Housing Bubble Bursting?

Discussion in 'General Real Estate and Real Estate Finance' started by Austin, Mar 24, 2006.

  1. Terrel L. Shields

    Terrel L. Shields Elite Member

    58
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    There is an element of cost in that too. Things that used to draw a premium like lumber, sheetrock, even appliances, have come down in price. You can build cheaper now. Further, you have your pick of cheaper labor. No more $40 an hour framers around here. Lucky to make $15 an hour. I asked around and most carpenters will hedge a little but are building houses that cost 80-90% of what they cost in 2007. And lots...basically free around here. You can build all the spec homes you want on lots costing no more than $10,000. The banks have loads of 'em for sale.
     
  2. nicholz12

    nicholz12 Senior Member

    0
    Sep 7, 2008
    Professional Status:
    Licensed Appraiser
    State:
    Massachusetts
  3. Terrel L. Shields

    Terrel L. Shields Elite Member

    58
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    Case noted this morning that the prices seem to be rolling from one area to the other. Atlanta has fell on its face. Phoenix, like its name, appears to be rising from the ashes.

    A Realtor told me this morning that he talks to a ranch broker in Texas who has an office is Corpus and in Dallas and he was saying parts of Texas has barely known there was a recession. The oil industry has revived that state along with Oklahoma, Louisiana, and the Dakotas.
     
  4. Riick

    Riick Elite Member

    11
    Aug 14, 2007
    Professional Status:
    Certified Residential Appraiser
    State:
    Delaware
    I'm curious, if our politicians had their way, we'd have a new Real Estate bubble tomorrow.
    If such a thing could happen, how long until it burst?

    /
     
  5. Randolph Kinney

    Randolph Kinney Elite Member

    14
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    [​IMG]

    House Prices Are Now Back To Early 2003 Levels


    Read more: http://www.businessinsider.com/char..._campaign=Moneygame_COTD_032712#ixzz1qMBa0nat

    Today's Case-Shiller House Price index came in a hair better than expectations (falling 3.78% year over year vs. an expected decline of 3.8%), but the bottom line is that the bottom still hasn't been hit.

    Prices are now back to early 2003 levels based on the raw price index.
     
  6. David R. Stevenson

    David R. Stevenson Elite Member

    0
    Dec 6, 2003
    Professional Status:
    General Public
    State:
    Tennessee
    Real estate prices down . gov. spending way up

    ... housing prices may be back to 2003 levels ... but government spending is not .....


    .... remember that 700 billion bail out in 2008 ........ ?

    .... another 700 billion bail out in 2009 ..........

    .... another 700 billion dollar bail out in 2010 .....

    .... another 700 billion dollar bail out in 2011 .....

    ..... on top of the baseline budget ......

    ..... and there will be another 700 billion dollar bailout in 2012 ...

    .... thats 2.8 trillion dollars in bail out money above and beyond our normal spending

    ..... its easier to have continuing resolutions and no budgets ......

    .... most folks don't realize that 2008 was just the beginning of the bail out .....

    ....
     
  7. Randolph Kinney

    Randolph Kinney Elite Member

    14
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    What's wrong with this picture?

    [​IMG]

    Americans typically derive their net worth from their home equity. While the market has had one of its strongest rallies thanks to massive bailouts, the number one asset for Americans continues to fall.

    Home prices are now down 33.9 percent from their peak reached in early 2006 (6 years ago). This is why when Americans are surveyed they are not feeling the outsized gains directed to the financial sector. Many companies are leveraging the recession and have cut wages and hired workers at lower overall costs while the gains are flowing obviously to one side. There is more to a bottom line than simply what is brought in.


    [​IMG]

    Since the recession hit, food stamp usage is up 84 percent. This is occurring while the stock market is up 109 percent and the housing market is down almost 34 percent.

    Does anyone really believe the housing market can recover?

    Most people are cash strapped and use credit to facilitate a purchase such as housing. There is a reduced demand (not enough qualified borrowers) and investors can't fill the void created by surplus sellers. The net result is a continued fall in asset price and value.

    Near zero interest rates create falling asset prices because savers can't get a real return on financial assets and don't have the wherewithal to take on high risk real asset plays.

    Real growth appears to be occurring, yet that growth is stressed by excessive fiscal deficits and high debt/GDP levels. Commodities are the beneficiary of the necessity to delever. Financial assets cannot continue to be elevated by zero based interest rate or other tried but now tired policy maneuvers that bring future wealth forward. Current prices, in other words, have squeezed all of the risk and interest rate premiums from future cash flows, and now financial markets are left with growth, which itself experiences a slower than normal because of less financial leverage.
     
  8. Randolph Kinney

    Randolph Kinney Elite Member

    14
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Shiller: Housing Has “Chance” to Bottom But Suburban Prices May Not Recover “In Our Lifetime”

    http://finance.yahoo.com/blogs/dail...bottom-suburban-prices-may-not-161914444.html

    Robert Shiller, a professor of economics at Yale University and co-creator of the Standard & Poor's/Case-Shiller Index, says the market has "a chance" of rebounding even though the downward momentum in the real estate market has accelerated in the past five years.

    Before housing can bottom, the problems facing mortgage giants Fannie Mae and Freddie Mac must be resolved, Shiller says in an interview with The Daily Ticker. There is speculation that Fannie and Freddie could sell bundles of foreclosed homes to hedge funds; NPR and ProPublica reported last week that both Fannie and Freddie are leaning toward principal mortgage write-downs and loan forgiveness.

    Many young people are choosing to live at home for a longer period of time instead of buying. Moreover, would-be homebuyers are settling into modern apartments and condominiums, further hindering a housing rally. Shiller says the shift toward renting and city living could mean "that we will never in our lifetime see a rebound in these prices in the suburbs."

    A perpetually sluggish housing market, which Shiller believes has become "more and more political," might push the country into a "Japan-like slump that will go on for years and years."
     
  9. Terrel L. Shields

    Terrel L. Shields Elite Member

    58
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    People pay a little more attention to Shiller since he was ridiculed for so long for predicting a bubble. Shiller is mathematician enough to recognize you can never predict a top in any bubble. Bubbles "pop" often from a single event. Elsewhere I am predicting that the gasoline bubble will pop one of 2 ways - UP if Israel attacks Iran or visa versa... DOWN if natural gas prices collapse to the $1 level far far below cost..which will have implications for hedge funds who are hedged the wrong direction on gasoline and oil, it will weaken the drillers state side, and it will expose the Emperor isn't wearing any clothes.... But anyway, I am stupid enough to say the die will be cast in July-August, historically the period of filling of the nat gas storage fields and the peak will be passing in gasoline usage.

    Actually, using gold as a metric, gasoline is roughly where it was in 1981. Obama's comments today about taxing the oil industry isn't helping...it only creates the sort of market angst that ultimate hurts the drillers and refiners which has a very negative impact on the economy overall....But it boosts PetroChina....making us ever more dependent upon events in China for economic salvation.
     
  10. Randolph Kinney

    Randolph Kinney Elite Member

    14
    Apr 7, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Goldman Bets on Property Rebound With New Fund: Mortgages

    http://www.bloomberg.com/news/2012-...property-rebound-with-new-fund-mortgages.html

    Goldman Sachs Group Inc. (GS), which survived the subprime mortgage crisis by making bets on a housing decline, is raising money for a new fund that will buy home-loan bonds to benefit from an improving real-estate market.

    The U.S. Housing Recovery Fund is expected to finish its first round of capital raising and open April 1, according to a marketing document obtained by Bloomberg News. It will focus on senior-ranked securities without government backing, many of which now carry junk credit grades.

    Goldman Sachs was among a handful of banks selected by the Fed to bid on the mortgage bonds acquired in the bailout of American International Group Inc., drawing complaints from others on Wall Street who were shut out of the process. The firm bought $6.2 billion of the debt in a Feb. 8 auction. Unlike Credit Suisse Group AG, which won a Jan. 19 auction, the bank failed to immediately flip most of the securities to clients bidding through it, regulatory data on trading volumes showed.
     

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