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The housing market runs the economy with tentacles that go out in every direction. Everything that goes into a house needs to be produced, purchased, installed, taxed, those homes bought and sold over and over, and on and on.
Love ya, Quilter, but have to disagree.
Historically, the housing market is more a reflection of the underlying economy.
It was never the nation's economic engine until Federal Reserve monetary policy (low interest rates and excess money supply) and lax lending standards created a bubble that had nothing to do with the underlying economy.
All that excess money had to be invested somewhere and big investors were actually running out of viable investment vehicles. Bundling up risky mortgages into mortgage backed securities and calling that a "safe investment" was the order of the day. The demand for these investments was very high, which increased the incentive to write more and more mortgages.
As long as the real estate bubble was growing larger, and everyone's house was artificially growing in value, it looked like a great economy. Wages were stagnant for most people, but homeowners could borrow against their equity and they felt prosperous. Their 401Ks were along for the ride too.
And then the bubble popped because they always do. All those risky mortgages began to be defaulted on. Now we see that booming economy was an illusion.
We could end up like Japan, where the same thing happened in 1989. Their prices kept falling for 15 years! Prices didn't begin to rise until 2007 and then the worldwide financial collapse put a stop to that. As a result of their experience, many young people in Japan are now wary of buying a house at all.
"Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over 100 million yen (approximately $1 million US dollars) per square meter ($93,000 per square foot). Prices were only marginally less in other large business districts of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak, but still managed to be listed as the most expensive in the world until being surpassed in the late 2000s by Moscow and other cities. Tens of trillions of dollars worth were wiped out with the combined collapse of the Tokyo stock and real estate markets. Only in 2007 had property prices begun to rise; however, they began to fall in late 2008 due to the financial crisis.
The time after the bubble's collapse, which occurred gradually rather than catastrophically, is known as the "Lost Decade" or "End Of The Century" in Japan."
LuvU2 shooter ...... But I didn't pull the opinion out of my ski hat; I've experienced this phenomena in the r/e profession over several years. The ups and downs. My glass is usually half full for that reason, not half empty. Nevertheless, take a peak at this site (below), some good information. I cannot agree with anyone who does not think this is a great time to buy a house. The combination of low prices and low interest rates are a huge incentive that we may not see again. Interest rates will be going up, they have to. What I am more concerned about is this administration having the USA on the brink of bankruptcy with their drunken sailor spending. Thankful that healthcare will finally get a common sense overhaul. The economy won't recover to past heights, that's a given. But over time, you will see the inflation curve rise ever so slightly. If not, save my post and you can beat me over the head with a wet noodle.
TrimTabs Investment Research « HousingWire (http://www.housingwire.com/tag/trimtabs-investment-research - broken link)
Last edited by QuilterChick; 02-03-2011 at 09:49 AM..
Reason: punctuation
We've already had deflation in home prices, which are at or near a bottom.
It is the monkey-ing around with trillions of dollars of debt by Barack Obama and his Administration that has sunk the economy.
But how do you know it's the bottom?
I agree that our impossible debt has helped to sink the economy further. What is going to lift us up? We don't have enough up-and-coming industries to offset it.
I agree that a lot of people would love to move. But someone has to buy their house first and there is less and less money out there chasing more and more houses. I haven't seen anything to suggest that this trend is changing for the better.
Personally, I know more people who have lost their jobs than at any time in my whole life.
I am working with a local realtor to find a rental house. The only reason she has so many rentals is because these houses are not selling. Some of these owners are angry at her because of their situation. One guy doesn't want to pay to install a shower enclosure around his shower stall because he's got $300,000 invested in the house and it's for sale for so much less. He doesn't want to spend another dime just to offer what any buyer would expect.
I just don't see the happy happy in all this. If someone buys a house today and the value does decrease further, then they will be in a world of hurt if they need to sell.
Okay, I've got that wet noodle in storage. I don't think what is happening now is like the normal ups and downs of the past. This time the whole system is on the verge of collapse - even if the collapse takes years to unfold.
I think we're in for dire times in these United States. Have you ever heard of Gerald Celente and the Trends Research Institute?
I agree that our impossible debt has helped to sink the economy further. What is going to lift us up? We don't have enough up-and-coming industries to offset it.
I agree that a lot of people would love to move. But someone has to buy their house first and there is less and less money out there chasing more and more houses. I haven't seen anything to suggest that this trend is changing for the better. The only people that should be moving are the ones that financially HAVE to move and have to lower their home prices, bite the bullet and take the lower dollar hit. If you have a seller who just wants "a different house" within an area, he is the one that will hold tight foolishly on price. There are many of those on the market now that add to the statistics of unsold homes.
Personally, I know more people who have lost their jobs than at any time in my whole life.
I am working with a local realtor to find a rental house. The only reason she has so many rentals is because these houses are not selling. Some of these owners are angry at her because of their situation. Yep, it's always the Realtor's fault, some people just don't take responsibility. Did he have to move? then he should have dropped the price below his competition instead of leaving it on the market for a year or more, and now have to lower it more. Another statistic would have been removed. Homes ARE selling believe it or not. It's all about price! and the vultures are out there. One guy doesn't want to pay to install a shower enclosure around his shower stall because he's got $300,000 invested in the house and it's for sale for so much less. He doesn't want to spend another dime just to offer what any buyer would expect. Confirms what I said above. Another fool. It's not the Realtor's fault he paid too much when he was under the ether; or paid too much because he didn't do his homework. There is no utopia, people who want instant gratification and were looking for Utopia are all over the place, lately, however, they are finally "getting it", drop the price and the house will sell. I have a lot of empathy for folks who paid too much or got transferred etc., or lost their job etc. The economy has been slipping since 2007, it didn't happen overnight and it won't improve overnight. I never said it would improve overnight. But it will improve.
I just don't see the happy happy in all this. If someone buys a house today and the value does decrease further, then they will be in a world of hurt if they need to sell. Just the same as if someone has a house on the market now, and has been stubborn in lowering the price, they'd better get on the ball and get it lower than their competition because, yes, it is possible that we are going to see lower home prices before the situation improves. I'd rather drop it $10K and sell it in 3 mos. than drop it in tiny increments and get $20K less for it after 12 months. Wouldn't you? If you have to let it foreclose because you got a 90% or 100% mortgage and you have to walk away, then walk away. The greedy banks are getting hit in the belly ... I have NO sympathy for them.
Let me add, your house is NOT an ATM machine. If someone borrowed to the hilt for the pool, the sod, the sprinkler system and all the other "keep up with the neighbors" crap, tough noogies. There was a lot of "equity" pulled out of houses when the market was flying high.
Yep, I read a lot of financial journals etc. I also am a huge fan of Dave Ramsey and Suze Orman. It's the debt that buries the markets.l It's the free market system that needs to be allowed to work, not "stimulus".
Okay, I've got that wet noodle in storage. I don't think what is happening now is like the normal ups and downs of the past. This time the whole system is on the verge of collapse - even if the collapse takes years to unfold.
I think we're in for dire times in these United States. Have you ever heard of Gerald Celente and the Trends Research Institute?
I like The Daily Reckoning for financial advice. And the Mises Institute for understanding the economy.
As far as Gerald Celente goes, I have a subscription and get constant updates. I don't think I can put up one of his newsletters word-for-word here, but I'll give you a simplified overview.
It's not fun.
Gerald Celente Prediction for 2011 - he says "the chickens have come home to roost":
* People in all nations will recognize that economic conditions are serious and that the "solutions" have have not only had no effect, but have been self-serving also.
* Once the people are convinced their leaders are unable to fulfill their promises, the people will defy authority. "The seeds of revolution will be sown in the streets of failing nations, on the internet, and at the polling places."
* Indicators like employment figures, real estate, currency pressures, and national debt would have caused the stock market to crash in 2010. But TARP and the stimulus propped it up - that's the part the public knows about. But it was revealed that the Federal Reserve gave $20 trillion in secret bailouts to foreign and domestic banks, hedge funds, financial institutions, and favored corporations.
Same thing happened in Europe. The treaties of the European Montetary Fund were breached to bail out bankrupt banks and nations.
* Now that schemes are depleted, Celente predicts economies will collapse, there will be currency wars, trade barriers, and the beginning of the "Greatest Depression".
* Just as people are getting poorer, the government will step up their efforts to collect the funds they need to service the debt. Europe has enacted "austerity measures" and that's what we can expect everywhere. As time goes on, even emerging markets will not be spared and will also resort to austerity measures.
* Governments will cut safety nets and services to the bone, while trying to raise more money. Taxpayers will pay more for less. Corporate tax rates will be kept low and tax breaks/loopholes for the rich will remain, but they will be creative in getting more from everyone else in the form of sales taxes, sin taxes, highway tolls, meter fees, parking permits, license fees, water rates, and fines for minor violations such as speeding tickets, jaywalking, litter-bugging will skyrocket.
* Crime Waves - American who have never been criminals will do whatever they have to to survive. Gerald Celente says "When people lose everything and they have nothing left to lose, they lose it."
* Crackdown on Liberty - As crime rises, people will demand a crackdown. It will become a major campaign platform. Homeland Security has already stripped Americans of their Constitutional Rights, but you ain't seen nothing yet. We currently have warrantless wire taps, computer intrusions, GPS monitoring, stop-and-frisk searches, full-body scanning, TSA groping, and CCTVs or Google Street View. In addition, we will have military-style aerial vehicles (UAVs).
* Alternative Energy - As gas prices go up and the global warming argument drones on, people will expect the next step to be solar panels, wind/water turbines, geothermal, and biomass. However visionaries are forging new physics using ideas once thought impossible. They are working to create devices that liberate more energy than they consume. Inventions that manipulate the hydrogen atom, spark low-temperature, radiation-free nuclear reactions, and capture power from energy fields around us are on the brink of commercialization. This is an opportunity for investors.
* Journalism 2.0 - The internet has been here for a while, but newer methods for news and information distribution will make the old media obsolete. There will be universal access to publishing, broadcast technology and it will be harder for governments and media moguls to push their agenda.
* Cyberwars - WikiLeaks is just the beginning. All major governments have dealt with cyber threats and they will try to control free access to the web, identify users, and shut down any computers they consider a threat to national security as they define it.
* Youth of the World Unite - Lots of 20-somethings will have a new college degree and loads of debt combined with no job prospects. Educated enough to know that all the government debt will be on their backs, they will protest. You'll think it's the 1960's again.
* End of The World - The closer we get to 2012, the more we'll hear the "End is Near!" Given the state of the world, some people will be into "Survivalism". Some religious people will spend time repenting, converting, and devoting their energy to that instead of working on safety in the present.
I like The Daily Reckoning for financial advice. And the Mises Institute for understanding the economy.
As far as Gerald Celente goes, I have a subscription and get constant updates. I don't think I can put up one of his newsletters word-for-word here, but I'll give you a simplified overview.
It's not fun.
Gerald Celente Prediction for 2011 - he says "the chickens have come home to roost":
* People in all nations will recognize that economic conditions are serious and that the "solutions" have have not only had no effect, but have been self-serving also.
* Once the people are convinced their leaders are unable to fulfill their promises, the people will defy authority. "The seeds of revolution will be sown in the streets of failing nations, on the internet, and at the polling places."
* Indicators like employment figures, real estate, currency pressures, and national debt would have caused the stock market to crash in 2010. But TARP and the stimulus propped it up - that's the part the public knows about. But it was revealed that the Federal Reserve gave $20 trillion in secret bailouts to foreign and domestic banks, hedge funds, financial institutions, and favored corporations.
Same thing happened in Europe. The treaties of the European Montetary Fund were breached to bail out bankrupt banks and nations.
* Now that schemes are depleted, Celente predicts economies will collapse, there will be currency wars, trade barriers, and the beginning of the "Greatest Depression".
* Just as people are getting poorer, the government will step up their efforts to collect the funds they need to service the debt. Europe has enacted "austerity measures" and that's what we can expect everywhere. As time goes on, even emerging markets will not be spared and will also resort to austerity measures.
* Governments will cut safety nets and services to the bone, while trying to raise more money. Taxpayers will pay more for less. Corporate tax rates will be kept low and tax breaks/loopholes for the rich will remain, but they will be creative in getting more from everyone else in the form of sales taxes, sin taxes, highway tolls, meter fees, parking permits, license fees, water rates, and fines for minor violations such as speeding tickets, jaywalking, litter-bugging will skyrocket.
* Crime Waves - American who have never been criminals will do whatever they have to to survive. Gerald Celente says "When people lose everything and they have nothing left to lose, they lose it."
* Crackdown on Liberty - As crime rises, people will demand a crackdown. It will become a major campaign platform. Homeland Security has already stripped Americans of their Constitutional Rights, but you ain't seen nothing yet. We currently have warrantless wire taps, computer intrusions, GPS monitoring, stop-and-frisk searches, full-body scanning, TSA groping, and CCTVs or Google Street View. In addition, we will have military-style aerial vehicles (UAVs).
* Alternative Energy - As gas prices go up and the global warming argument drones on, people will expect the next step to be solar panels, wind/water turbines, geothermal, and biomass. However visionaries are forging new physics using ideas once thought impossible. They are working to create devices that liberate more energy than they consume. Inventions that manipulate the hydrogen atom, spark low-temperature, radiation-free nuclear reactions, and capture power from energy fields around us are on the brink of commercialization. This is an opportunity for investors.
* Journalism 2.0 - The internet has been here for a while, but newer methods for news and information distribution will make the old media obsolete. There will be universal access to publishing, broadcast technology and it will be harder for governments and media moguls to push their agenda.
* Cyberwars - WikiLeaks is just the beginning. All major governments have dealt with cyber threats and they will try to control free access to the web, identify users, and shut down any computers they consider a threat to national security as they define it.
* Youth of the World Unite - Lots of 20-somethings will have a new college degree and loads of debt combined with no job prospects. Educated enough to know that all the government debt will be on their backs, they will protest. You'll think it's the 1960's again.
* End of The World - The closer we get to 2012, the more we'll hear the "End is Near!" Given the state of the world, some people will be into "Survivalism". Some religious people will spend time repenting, converting, and devoting their energy to that instead of working on safety in the present.
OMG, make the sun come out and pass the Zoloft ! Mr. Celente is talking about a global picture of total gloom and doom; he has nothing good to say, and cannot say one thing positive for the future. He is predicting more government control and yet government collapse at the same time. ??? Well, sure, if we keep the current loons in office, we certainly are doomed. Anyone would be depressed after following his doom and gloom diatribes; the world is ending preductions. Geesh.
I'm simply relating my thoughts about the real estate market in general, in this country over the course of time (and in our own little micro area of WNC) -- it is the most cyclical market one could study. Economics was painful for me in college -- like eating chalk.
Besides, isn't it the old fart Al Sharpton who said "the chickens have come home to roost"; and that other nutcase in the "Rent is too Damned High Party". ROFL.
Shoot; you can come up with better than Mr. Celente, I know you can.
As for wet noodles .... I'll try. Think about a cooked egg noodle, then think about trying to hit someone with one. The saying has been around forever.
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