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Just more Gloom and Boomers . . . everything is okay dokey . . .
Economist: U.S. housing slump may exceed Depression | Dallas Real Estate News | Dallas Morning News | News for Dallas, Texas (http://www.dallasnews.com/sharedcontent/dws/classifieds/news/homecenter/realestate/stories/042308dnbushousingslump.1a45b90.html - broken link)
Quote:
NEW HAVEN, Conn. – An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression and bailouts will be needed so millions don't lose their homes.
Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said.
"I think there is a scenario that they could be down substantially more," Shiller said during a speech at the New Haven Lawn Club.
1. those who are educated about all aspects of whats going on
2. those who go on the internet and come up with half baked theories
3. and those who just go with the flow.
Depending on which category one falls into, will determine how this information is digested.
Houses were only considered an appreciating asset because of increasingly socialist programs to incentivize homeownership, such as mortgage interest deducations, Fannie/Freddie, FHA, etc.
Houses will eventually be regarded as a depreciating asset after this is done (just like a car or a boat) as we've run out of direct ways to incentivize homeownership and artificially prop up prices. Of course, I'm sure there are ways to indirectly promote homeownership vis-a-vis the State, but then do we wish to replace the stars and bars with a hammer and sickle?
home ownership saw a run up because of exotic loans, not necessarily fannie/freddi, fha. Once houses go back to historical prices (in line with local incomes) then they will increased based in yearly income increases which is 3 to 6%. Unless of course they come up with some other monkey brained scheme to give out cheap loans which will enable people to buy more home than their incomes can actually sustain.
home ownership saw a run up because of exotic loans, not necessarily fannie/freddi, fha. Once houses go back to historical prices (in line with local incomes) then they will increased based in yearly income increases which is 3 to 6%. Unless of course they come up with some other monkey brained scheme to give out cheap loans which will enable people to buy more home than their incomes can actually sustain.
A house produces no revenue for the owner, except the cost of living which is easily offset by maintenance and taxes. Owning commercial real estate such as a factory can produce dividends on investment. That's why I do not regard residential real estate in the form of single family homes as investments, regardless of what others suggest.
If you look at historical trends in real estate, you'll notice that the appreciation was very flat or below rates of inflation during periods when there were no government incentives of homeownership. Of course these incentives have a huge impact. if houses had to be owned by cash or through the local bank without securitization, I think you'd see a different ball game.
"They ain't making more land" is poor argument IMHO. There is a ton of undeveloped and habitable land in the US of A.
Last edited by ViewFromThePeak; 04-23-2008 at 02:54 PM..
I don't think it took an economist to figure out this housing slump, common sense would of done just fine. Tens of thousands of people buying on sub-prime loans, they can't pay them off. Something was bound to happen.
I don't think it took an economist to figure out this housing slump, common sense would of done just fine. Tens of thousands of people buying on sub-prime loans, they can't pay them off. Something was bound to happen.
sub prime doesn't even account for half of the exotic loans out there that will be reseting this year. There were tons and tons of prime loans (people with good credit) that took out exotic interest only loans and these choose your rate loans. Now they will be resetting at the end of this year. That is when the real fun begins.
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