All these people trying to predict a GENERAL crash in RE market should remember that we just reached 300 M people a few weeks ago... and those are the documented ones. Compare the population in the 1980's to now and maybe you will come to the conclusion that we may NOT revert / revisit 1980's style RE crash. In addition, a lot of tree hugging town councils are buying up tons of land as well as states who like to protect their water tables /reservoirs for the next 100 years. Now, Miami, Phoenix condos that is another story....
Whether housing equities have bottomed is an open question. Any statement to that effect is a guess. Probably they have not. Whether the housing market itself has bottomed is another thing altogether. The downturn in the actual housing market, and associated markets, seems to be picking up steam, and would seem to have just gotten started. Real estate cycles tend to last several years rather than turning in a matter of months. Personally , i would not be going long on builder stocks, or stocks of the non-prime mortgage lenders right now, although it might be getting a little late to be shorting them. I wonder how significant the gulfcoast losses will be in terms of rescuing the overall market. Even though the country is vast, one gets the feeling after seeing first- hand the destruction in New Orleans and the Mississippi Coast, that rebuilding there will be a significant factor . With regards to the inflation, it is true that housing rises with inflation, but not lock-step. If that were true we would never have periods when housing prices actually decline , except in a depression of course, and we are certainly going to see some big declines in some regions of the US. Estimates in the 30% area are common, but then those are from economists. And we know how reliable economic projections are.
good points. however, the trades were not intended in any way to be a hedge. both postions were independent of each other in analysis, goal, and execution. surf
Hasn't even started. In '07, we will see over a trillion $ of ARM's up for readjustment, and guess what, half of em cannot get financing! The long term stat to look at is income vs mortgage, which has been incredibly consistent for 40 years. Its skewed due to "creative" financing just to get people into homes. Not happening anymore. Except for locals such as Texas that never had the run up, expect flat prices for several years. There is no alternative until incomes catch up (unless you want 60% + of your income going to your home). Jay
Gotta agree. Nationally, we've bottomed. That isn't a "tough call" when you consider how many times the national average has declined. It almost never does, because to compare the housing market to stocks, you'd have to have: 1. more stock market traders every day 2. stocks would have to be a necessity 3. stocks could not be sold unless the seller bought others or rented stocks from other stock holders. Most all of the stuff you read in the papers is opinion based on old data, or isolated areas. My opinions are based on up to the minute direct observations of my market, which resembles a overall national market. SM
enough hand picked locations will drag down the national average. these are longer cycles. i say 3-5 years !!! And because this boom was more out of scale, the bust will be the same. Boston, New York, entire socal (actually entire california), southern florida, etc.. all have quite a bit more room to go. Like someone else said -- the ARMs will reset next year, the wages won't keep up enough, and most buyers in their right mind will want to take the principal risk associated with buying a house. Who cares even if it works out to being cheaper than renting, if in the end the risk is high you'll be 10-20% underwater on equity within several years ? Thats the mentality that will pervade the market even more than now. Basically anywhere that people actually -want- to live.
Really? Documented here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=5285&perpage=6&pagenumber=443 Thank you Artie21
I dont know why a few here think that real estate deserves to jump like it has. Many think its a bad thing that there is a slowdown in housing. After seeing where housing has gone it deserves a 10-20% pullback. To think it has bottomed is a joke.
It would be interesting for any participants here who are either raging bulls or raging bears to preface their housing call with one simple answer to this question. What is your current situation .. 1)home with a mortgage 2)home all paid for 3) renting 4) looking to move up in housing prices 5) looking to downsize. Let see if people "talk their position" Here is my opinion. There will be 5-7% dips in desirable NE and california cities . 15% in spec areas-AZ,FL, CA outliers. I am looking to make a lateral move between 2 states so I frankly don't care whether it goes up /down as long as the spread between them is equal.
I'm sure you are right when you say that prices have already fallen X% in so-and-so region, but it seems to me that in the US the housing market will correct in a fairly orderly fashion (and may even pause for a bit without much happening) unless the labour market slackens... perhaps via the slowdown we are beginning to see signs of on the horizon. Then you will get a lot more time pressure with sales. This is the catalyst that is needed. I reckon that these days people feel very secure in their places of work in the Western world - unemployment has been low for ages, and people only really learn from experience don't they? Getting fired?! That will never happen to me! This, however, is the view from the UK where perhaps it's easier not to get brainwashed by a big consensus view, but more difficult to gather first hand evidence of what's going on. All I know is that there are tons of people in this country who have never felt that their job is under threat, so they don't even factor in the risk when they are scraping their deposits together. I do think this complacency will cost them but I don't think I'll see them on their knees for a while yet... Oh and by the way Artie you do a good impression of Harry Hindsight don't you eh? Who cares what trades that surfer guy did in oil, any trader who hasnt made a losing trade yet is a timebomb. I would honestly love to give my money to a good trader coming off the back of a big losing streak - he'll only put the best positions on, and you can bet that he'll be stopping out on time.