Friday, January 25, 2008

I like to torture myself

So I watch CNBC.

This afternoon those knuckleheads had a discussion about housing. 3 impartial (ahem ahem) real estate experts were guests. These experts were - wait for it - real estate agents. So we of course know they had no incentive to lie or spin.

The topic du jour was the raising of conforming loan limits for $417K to $727K. Of course the 3 experts said yes yes yes do it do it do it.

What these dumbasses still don't get is that you could raise the limit to $727M and it won't make much of a difference in affordability. Median income is $50K in the US. That means the median house should cost $150K to $200K. It is getting there there nationwide. Another 9 months and nationwide prices will probably have bottomed.

In places like LA the median income is $65K and yet median house price is $500K. The math doesn't add up. Someone making $65K cannot afford a $500K home. That simple. People though they could in 2005. They bought and now in 2007 and 2008 they are foreclosing.

The gubermint, being the gubermint simply cannot allow the market to correct on its own. It has to get its dirty hands involved. Oh well, instead of having a 3-5 year housing recession, we'll have a 5-7 year housing recession. The end result is the same. Regression to the historical mean of 3 to 4 times income.

The NAR (National Association of (Lying) Realtors) will never admit what's happening. They are still on the NOW IS A GREAT TIME TO BUY plan. A fish swims, a realtor says buy a house. That won't ever change nor do I expect it to. What I would hope is that the lazy MSM would at least call them out on it.

In the meantime I'll keep on kicking it old school in my rental (for which I am paying pennies on the dollar compared to "owning" ) watching the whole thing unwind.


Malcolm said...

Not to mention the idea that if you need to bail out “poor” people with $700k homes, there’s something seriously wrong with your reasoning.

Dino said...

Good point.

On the one hand anyone making over $75K a year is too rich for the tax rebate. On the other hand they will qualify to buy a government subsidized $700K home.

Makes a lot of sense.