Wow I thought this thread ended when I said sell on the homebuilders back in 2005 for the easy double digit gains. Lets see this thread, and in response to Lanser's inbox message, was started in continuation of a 2004 thread where people were proclaiming a crash then. 2004 double digit home appreciation. 2005 double digit home appreciation. 2006 down 3%. (If anyone lives in Northern NJ, you saw price appreciation last year, double digits in some parts.) Wait til Thursday to see how the year ended. I'm amazed at all the banter about how supposedly bad things are yet nothing looks like how bad it was in the mid 90's when unemployment was the cause then. Today rates aren't going anywhere, everything that can be outsourced has been and with the healthy job market, no one wants to live in a cardboard box(apartment). It appears the softness to be in the overbuilt areas, but for the long run crowd, why worry, everyone wants to live in these areas as opposed to the midwest, the south and other shit areas. And to see someone say inflation is gonna get worse, double digit mortgages, lol. I'll have to bring back the Weimar fan reference and post cpi numbers again.
How can you say rates aren't going anywhere?? Are you kidding. What do think the Fed is going to leave rates the way they are? With oil at over $50 a barrel and precious metals at prices not seen in decades. What do you think they're just going to let inflation get out of control. Like I said they will keep rates as low as they can for as long as they can. Mortgages are still low but remember they will follow the Fed's discount rate eventually. The fed has brought the discount rate back to normanl levels, mortgages will come back up to 8%-9% very soon. The cpi doesn't mean shit, when it comes to measuring inflation. Answer me this question. What will sustain real estate when mortgage rates are at 9%??? Explain it to me. How will prices remain where they are? Mortgage rates are close to where they were in 2004-2005 but the market is getting crushed. The writing is on the wall for real estate that's why it's slowed down so much. Don't you understand economics you can't do a completely radical action (lowering discount rates to 1%) WITHOUT SEVERE CONSEQUENCES. Severe inflation is inevitable at what Greenspan did!!
You oughtta go study that silly brokerage test you failed to be a salesman and leave the data for the collegiate ones who went onto more aspiring careers than sales. LOL understand economics? Anytime the Fed does something, it doesn't show up in the economy til about 12 months after as detailed in Milton Friedman's book "Money Mischief." (That book should be required reading). Also in the book, oil is not inflationary, to argue such ends the economics discussion there. Inflation would've shown up in the core rate by now since the 1% discount has far been removed. Consensus for 2007 rates is what I have on my wall right now. Last year they were pretty much in line. Barring any dramatic event, it'll be a quiet year on the rate front. Looks I'll be appealing to the Weimar fans shortly with the release of PPI numbers today (Wednesday) and the CPI numbers tomorrow (Thursday).
Give me a break what college did you go to? Chippy chappel univesity? What are you a real estate agent? Do you even have to go to college to do that ? What is your career not understanding how investments or the economy works for that matter. Just because you read something by Friedman doesn't mean shit...Oil is a very good measure of inflation, it's one of the major measures of inflation. It's the most important commodity there is. Inflation is beginning to show up in oil prices, precious metals and commodities BIG TIME!! There is no set time standard to when something is going to showup!! Core rate doesn't mean anything it excludes FOOD AND ENERGY the two most important measures. That's like excluding a baseball players batting average and home runs and trying to measure how good of a hitter they are.
By the way Slick you still haven't answered this question: Answer me this question. What will sustain real estate when mortgage rates are at 9% Incomes have not doubled or tripled, nobody will be able to afford those prices. When all of the speculaton is gone it's completely over with. Ontop of it when you have inflation creeping in with rates that may get out of control forget about it. What is that $400,000 house going to be worth with a mortgage rate at 9% or 12% or for that matter 18% It's going to implode. But yeah that's right I don't know anything because I didn't read read Friedman like you and go to Chippy Chapel college like you so I could be a real estate agent and work straight commission with no benefits and no vacation
ROFL Either this guy is a dumbass or he's writing some pretty funny posts. I don't which is funnier this, or that San Diego thread where half the homes are in foreclosure.
Pardon me but I think you are absolutely a paranoid gadfly. Last I looked commodity prices are tanking. Are you Rip Van Winkle or something? Oil DOWN HUGE. Gas DOWN HUGE. COPPER DOWN HUGE. Hello?? Also get a lesson on the underlying cause of inflation. It has NOTHING to do with borrowing. Its basically caused by a lack of capacity to meet demand. Also, 2006 was the 4th highest real estate sales volume in history believe it or not. You lack any vision of scale. Just because sales were off their 2005 highs does not mean doom-and-gloom rules the land. BTW - real estate is one of the best things to own in inflationary times if that is what you think we are in. I think the only "bubbles" we have at this time are what you are making in your mind. The NASDAQ is doing just fine and has been under fair value for a long time. It is now showing some leadership in the markets. That's called sector rotation and there is no bubble whatsoever. At some point it will be healthy for the market to correct 4-10% to reaffirm convictions but thats a normal and expected event in the equity markets. You fail to understand the one problem we and the rest of the globe have. Its called massive liquidity. There is TOO much monetized wealth all over the planet that moves about like a willow wisp to the next great best speculative opportunity du jour. That creates some volatility in the markets. But Mortgage rates will never get over 9-10% since there is so much readily available cash in circulation looking for a home and competing for yield. YIELD GOES DOWN when there is a lot of cash supply not UP. Get a lesson in economics and take a few pills to settle your chicken little emotions. TS
First of all Oil is over $50 a barrel which is still way too high, and it's probably not going any lower. Many analysts are saying it's just in a corrective cycle at this point. Gold which is also a good measure of inflation is off of the charts. How can you say mortgage rates will never hit 9-10% because there is too much money out there. That's right there is so much readily available cash in circulation, which creates inflation. The more cash supply there is, the more inflation that is created. You have too many dollars chasing too few products. The fed will raise discount rates, in time mortgage rates rise. Don't you guys understand what's going on here in real estate. Greenspan just shifted bubbles. We had a HUGE bubble in the Nasdaq that wiped out a good amount of traders. In order to save everyone from the nasdaq he butchered interest rates down to a 1% discount rate. This created a huge real estate market. This was his intention... All the people that got crushed in the Nasdaq could sell their house and recover there loss. We've just shifted bubbles, but the problem with doing this is now you have a new bubble that's forming in inflation. The commodity markets all starting to get out of control. Although some markets have coooled, they are in correction phases. No market moves straight up. You've got to understand it takes time for things to develop. Nobody can pinpoint exactly when that time comes. The fed is stuck in the middle: leave rates low and try to keep real estate moving along or raise rates to keep inflatioin from getting way out of control which in turn will kill real estate and crush a lot of real estate investors and home owners. I like Bernanke he seems level headed. Greenspan did some wild shit. Lowering a discount rate to 1% and leaving it there as long as he did is crazy!!! So much money was borrowed at this time...there is so much cash out there, but remember it takes time for that to show up.
Sorry Lasner - $50 a barrel oil is very cheap relative to what the costs, risks to production and demand is at this moment. I am hoping against all hope that the US is filling our strategic oil reserves right now as fast as they can at these low prices. I agree that Oil is going to be increasing in price and that is a VERY GOOD thing since its time for this planet to transition off oil and reduce its impacts on the planet and to keep some of that oil money here at home on alternatives. I am all in favor of taxing the bejeezuz out of oil to force gasoline at the pump to be perma priced at about $4-$5 gallon to force a energy mix change and to use funds to revamp our entire energy mix and infrastructure. BTW - Gold is showing incredible softness and is bound to correct to about $450/oz sometime in 2007. It rose too fast in 2006 bypassing the need to establish firm price support points. That means we have to go back down and reaffirm a logical pricing mechanism if it is to advance further. But you know what? Gold is completely irrelevant to anything real in the world. The world can get by without much gold at all. It is not needed for economic expansion and hardly needed at all in any significant quantities for industrial applications. Gold is an emotional and speculative commodity that is nothing put a pacification for those that are inherently paranoid and fearful. Afraid of inflation eroding the currency and your net worth? I'd be more afraid of losing 20-30% of my net worth in a rapid shakeout of speculative pricing in a large gold position. Why do you think Gold companies don't horde the metal for themselves rather than sell it on the open markets for cash? Answer, because they know price is fickle and emotional and it can't be relied on from day to day. Otherwise they would price fix super high and pay all their workers and suppliers and debts in gold and keep the balance for themselves. Gold prices are manipulated and only a fool would put their full trust in gold. Mortgage rates will not approach 9%-10% any time for the foreseeable future. This country learned its lesson from that buffoon Jimmy Carter who let the country devolve economically to the point we had 18% interest rates. We have learned from that jackass and it ain't gonna happen every again while we still function as a viable country. Here is a test to prove my point. Hunt around the globe and try to find a bond or stock etc. that can produce a yield anywhere close to 9-10% or higher without taking on a super high risk. You simply won't find it except for in Canada's government busted Income Trusts (devastated by 30% in value overnight due to a malicious and unexpected unfavorable tax law changes. BTW: great opportunity to become wealthy on these right now as politics force the government to change policy or resign). Yeah, you might find some bonds in Russia or the banana republic over 10% but then you have political risk like Hugo Chavez and the various other Latino madmen who want to take over private corps and steal wealth like Robin Hood from the "wealthy" to buy votes from the have-nots. So, bottom line, 9-10% is the upper yield threshold/limit that anyone can get right now globally without super high risk or some ponzi scheme that pays dividends out of current principal. BTW China's cheap prisoner labor and razor thin margins has been underwriting the global inflation risk for over a decade. As long as China is a global player there will be an oversupply of cheap products. There is not enough "things" on the planet that anyone wants to buy to suck up all the excess global equity. Not even gold can do that unless the whole planet becomes instantly paranoid and bids it up to $5000/oz and everyone falls for it. But again, gold does not produce wealth or even contribute to cash flows so its a suckers game unless they figure out how to plant in in the ground and make it grow into a money tree. Best domestic bet in 2007: High Yield dividend paying quality equities with favorable markets and fundamentals throwing off a lot of cash. Retiring baby boomers are starved for income and the 4.5% US Treasury Bills/Notes/bonds whatever are not going to keep these people in their comfort zone. I have made more capital gains in my income producing holdings than in almost any other equity class. There is HUGE demand for yield and people are paying a premium to get it. Its like child's play right now and easy to get 30% total return on these high dividend yield stocks. TS
Ok, I did go to Chippy Chapel College in Tucson and I'd appreciate you all not running it down. Ok, seriously, the only way that mortgage rates would go up to 9% is if long term rates were up. The only way that would happen is if the economy was going great guns and folks needed to borrow lots of money because there were too many good things to invest in. And if businesses were investing that heavily, and demand for borrowed funds were that high, you can believe that there would be a ton of great jobs available and the companies would be stealing employees from each other. Bottom line...rates don't go up that high unless the economy is super good and it would act as a brake on a great economy. You won't get that braking action unless there is a reason these days... SM