Now for the scary part. Greenspan lowered the federal discount rate to 1%. That's basically what created the housing bubble. It in turn will create inflation...what we have right now is inflation. Oil is at $73, gold $650, silver $13. The Fed is going to have to keep raising rates. Inflation is setting in....you could see the late 70's early 80's all over again. When the Fed raises rates real estate will tank all the more. If we see inflation like we did in the 80's....we are done. What happens when you have a mortgage payment at 10%,12,% or like we did in the 80's 18%. That overinflated 700k house that some sucker bought on a interest only loan is now worth 300k. I'M TELLING YOU WATCH OUT FOR INFLATION AND HOW IT PLAYS INTO REAL ESTATE.
Yall think interest rate will be in the 10's ? Is it possible ? When ? Didn't the Fed learn a lesson from the 80's ?
columbian/brazil market is up 8-9X in 5 yrs. US dollar is sinking/approaching parity with canadian dollar. top tier property in miami has nothing to worry about. there is no affordability issue.
There are going to be 80 million bb's retiring in the next ten years and that will further weaken the market. I come from a very high end town in western suburbs and there are homes for sale everywhere. Its not just the housing slump, the demographics are also beginning to change.
I agree...back in the late 80's early 90's they couldnt give away an apartment out on south beach...you could have scooped them up at 30-40k now 300-400k ...is it becuase we are in a bubble or because someone didnt see the value when granny and papi were busting a nut in Sobe??
NAHB Housing Index falls to 24 vs 28 consensus; lowest level since Jan 1991.... US NAHB Jul Housing Index 24 Vs 28 In Jun Jul 17 at 13:00 WASHINGTON (Dow Jones)--Home builder confidence, as measured by a trade group index, fell to the lowest point in 16 years this July, amid concerns about rising interest rates and continued problems in the subprime mortgage market. The National Association of Home Builders' index for sales of new, single- family homes decreased in July to 24 from 28 in June, according to data released Tuesday. The reading of 24 marked the lowest point in the index since January 1991. "The bottom line is that the single-family housing market is still in a correction process following the historic and unsustainable highs of the 2003- 2005 period," NAHB chief economist David Seiders said in a statement. "Builders are actively trimming prices and offering buyer incentives to work down their inventories, but meanwhile there is a large supply of vacant existing homes on the market, and affordability problems persist despite efforts to attract buyers," Seiders added. Still, Seiders said the market may turn around toward the end of this year. "In spite of these challenges, we expect to see home sales get back on an upward path late this year and we expect housing starts to begin a gradual recovery process by early next year," he said. Within the NAHB's housing market index, the component for present sales of single-family homes fell to 24 in July from 29 in June. Expectations for sales in the next six months dropped in July to 34 from 39 in June, the NAHB said. The traffic of prospective buyers slipped to 19 from 22. The index in July was based on a survey of 330 home builders, who answer questions about sales prospects now and in the near term. When the Housing Market Index exceeds 50, it means the number of builders who see 'good' sales outnumber the number who see 'poor' sales. The numbers used in compiling the index are adjusted for seasonal variations.
Home prices aren't that important. They go up and down but in the long term go up. The market is ignoring them so I don't see what the big deal is.
Its a question of time frame, if they go down say for 5 years that would hurt like hell. Japan its been falling for 15 years. Consumer is 75% of USA economy, and if half of all consumers have mortgages and if the house price falls for the consumer then USA economy goes south with consumer confidence. Refinance issues, worry of valuations, equity withdrawals, etc But they say if consumer can get a job then all will be ok...but... Employment numbers are a sham in the USA. Resdential construction jobs for 2007 will be revised down come the re weightings of the BLS forecast in Jan 2008. Soon there will be negative job growth. Soon housing and jobs will become the negative forces that send USA into the crapper!!! Dont get me started on bullsh*t inflation rate that USA gov't puts out.
Let me explain why the decline will continue.... I(mortgage broker) just completed a loan for a client who is purchasing a home that was foreclosed by a bank. The bank foreclosed for $468,000 and my client made an offer for $505,000 which the bank accepted. The appraisal came in at $550,000... as soon as my clients purchase is recorded the comparable homes in her neighborhood will decline by $45,000. Foreclosures for May 07 were 90% higher than May 06.... unfortunately this is going to get much worse before it gets better. The subprime debacle is adding further fuel to the fire.... subprime loans are no longer an option for potential buyers with poor credit or no money for a down payment, reducing the pool of potential buyers.