly not included in his analysis. He also seems to imply property taxes are based on purchase price, and that's not universally true - its a function of current market valuation, depending on how frequently the local assessor fixes the property value.

Price-elasticity of homes in relation to interest rates isn't quite as rapid as he implies...people will race to save, say, a half-point on a rate, and it doesn't change the sales price of the house they try to finance one iota. In that vein, buying at low interest rates greatly lowers the long-term debt service over the life of a 15- or 30-year mortgage. I would offer that price changes lag (well) behind interest rate changes. Besides, builders have their own debt expenses for their inventories, so it isn't like they can arbitrarily afford to lower a price reflexively when interest rates go up.

I do agree with him, however, that the housing "affordability" and "subsidy" programs are detriments to the people they're supposed to help, and the broader market in general because they inhibit market operation...

True in a lot of respects ... a lot of what he is referring to is based on his local market experience.

Keep in mind that blog author is living in the San Francisco area and has been following closely the massive increase in values and then the subsequent price adjustments/foreclosures. He felt shut out when the market started it's uptick and has been trying to justify his rent vs ownership decision ever since.. lol

Unfortunately, some of his dire predictions from years ago have come to fruition... adjusting ARMs, unemployment, foreclosures etc.

What I find most interesting are the articles on the right hand side of his home page. National/local perception has a way of perpetuating the fear, and becoming a self- fulfilling prophecy. A vicious cycle.

Based on the housing mess there, I'm glad to say I'm not living in California any longer.

The bottom of the housing market is relative to where you live. The vast majority of the country will recover before the half-dozen really bad places like CA, FL, Vegas, Phoenix, Ohio and Mich.