Treasury stress test home price predictions

Looks like the "Stress Test" that's been much talked about has had some of it's basic criteria released.  You can find the criteria and table here.  One of the most interesting aspect of the "stress test" that is being administered to these banks is that the two scenarios both have rather large house price declines built in, which tells me that whoever designed these tests is realistic about how much further home prices are going to fall, especially since their index of choice if the Case-Schiller Composite 10, which is based on the 10 largest housing markets in the US.  This would include LA among others, which has fallen somewhere around 35 to 40% already.  They are using a further 14% decline as their baseline for 2009 with the extreme scenario having a 22% decline. 

 

I doubt the National Association of Realtors will appreciate this information, they keep telling everyone that now is a GREAT time to buy (if you say it enough you might start to believe it I guess).

 

The optimistic viewpoint of this data is that if interest rates rise (they can't go much lower for home loans) then house prices will have to go down, because everyone is shopping a monthly payment.  The best time to buy is when interest rates are as high as they can go, because real prices are low, then later when interest rates inevitably go down, you can refinance. 

 

I think there are a decent number of financially savvy individuals who are on the sidelines right now because interest rates have nowhere to go but up, which means that house prices will have nowhere to go but down. There is an inverse relationship between the two that isn't covered much in mainstream media.  However, if you already have a house, this is perhaps the best opportunity you will ever have to refinance.

 

 

Seattle home prices back to 2005 where will the wheel stop?

Seattle PI and many others report. Calculated Risk also has some informative graphs re: price to rent ratios and historical affordability indices, which can be bound here

 

 

Real unemployment vs reported unemployment

So, numbers officially out today, 598k jobs lost in January, unemployment up to 7.6%.  Gee, 7.6%, that sounds bad, but not THAT bad, right?  Wrong.  When you look at historical graphs of unemployment, it's not stated that how unemployment is measured has changed over time, you can mostly thank Ronald Reagan for this.  Regardless, if you want to see a more realistic measure of true unemployment, check out table a-12 "alternate measures of unemployment" currently listed at 13.9%

How I spent my winter break

Helping someone build this fence. 

Housing crisis idea?

Underwater house swap.  Need to move for work but are underwater on your mortgage and can't sell? Maybe you can switch houses with someone else in a different area of the country who is underwater on their house as well?  Everybody wins!  It's like that vacation house swap, but permanent.

Obligatory Backyard Picture

 

Waiting out the impending storm

Just hanging out here at home, waiting for continuing action from "Winter Storm 2008".  So far, nothing but a dusting of snow and occasional wind gusts. There's a chance I'll get called into work for an overnight shift mapping disaster, but for that to happen, I need some real disaster type stuff to map.  I think the most unfortunate part about all this uncertainty over whether I have to go into work is that you don't get to partake in the traditional method of waiting out a storm - drinking, watching TV and waiting. Well, you can still watch TV and wait, but it isn't quite the same without the sauce. 

The 4runner is getting around quite nicely in the snow and ice so far, and we have the wife's car chained up until further notice.  Wishing you all luck.