DURHAM, N.C., Feb 20 (Reuters) - Federal Reserve Board Governor Susan Bies said on Tuesday that there still was a high potential for a correction to occur in the housing market and said that made it hard for the Fed to assess conditions. "There's a lot of vacant housing out there right now,' Bies said during an address at the Duke University Fuqua School of Business. "The potential for inventory correction is still very high," she added. While supply is hard to judge, Bies said that a downturn in demand for housing may be nearly over. Reuters Pictures Photo Editors Choice: Best pictures from the last 24 hours. View Slideshow "We may be near the floor in terms of demand," Bies said.
<i>"We may be near the floor in terms of demand," Bies said"</i> it'd be even funnier if she actually believe that
I love the way they all think they can have a floor by sheer will power and determination!! Its EXCATLY like the internet bubble..."Yahoo has reached a bottom at 45.00" LOL...AOL shouldn't dip much past 28.oo per share!!!
I doubt RE prices are like the 2000-2002 NAZ. More like the Dow of that period. Ain't too many homes trading 100x their 1993 levels, eh? Inventories are huge but IMO many sellers are of the JIC variety. Not that prices won't come in. They will. But it'll be more of a correction than crash. Prices aren't high enough to crash. Assets are king because they're fungible for depreciating cash. Wages are paid in script with earners competing with Chinese, Mexican's and Indian's for bread crumbs. Great environment to own a farm. Bad environment to work in a factory.......
You mark my words......There is NO CORRECTION taking place...there is a CRASH taking place and nobody (talking heads and analysts) gets it. One of the bigger factors too is the affordability of payments....if you bought a home for 300k and now you want to sell it for 600k, that means the Buyer has to pay mills based on 600k not the 300k you bought at.....and now they ae raising the credit and risk standards or buyers so you will have even LESS spenders out there...LOOK OUT BELOW!!
In my neighborhood prices are off 20-30% from the highs. 550K to 400K Is that a correction or a crash? Homes are still on the market after over 1 year being actively listed. Funny that the 1+ million $ homes are still selling at a brisk pace keeping median prices up. A friend is flipping homes from the 900K to 2 million range and has no problem finding buyers. He's been making about 200K+ on every flip and has completed and sold 2 so far this year. For the regular working folks, the market is toast.
It was Bies statement that created this buying today in the markets. I think it was a pathetic statement, it was only made to keep the bull going. They really have no clue in what they are saying. I have heard that the bottom is in for the last 6 months. Its quite sad how many times they have mentioned it. Its almost like they know something is alot worse than it should be and to keep everyone calm and collected they tell the people everything is fine.
Given the magnitude of the rally I wouldn't even call a 50% reaction a crash. Just several years of filling in prices. RE won't "crash" unless other dollar denominated assets also crash. I see a glut of homes for sale in Ft.Lauderdale. Prices are trending lower yet they're still 4x 1997. I'd rather take a 500k hit on my home's value as part of a balanced diversified portfolio than get hit with some SouthAmerican type inflation and be paying 5k a month for a 1 bedroom apartment while my house trades 4mil and I'm long a boatload of worthless cash.
Near me there are 2 houses for sale, one was listed at $675,000 in mid 2006, someone came in and offered $625,000, he didnt take it, now its sitting on the market for $575,000. Down the block another went up for sale at $689,000, no takers, its been on the market for over 6 months, last I checked they wanted $589,000. Does anyone remember the market in 1988?? I see housing prices coming down an additional 10% by the end of 2007 and in some over heated areas as much as 25-30% decline.
Pabst all true...However your missing the fact the loans are being called on these homes....If your paying 2500 for a 400K hom thats fine...If the value drops to 300K....that's still fine...But what happens when the value drops and your NEW ARM causes your monthly payment to jump to 4000 per month?????? That is when the the fun starts