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David Lereah being honest–but only in private:
http://globaleconomicanalysis.blogspot.com/2006/04/new-gold-standard.html
“Is this a bad year. Yes. Your numbers will down. You got ahead of yourselves. The market got ahead of itself.”
Lereah said it will be the “middle of 2007 when you start to pick up again. I see Florida picking up in 2007. But there are particular markets that will not. It depends on inventory levels.”
Maybe this time will be different than the late 1920s, when the bursting of the Florida Land Boom was an early warning sign for the Great Crash of 1929 which brought on the Great Depression.
Lereah: “I see Florida picking up in 2007.”
Yeah, picking up the pieces from another hurricane season.
Has Ben Bernanke confirmed that he will attempt to keep the bubble aloft by stopping his measured pace of Fed Funds rate increases in the face of a raging inflationary wildfire in the commodities market? If so, will the long-term bond market finish the work the Fed has left unfinished, leading to higher l-t mortgage rates and the coup de grace for the housing bubble?
Pretty much. Greenspan set the template — always do the quick fix and damn the long-term consequences — and BB won’t deviate from it.
I’m seeing PPT activity practically every day. WTF is the excuse for everything going up AGAIN at 10:00 today, the Chicago Purchasing Managers’ Index being down to 57.2 instead of down to 58.0? Yeah right! Just another excuse to run ‘em up. It’s literally happening on a daily basis.
Mortgage rates are up like five weeks in a row, and with the 10-year action of the past week it looks like they’ll be up for the next two weeks as well. I figure they’ll be about another quarter-percent higher than they are now just in time for the end of the “Silent Spring”. Gonna be some real nasty sales numbers this summer.
Which area gets hurt least and why? Upper NYS because there’s no place to fall from the bottom? Boulder? The New Urbans like Austin? Ultra high end places like Aspen because nobody would notice a million off the top? Charlotte, Memphis types because of energy concerns?
This is a good topic. It seems clear that certain areas (SD, Florida, NoVA) have begun to tank, while other areas seem OK (NYC, SF). Delayed reaction or are some areas just different?
I do like this idea and a related topic…Which areas were barely affected but may still get splattered with froth as the bubble pops?
For example, I’m seriously looking at acreage out where my dad lives in boondocks Arizona. Land is still available for $1,000/acre. Will even this price go down? Or will a lack of RE buyers from California eventually motivate some land sellers to become desperate for a low-ball cash offer?
I’d say it will go back to being “speculative land” in the old-fashioned sense. That is, don’t buy any old rectangle of dirt unless the offer looks particularly compelling and don’t plan on selling it within 10 years.
They only the thing banks in Texas won’t allow a 0 down loan on is raw land(in fact somewon’t loan at all). I think raw land will fall the hardest (even though they are not making any more of it).
Flippers have been buying land too and are starting to get itchy.
I’ve been looking for some land in Colorado; one real estate guy in Pueblo has thirty or forty listings and six or seven at least say “motivated seller” or “just reduced” or somesuch. I think one might have come right out and said “offered below owner’s cost”. These are just over the $1,000/acre range as well, for 35-40 acres, so the sellers are almost certainly not in foreclosure, they just want to get out of an investment that ain’t going anywhere.
What the heck, go for a low-ball.
Good topic. One thing about this bubble is the true high-end areas didn’t go up anywhere near as much as the middle/lower end areas. Places such as Marin County, Greenwich/Darien CT, Winnetka/Glencoe IL, Jackson WY etc. did OK, but it was really the Baskerfields and Vegases that went completely loony. The rich actually have the means to afford (in the traditional sense) $1-2-5 million houses and they’re far more diversified across other assets. A few hundred thousand off their house is just an ordinary bad day in the market.
I think any non bubble area that has a good public school system, good colleges, universities, and hospitals, and is attracting major companies won’t burst.
Which area will get hurt least? Las Vegas, of course. I’m predicting another wave of hyper appreciation. Not yet, but… soon.
You wish
Need to cut back on the free drinks, dude.
Let’s discuss economic, monetary and fiscal policy that would lead to a ’soft landing’ scenario. Now, I’m not talking about a soft landing in real estate, but a soft landing for the U.S. and World economies.
I don’t think a soft landing is possible, but in order to get the pain over with as soon as possible we need as little government interference as possible to allow the market to correct itself. In the great depression Hoover, who was NOT a noninterventionist as is sometimes said today. Roosevelt blasted Hoover for spending and taxing too much and putting millions on the dole, and then when he was elected most of his New Deal was simply a continuation of programs that Hoover started. In spite of a petition signed by over a thousand economists, Hoover signed the Smoot-Hawley Tariff in June 1930 when unemployment was only 8.9%. This law not only increased prices on certain products but put many people out of work. For instance nearly 60,000 people who worked making cheap clothing out of imported wool rags lost their jobs when the tariff of wool rags rose by 140%. Exports were cut off and many more people lost their jobs. In 1933 the unemployment reached 25%. Within a month after the stock market crash Hoover (and the trade unions) were pushing fixed wages at a time when prices for goods were falling with the result of more lost jobs as businesses had to cut back to make ends meet.
Roosevelt continued all of Hoover’s policies and added gems of his own, such as seizing the people’s gold holdings and devaluating the dollar by 40%. He decided on the 21 cent price hike on gold because “it’s a lucky number.” Roosevelt refused to follow a gold standard and opened the way for limitless currency and credit expansion, and defaulted on the treasury bonds by repaying the bonds in paper currency instead of the promised gold.
I could go on and on, but the point is that politicians are experts at getting elected, not experts in economy, and their actions will always be what they think will get them the next election, not what is best for the economy. The people need to rise up and demand that the goverment not institute “solutions” that will only make the problems worse, such as increasing tariffs and government spending, and not to inflate the economy into a bubble in order to keep getting elected, which is what has been happening the past few years.
Smoot-Hawley caused the Great Stock Market Crash of 1929 to be The Great Depression. The New Deal did little to end the Depression and may have worsened it. US involvement in World War II created a Keynesian expansion and ended the Depression.
what are you guys talking about? the great depression had been studied deep and wide for decades and you are interpreting it this way? yes, the point that politicians are experts at getting elected and not in economics is well taken.
I want to know how everyone local markets are .I’m outside of Philly and the market is at a standstill with sellers refusing to lower prices just yet and the houses that are selling are the ones priced reasonably. Also Inventory ,natually, is building up. But just in the past few days of noticed alot of very, very overpriced houses come on the market. I’m talking about houses that are barely $300,000 with an asking price of $400,000 plus. That kind of overpriceing hadn’t been to effident so far this spring.
bridgitS - where are you? i’m bordering bucks and montco - hatboro/warminster area.
West Chester
I enjoyed the buyer vs spendor tangent that took off a day or so ago… My friend suggested yesterday that I give a listen to the Randi Rhodes show on Air America on the way home from work. It basically made me want to puke as victim after victim told their stories of how their lives have gone to hell because of Bush. Our country is in trouble. It’s because of spendors/victims who live their lives with absolutley no clue!
I thought everything was W’s fault.
The bubble was hatched by AA raines and co
people like to forget the community bankin bill, yo
RR be damned. I for one am rooting for the American economy. People moan and groan and gripe about working too hard but we really don’t compared to our ancestors.
I agree wholeheartedly. We really have lost our historic perspective. In some ways I think its good we’re going through these upheavels in the business sector. We need to seperate the wheat from the chaff. The days of easy money are over. We as Americans have no ‘right’ to easy money…
It’s true - slavery is part of our historical heritage.
Can the housing market be sustained
with 6 percent price gains?
NAR’s own chief economist David Lereah
said Wednesday
“…this year…a slowing in price
gains to around 6 percent…”
Here in Orange County, Ca. a rule of
thumb that I use when evaluating property
is to assume that recurring carry costs are
between 2 to 4 percent of the purchase price per year.
I define recurring carry costs as Property taxes, Local
Association dues, Insurance and routine maintenance.
These costs are exclusive of any
interest costs associated with a purchase loan.
My question is:
What happens when speculative investors suddenly
figure out that 6 percent annual appreciation
barely washes out recurring carry costs,
regardless of the terms of any purchase loan?
Granted, my calculations are rough, and do not take
into account tax effects, etc.
My own feeling is that speculative investors will
find themselves as nothing more than check writers
to Governments, Allstate Insurance and
the local Home Depot.
In other words, the profit margins have now dropped to zero.
To make speculative real estate profitable, I believe
that property must minimally appreciate at least a
10 percent to possibly 15 percent annual rate
to provide a sufficient profit margin, which,
as readers of this blog have been arguing
for years, is preposterous and unsustainable.
octal77..I think your 15% a year is a good annual to go by. So its clear the investors won’t be interested anymore . Since the investor market was around 40 to 50 % in alot of markets last year ,where are the buyers going to come from ? I would really like to know . How can the NAR talk rah rah ,and even go to the point of claiming 2007 will be another strong real estate year ?Is it a crime for the NAR to make these kind of predictions in that the public acts on the spin?
I bet all bulls $$ that 06 will show price declines-
end of discussion
already has
Talk about consumer sentiment of people reading this blog. I for one found my mood a little funky. We all know that consumers are being tapped out in the housing market and the home ATM, the result of which is pending financial pain for a huge section of this country. Possibly even leading to the dreaded R word…recession. Listening to BB this week made it abundantly clear that he wants to keep the housing ATM rising, and the NAR and RE radio guru’s are still finding useful idiots to purchase IO loans on over-inflated property.The only thing that can jolt things back to reality are hurricanes, extreme summer heat, continued higher gas prices, floods, world political unrest, etc, so I guess that I’ll be one of those hoping for mother nature to raise her ugly head in exuberance to the benefit of all.
If housing truly is a speculative bubble, we don’t need pain, misery, or an external catalyst to make it pop. It’ll just pop all on its own.
I agree that the bubble will pop on its own, but probably some event will get the blame in the newspapers, such as the rate hikes, as little as they have affected the long term rates, or some other event.
The reaction of the currency markets to BBs comments is instructive. The dollar has lost 4% to the euro in the past two weeks, starting with Yellin’s remarks about Fed rate hikes reaching a close. The Fed cant halt rate increases without foreign currencies rising. Its rock and hard place. Watch them try to navigate in the coming months.
I’m reading “The Creature from Jekyll Island”, and it’s rather depressing, because it makes you realize that they way this is going to play out is - bubble gets blown as big as it possibly can –> bubble bursts –> HB’s are screwed –> recession –> banks are screwed –> banks whine to Congress about how the entire economy is in danger –> Congress bails out banks with OUR money –> banks who fostered this whole thing are no longer screwed, just us, the taxpayer.
Sucks big time if you ask me.
Here’s an alternative theory. We’re in the midst of accelerating technological change. Computers get much faster and much cheaper every year. The same is starting to happen to other products as they’re increasingly developed and manufactured using technology.
Lower prices are known as deflation. The Fed is hiding the money supply because they’ll going gangbusters trying to keep our endebted nation from having to deal with deflation.
So why the asset bubbles? Because a> the rich are getting richer and the poor don’t invest in gold and b> the falling median income has people grasping at straws to get richer. Those teetering between the upper class and the rest are pressured to jump on the “richer” train before it’s too late.
Deflation is inevitable because the Fed can’t keep creating money to offset accelerating deflation because the negative consequences of their meddling are also accelerating.
Good points, Kirk.
I think this (inflating money supply to stave off deflation) has been going on for a long, long time. The longer it goes, the more distortions we will see, IMHO.
I know the Illegal Immigration factor has been mentioned before but I’m curious to see what people think about the latest wave of protests in relation to the housing bubble. I still believe all the below median housing is owned by multiple families working together to afford one house, therefore driving the rates up for everyone.
I’d like to know
a) will the protests simply bring millions more into our country, continuing to prop up the low end (at least in the south west)
b) could a “patriot-type” backlash pop the bubble sooner?
It has become politically acceptable to talk about this finally. Lots of us have been driven underground on the immigration issue because until it got so bad the merest mention brought cries of racism. And thus my second weekend topic:
The housing bubble disproportionately benefited minorities who dramatically increased their wealth and ownership rates. Notice that you never heard this good news? Anyway it is a mathematical certainty that they will be be disproportionately hurt on the way down. This will be headline news. Add to this the stress of financial difficulties and a huge increase of broken families, these too will be disproportionately impacted. More headlines of course. Therefor:
“Race, Class and the Bubble”
Every wave of inmigration through history has been scorned, abused, and in general, discriminated against. The Irish during the turn of the century, the Italians, Polish, Portugese, Mexicans, etc, etc, etc. Each in turn would come in, live in the ghettos, raise large families, compete with the establishment for the meager resources, and eventually come to power in the local scene. Witness Boston’s change from a mostly non-inmigrant city, to an Irish controlled city in less than 100 years. In 20 the SW will be controlled by the Mexicans and Latinos, much the same way that Florida is controlled by them now.
There is an old saying that states that you cannot stop change, only adapt, and profit from it….
True to a point, but we have changed from a melting pot society to a “multiculturalist” society. It is unknown how this will affect the outcome 20 years from now. Many people think that multiculturalism is deadly and that if we still had a melting pot it would be fine, but under the status quo, not so much…
These are not “immigrants” they are carpetbaggers and subversives and thieves and invaders. They don’t come here with the intent of assimilating, that’s all you need to know. They have their model; Quebec. They have their heroes and martyrs. They have their own maps; Aztlan. They don’t want the -same- as what we have, they want what we have for their own.
I distinctly remeber Harvard having an admission code that forbade any catholics because they had their own simbols, worshipped other deities, and answered to the pope. Last I knew, their most famous student, JFK was an Irish Catholic (both groups highly ostracized, and discriminated against).
Understand these people, learn what they have to say, and you will be infinitely rewarded. Scorn them, fight them, and you will lose the battle. Yes, they are thieves, but they are also very hard workers, with strong family ties, and a desire to get ahead. Something that the average HS student is severely lacking in (except the stealing part, they got that down perfectly) if you ask me…
You are confusing a long (1780s) debunked history of Rhode Island and the schism of Yale from Harvard over Puritanism. move along, nothing to see here.
Hey, I took all kinds of bullshit abuse from the minority racists
I know you know the thread anotherf*cked borrower. What pissed me off was calling Susan, I think white trash.
Thanks but I’d rather not pay billions in taxes for these third world invaders.
I can do without them very nicely,and their crime and their diseases and their third world LATRINO culture. Lets not forget the filthy trash mouth responses posted.
I was born here, so were my parents, my grand parents, we did not sneak in like cockroaches to steal benefits from the middleclass.
Have a nice day!
“Excellent point Cote”;….A tipping point for some serious class warfare ???
Class warfare has been being waged since the 80’s except it has been one sided and from the top of the pyramid down. The new bankruptcy law might be the straw that breaks the camel’s back and causes the warred upon to decide to fight back.
KBabes;…I am taliking about from the bottom of the pyramid “UP”…
Just pointing out that class warfare has most been definitely “In season” for a generation.
Lets see if those getting shellacked decide that they dont like being lied to, cheated, and stolen from…..look over there gays and brown people, hey who is winning American Idol??
My confidence level is low.
The Boston Globe is already beating the drums: “As the housing market cools, more borrowers are facing foreclosure, especially in neighborhoods where high-cost loans abound. That spells trouble for Boston’s black and Latino homeowners. As the housing market cools, more borrowers are facing foreclosure, especially in neighborhoods where high-cost loans abound. That spells trouble for Boston’s black and Latino homeowners…”
In Texas Anglos are now less than 50% of the population.
I actually think this issue will create racial tension in a way not felt since the Rodney King beating. I know a few guys who started ‘packin’ for their rides into work in LA. Nothing like being stared down for being white and driving a nice car. This is a powder keg in the making because race relations between blacks and browns is already pretty tense. If there is a big walkout on Monday of workers sparks will fly…
IMHO it is not racism. It is the substandard wage offered to any worker. I was surprised when I saw the minimum wage in Ireland and other EU countries. From The Christian Science Monitor http://tinyurl.com/fk2dw “And with almost full employment, none of the figures suggest yet that the cheap foreign laborers, generally willing to work at or below the 7.65 euros ($9.18) per-hour minimum wage, are pushing significant numbers of Irish workers out of their jobs.”
I believe that the wage structure in this country is ugly. When workers make enough to live where they work and are not priced out of housing then the economy can be balanced. Most people want shelter, food , clothing and a better chance for their children. When an oil executive receives a $400,000,000 bonus, it lowers the standard of living for everyone else.
Speaking out against people who are breaking the law = racist? Wow, only in America.
I’d like to see what the rich white liberals would have to say if the triple decker next door to them was bought by an illegal family of 40 immigrants who decide to start killing chickens in the backyard and turning their driveway into a repair shop. No amount of Yoga is going to suppress that racket. But since they live in their wealthy gated communities, they can spend all their free time yelling at the rest of us about how we’re being unfair, when it’s the middle class getting pinched.
And to those who say: yeah, well, your ancestors were immigrants too. Yeah, via Ellis Island, legally. Then they had to go live in slums and get treated like s**t, instead of getting free health care and no-interest, no-money down loans to buy a house, driving up prices and forcing the hard-working middle class to kill themselves to afford the American dream.
And no one has pointed out yet that NONE of these companies that employ illegals want their status changed. The minute it does, they’ll need more illegals to keep their profit margins intact. Now they can pay them low wages, no health care, no controls whatsoever really - a slave class. This is unfair to Americans who either get pushed out of jobs or pick up the tab via taxes and to the Mexicans themselves, who can be abused. We have to back the Minutemen and a 3rd party candidate who will handle all these issues.
This is an entirely different situation because of the factor you described as tensions “between blacks and browns.” The Minutemen were trying to recruit African Americans to join the Minutemen in Leimert Park this week. This created a big controversy in the black community.
It’s a poorly kept dirty little secret that illegal immigration hurts the African American community out of proportion.
This is a huge and complex issue. I’m not sure how it affects the bubble.
12 million illegals have to live somewhere. Entire subdivisions of entry level/affordable housing have been overrun. The “writing” is on the walls.
Drive through a few entry level subdivisions in Merced and you will see….
Look what you started Cote….Good topic though…
Look what you started Cote…
I am a stinker. Every once and a while you gotta throw a skunk into the square dance just to wake up the FDHLRUs.
FDHLRUs? That’s an acronym I’ve never seen before, and my sense is that others are in the same boat with me.
Okay, Robert, what’s a FDHLRU?
fatdumbandhappylinereplaceableunits
It’s a poorly kept dirty little secret that illegal immigration hurts the African American community out of proportion.
__________________
Absolutely. Take a look at downtown Los Angeles. Neighborhoods which were once predominantly black are now Latino. The blacks were pushed out of their neighborhoods long before the whites were. They are also competing with Latinos for the same jobs. Lots of tension between these groups.
As Robert C. mentioned, the fact that we have not been able to talk about it has only exacerbated the problem. We can’t fix a problem if we cannot admit to its existence in the first place, and have HONEST dialogue without having to fear the angry name-calling (racist, xenophobe, etc.). Because it’s (fixing the wage/race/class problems) been put off for so long, the problems might be irreparable.
How about documenting some cases of serious gouging that has been going on in the housing market. Everyone has been talking about oil companies gouging customers with no evidence. It seems that there is a ton of evidence in the housing market with nary a peep, just because house prices were rising…
An excellent point: This week Spitzer indicted a group of individual for mortgage fraud alleging they inflated appraisals for fraudlent purchases. Honest realtors, loan officers and appraisers used these inflated sales as comps. This creates a false increase in prices and lending institutions, as well as the buyers involved, have been duped.
This is not gouging but if you have 20 fraudulent appraisals in one area, these are going to be used as comps for subsequent appraisals and the pyramid expands exponentially. This is known to have happened in San Diego, LA, SF, Indianapolis and has probably happened in every metro US area. The frauds for maybe a billion dollars (total) created false loans for a trillion (maybe) and certainly a false sense of increasing wealth.
Let’s look beyond just gouging to all of the dishonest activities that have gone on in this bubble. And let’s talk about how in God’s green earth did it come to pass that things like lying, deception, trickery, misrepresentation, etc. became so common, acceptable and even expected as part of the “tricks” used by every member of that sector. I am talking about phantom bidding wars to pump up the offer on a house, removal from listing, then relisting to reduce DOM, pocket listings, etc. Have we lost touch with what was once considered honesty and ethical? I hope not and I for one expect to see some prosecutions just like Sptizer is doing now.
What has happened to that wonderful humorous website There is no housing bubble! ?? When housing bubble blogs go off the air so suddenly I have to wonder…
condflip is still up
claims no bubble trouble
Looking for closer ties at the agency regulating Fannie Mae (FNM) and Freddie Mac (FRE), U.S. President George W. Bush on Thursday chose his high school friend and Yale University fraternity brother
James Bicknell Lockhart III.
Lockhart would take the helm at the Office of Federal Housing nterprise Oversight during a volatile time for both the agency and the government-sponsored enterprises it supervises.
Sounds like Fannie Mae will have indefinite plunge protection, with a guaranteed taxpayer-funded bailout when the Black Swan finally lands on the pond.
What about rental rates in a post-bubble world? I would be very interested in discussing what the rental market will do in a protracted real-estate down-turn. Will rental rates rise as more people decide to rent? Or will rental rates decrease as the inventory of vacant speculative properties (single homes, condos, etc) increases and investors can’t sell them?
Good question .
There will probably be quite a but of moving in with Mom and Dad, so rentals may not go up at all. After the Great Depression rentals bottomed about 1940, about 7 years after housing bottomed, so the same thing may happen again, especially in areas with the most overbuilding.
Quite a bit, not quite a but….
We have a huge increase in supply, which tends to lower rental price. However, there will also be an increase in demand and the number of foreclosures increase, etc, which tends to raise price.
I’m not sure if the end result will be lower prices, higher prices, or roughly the same.
Rising rental rates are not necessarily a given, if past history means anything. Here is a link about NYC and tenement rentals during the Great Depression.
NYC Housing
If history means anything during the last downturn here rentals suffered a 30% drop. Which created havoc with many Apt-Complex owners. They had to drop there prices to compete then when the market somewhat recovered they couldn’t go back to market because they were under rent control
Dream Data — if RE associations were run honestly, what kind of data would they collect and provide to present a spin-free picture of the marketplace?
I believe the NAR should just present the data and that’s it . As far as I am concerned the NAR has already violated some laws by making future predictions .
Oh, if only!
Unfortunately, true data, as I have found, may not be indicative of anything. In a zip code that sells only 4 houses one month and maybe 5 in the same month the following year, does that mean there is a boom? The spinners might try to portray it as such saying that the number of sales increased by 25%. That sounds like a big jump in sales. All we might surmise is that this particular zip code does not have a lot of real estate activity in that particular month.
In my area sales data tends to be very clumpy. I have wondered if those clumps are genuine, but like traffic patterns and congestion I assume they are.
The only data sin I see being practiced in my area is the practice of delisting, then relisting at a lower price, but that hasn’t happened very much yet.
Now, if realtors would carry statistics on listings that expired without being sold, that might tell us something. I see about as many of those as relistings at lower prices.
In the end I predict that NAR will claim that the “gas crisis” caused this whole thing along with Katrina. It is called deflection!
For me, it’s the Fed. I think Ben’s testimony was typical Fed-speak and people took out of it what they wanted. I think he was trying to steer a middle course. He wants to fight inflation, but he doesn’t want to raise too much and cause/worsen a recession.
Today’s NY Times reports 5% growth. That’s a lot.
If Ben will be data driven, as he’s said, he will raise to 5%. My prediction iis that he will definitely raise to 5%, but then he will wait and see. 5.25% is maybe 50/50, and there will be a pause and assess period.
Anyone else have thoughts?
This article suggests that stopping raising rates could be a bad thing.
Look at what gold and commodities have done with rising rates and a level dollar. If the fed stops raising rates, they’ll explode upwards. Game over.
What I haven’t seen discussed much, if at all, is the effect of other countries raising their own interest rates recently. I’d have thought that this would immediately diminish the “value” of our own current increases, thus forcing all up in a sort of inflationary (by design, I’d bet) spiral.
What do you mean by inflationary?
I agree that other countries raising their rates will force the Fed to continue raising if they want to continue to battle inflation and protect the dollar.
However, it’s not inflationary, but rather restrictive monetary policy. Maybe you were just using the term to mean that it’s a self-reinforcing cycle?
If he wanted to take the middle course, he should have played mum, as tipping his hand by hinting that the Fed may soon pause (despite unsustainably high GDP growth and rampaging inflation) suggests that he may be more interested in keeping Wall Street happy than in doing the hard work of keeping inflation under control.
Will the mtg deduction go away or be reduced could be a good topic. If the Republicans win the next elections this could happen. The bubble states are mostly blue while the vast majority folks in the red states, even those who own houses, don’t itemize.
I’m not sure that you’re right on the facts. Further, I think your prediction is wrong. It would probably be good policy, but it would be political suicide, regardless of which party attempted it. There’s a reason a bipartisan panel of former politicians and non-politicians were the ones who suggested this. Notice that no politicians have been saying it’s a good idea.
The mortgage deduction should be done away for for 2nd, 3rd, 4th,… 20th homes.
Republicans getting rid of a tax break? Sounds far fetched to me. No matter how much they spend, they always prefer to borrow than tax.
I have some sttrong opinions on this subject….
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” -
— Bill Gates
I’d like to see a topic on “Has broadband had any effect on housing demand in areas you are familar with and if not, do you see it having an effect over time”?
The consumer is tapped out has been thr cry of bearish analysts for years now. But is the consumer tapped. With filling the tank at $40 or so, its a shock to my psyche but is it a shock to the pocketbook.
When will the consumer culture in the US finally slow. We have the highest gdp growth numbers. When is there going to be a change or will this go on for a long time still?
Simmsays…
http://www.AmericanInventorSpot.com
$40? Damn, my Windstar E to F is $80. Makes me think about what my next SCE greeting will be.
Foreign central bank risk taking behavior in the US agency market:
http://www.xanga.com/russwinter
Ben, can we have a thread on what a “buyer’s market” really is. There seems to be a misconception going around that a “buyer’s market” is when the price only goes up 5%, or maybe even if the price is flat.
I don’t agree. A “buyer’s market” is when an asset trades beneath its intrinsic value. Just because buyer’s right now can get some small concessions from a seller that they couldn’t get a year ago doesn’t mean that it’s a “buyer’s market.” In the bubble areas, prices will have to go down 40% or more for it to be a “buyer’s market.”
Exactly, this market is far from being a true buyers market
…when an asset trades beneath its intrinsic value.
Substantially BELOW asset value AFTER inefficiencies and transaction costs and lost opportunity costs are subtracted. That means markets like Buffalo. Zip or Zill or Real the Buffalo area for thousands of houses for sale below the cost of demolition.
what will the realtors use to explain the reason why they were wrong about the boom going on. will they use an excuse that it was an event they couldn’t forsee? most realtors are starting to hedge, especially Lereah.
KBTC interrupts this blog to bring you the following educational program:
It’s Friday kids, you know what that means!
That’s right, it’s The Bubbles the Clown Show!
Now when Bubbles was driving up through LA a while back trying to make it to the track, there were so many couples clogging the roads looking for houses that Bubbles almost missed the first race! That made Bubbles grumpy. Then Bubbles said to himself as he drove along
the beach, ‘Boy who are all these folks who’ve been buying houses in Southern California? And since the prices are so goofy, how were they able to afford it?’ Bubbles doesn’t think it will end well for these bozos so he had to write a song about it! Sing along boys and girls!
“Searchin’ Safari”
Let’s go searchin’ now, everybody’s learnin’ how.
Come on, search for houses with me!
Early in the morning we’ll be startin’ out.
No money will be comin’ along.
Cuz we’re loaded up with credit
Interest Only? We don’t get it.
Not to worry, houses never go wrong!
Come on Baby try it and see.
Yes I’m gonna take you searchin’ with me.
Come on Baby soon you’ll agree
That buying houses is basically free.
Let’s go searchin’ now, everybody’s yearnin’ now
Come on, search for houses with me!
From Huntington to Malibu
our house will appear.
Our income, we will watch as it grows.
We’ll be eating Calamari in Hawaii next year.
We’re so cunning, and it certainly shows.
Come on Baby buy it and see.
Yes I’m gonna take you searchin’ with me.
Come on Baby we hold the key.
We can retire by age thirty-three!
Let’s go searchin’ now, everybody’s earnin’ now!
Come on, search for houses with me!
We’re lookin’ in Laguna, but The Valley will do.
After buying, all our dreams will come true.
Oh the equity we’ll borrow
We will say this time tomorrow,
I feel richer, how about you?
Come on Baby don’t disagree.
Yes I’m gonna take you searchin’ with me.
Come on Baby it’s guaranteed.
It’s California not Tennessee.
Let’s go purchase now, how much will the bank allow?
Come on, in a year you will see!
I don’t know what happened
Our low rate disappeared.
And the value, we got nothing to show.
We’ll be eating Tuna Helper in the Shelter this year.
We’re so stupid, now we certainly know.
Come on Baby how could this be?
Oh why did I take you searchin’ with me?
Come on Baby please talk to me
Oh Dear God we’re so up a tree!
Let’s go searchin’ now, gotta earn a livin’ now
Search for cans and bottles with me.
Searchin’ Safari.
So stupid, I’m sorry.
Searchin’ Safari.
So stupid, I’m sorry.
Yikes!…That doesn’t sound good at all does it?! I think Bubbles would do better betting on the ponies at Santa Anita then these folks will buying houses to make money! Bubbles remembers when people bought houses simply for a place to live. But that was back when Bubbles had money and drove a nice car and was chasin’ after the ladies with “little bubbles” (if you know what I mean). Ahh, the good ‘ol days. It’s hard for Bubbles now that he’s lost all his money in two bitter divorces, reeks of cheap scotch and drives a ’74 Olds Cutlass. Whoa, Bubbles got off on a little tangent there, never mind kids! Just remember: Bubbles the Clown is fun, Housing Bubbles are icky!
See ya next time!
a rainman18production copyright 2006
BTC#6
that’s classic. Maybe we could have a song parody competition.
ROTFFLMFAO! Oh Bubbles you make me laugh so much on Friday afternoon!!! Dank you, Dank You very much.
Hey what’s wrong with a 74 Cutlass??? And, yes, well, 2 divorces will break the old bubbly bank it is true, try rum, its cheap too and mixes well with orange juice - you can still find the occasional orange tree in Orange County
Hang in there Bubbles the times they are a changing and even though its been a long and winding road we’ll get by with a little help from our friends because we are the champions, my friend …
Gold over $650 today, and it takes $1.82 to buy a British Pound… Hmmm… Think the world wants to finance our deficit anymore? Confidence in the Dollar? Think not…
Been thinking the same thing.
I don’t know if you’ve ever discussed this but I’m interested in hearing about the differences & similarities between the U.S. today and the peak and decline of Japan’s real estate.
How could I forget the most personal issue probably facing many on this blog? What’s it like being a “Housing Bubble Leper”? Even now with all the evidence on the streets!!
My personal example is with my wife’s family. Her brother’s getting ready to buy a house in Utah for over $300K and her Mother won’t listen to my advise to sell her Vegas home and rent even though she wants to sell in 2 years.
My wife says things like “oh, you and that silly bubble” “quit scaring my family” “It’s their money”, etc.