Housing Bubble Bursting?

[moh malekpour]

If rents are rising, then all those "speculators" who bought houses recently will have an easier time offsetting holding costs and earning a return.

I don’t know about your market but in my market, there are two reasons for current rent increase due to the more demand for rent than purchase:
1-new homebuyers who were ready to buy homes this season are backing up, waiting for a better deal in future as more they wait, the better deal the can get. So, it is in their interest to rent and wait to get the ultimate deal when the home prices go down.
2-many homeowners who sold their homes at high prices and were looking to buy a larger and better homes are changing their minds temporarily so, they are renting and waiting for a short time hopping to buy back their homes for 20 to 30% less than what they sold them. These are smart renters who are renting temporarily for higher profit.
Does this situation help speculators to hang on for few more years? I doubt it because they are not investors; they are flippers and have neither the patient nor the landlord experience to deal with rental properties. They want to get out of this mess now especially those who have adjustable rates.

 

[DTB]

I don’t know about your market but in my market, there are two reasons for current rent increase due to the more demand for rent than purchase:
1-new homebuyers who were ready to buy homes this season are backing up, waiting for a better deal in future as more they wait, the better deal the can get. So, it is in their interest to rent and wait to get the ultimate deal when the home prices go down.
2-many homeowners who sold their homes at high prices and were looking to buy a larger and better homes are changing their minds temporarily so, they are renting and waiting for a short time hopping to buy back their homes for 20 to 30% less than what they sold them. These are smart renters who are renting temporarily for higher profit.
Does this situation help speculators to hang on for few more years? I doubt it because they are not investors; they are flippers and have neither the patient nor the landlord experience to deal with rental properties. They want to get out of this mess now especially those who have adjustable rates.

1. So now new homebuyers are the savvy ones in the market?? I thought they were part of the blame for the bubble.

2. I've been told here many times that this group doe not include many appraisers. I also love the dimestore psychoanalysis of investors, speculators, flippers and landlords. Priceless.

 

[moh malekpour]

1. So now new homebuyers are the savvy ones in the market?? I thought they were part of the blame for the bubble.

2. I've been told here many times that this group doe not include many appraisers. I also love the dimestore psychoanalysis of investors, speculators, flippers and landlords. Priceless.

How do you make your judgement? by looking at the action and behavior or by IQ test? If they act smart, they are smart. If they act stupid, they are stupid.

 

[DTB]

How do you make your judgement? by looking at the action and behavior or by IQ test? If they act smart, they are smart. If they act stupid, they are stupid.

And when did this transformation occur?


And #2 still holds:

2. I've been told here many times that this group does not include many appraisers. I also love the dimestore psychoanalysis of investors, speculators, flippers and landlords. Priceless.

 

[Terrel L. Shields]

Personally a lot of the investors seem to have a pretty nonchalant attitude towards their investment. We have a commercial building that has been vacant for over 2 years, never a tenant. A guy tried to lease it for $6/Sf and the guy insisted he had to have $10/SF and would wait...so your building is vacant what do you do? He built an apartment complex 320 units...'luxury apartments" high rents...10 miles from town between a regional airport and wally world and next door to his vacant commercial building. The last 80 are UC and almost finished. The other 240 units? 33 tenants according to a poll done by local appraiser....14% occupancy within 6 mo.?

I don't see these "investors" sweating until their bankers start sweating. They seem to think this will blow over in a few months...I personally think it is a longer trend but who knows....its a wierd market rents or sales.

 

[Ty Yu]

Heavy Debt Drives the 'Pin' Bursting America's Bubble Economy

Roger, I think you underestimate the Chinese leadership. They are the worlds most powerful nation. Keep in mind the record of the US in wars where the Chinese worked for the other side is 0 wins, 2 losses and 1 tie. The economic war in which we are currently involved is not going any better.

Good call Greg and you are not alone my friend.
The first article reports that 43% of Americans believe Communist China will *Rise Above* the United States.

1) Poll Reflects Growing Fear of China's Military / September 22, 2006
http://www.boston.com/news/world/as...oll_reflects_growing_fear_of_chinas_military/

2) Debt Saps World Power of America / October 15, 2006
http://www.timesonline.co.uk/article/0,,2095-2404009,00.html

(3) United States: The Lone Superpower That Couldn’t / October 15, 2006
http://www.nytimes.com/2006/10/15/weekinreview/15sanger.html?pagewanted=1&_r=1&ref=world

The Housing Bubble Bursting has given many of my fellow Americans the *Boiling Frog Syndrome*
http://en.wikipedia.org/wiki/Boiling_frog

 

[Randolph Kinney]

Some robust stats contradict the market-gone-bust reports

Some robust stats contradict the market-gone-bust reports


By Kenneth R. Harney, Washington Post Writers Group
October 15, 2006

http://www.latimes.com/classified/realestate/news/la-re-harney15oct15,0,1209869.story?coll=la-class-realestate-news

WASHINGTON — With all the dismal reports about the home real estate market, don't lose track of something critically important: Mortgage interest rates have been falling quietly but steadily for months and are now at their lowest level in half a year, barely a percentage point above 40-year lows.

New mortgage applications are up sharply, the number of pending home sales is up, the national economy continues to expand moderately, and the rate of unemployment just declined again — to 4.6%.

All of which begs the question: Just what kind of housing bust is this anyway? With gloom-and-doom purveyors forecasting imminent crashes in dozens of metropolitan areas, how could such key fundamentals as jobs, interest rates and even pending home sales simultaneously be trending in the opposite direction?

 

[Dee Dee]

http://biz.yahoo.com/weekend/weakhome_1.html

Home buyers have another reason to sit on their hands.

In the latest news from the slumping U.S. housing market, a report released this week says that median house prices are likely to decline more than 10% over the next few years in 20 metro areas, including Las Vegas, Tucson, Ariz., and Washington, D.C.

The report, by Moody's Economy.com Inc., a research firm in West Chester, Pa., also says that the slump won't end quickly. Indeed, according to the report, prices may keep falling until 2008 or even 2009 in some areas. In all, prices are falling or likely to decline soon in about 100 metro areas, the firm says.

 

[Ty Yu]

Helpful Housing Bubble Document

There are several newspapers throughout the country that push their own *propaganda* with their own agenda and are considered to be *Spin Doctors*.

The following link shows the U.S. housing market in a *Downward Spiral*

Home Sales Chart: National Association of Realtors
http://www.realtor.org/Research.nsf/files/EHSreport.pdf/$FILE/EHSreport.pdf

 

[Randolph Kinney]

Dee Dee, according to my news story:

It is a "correction" that's underway — a cyclical re-balancing of a marketplace that got too hot for too long in some parts of the country and is now heading back toward more "normal" conditions, where prices are more in line with what consumers can afford.

"The reported declines in house prices in a number of areas should help to facilitate the re-balancing of supply and demand in those markets," Kohn said. Not all home sellers have fully grasped the altered realities in their own local markets — that they've got to reduce their asking prices if they truly want to sell. So the process is still unfolding.

This is happening in spite of record low unemployment, a growing economy, increasing wages, rising rents, falling mortgage rates that are the lowest level in half a year that are barely a percentage point above 40-year lows, and the stock market is reaching a record high.

As some want to view the housing market at this juncture, it is "normal" that house prices are now falling. Nothing to get excited about. Everything is okay. Do not pay attention to that man behind the curtain.