Ofcourse its just my opinion but until the big problems are solved (increasing debt and the cost of servicing it; big balloon payments/liabilities coming in the future); aka balancing budgets and moving the pendulum in the other direction, increasing real productivity by creating new industries which are globally competetive (which will also reduce unemployment for real - not reducing numbers on the roll since people are dropping out of the employment pool), not much good will happen. But who is going to do that? That would mean not kicking the can down the road. Show me a party that is willing to do that; but alas; if that is their agenda, its pretty hard to come into office. Again just my thinking; but looks like its going to be a real muddle through (at best) for the next couple of decades atleast. And what the hell is going to happen on the next downturn. Housing market has not founds its bottom due to the props put in place; how are they going to hold it through the next recession or whatever. Very sketchy.. its all going to add up. As far as global economy is doing; a lot of the new markets are growing pretty strongly both domestically and in the services sectors. I was recently in India; and the growth and money flow there is unbelievable (i presume its much more in china). They've got problems with inflation, infrastructure etc but atleast the economy is not stagnant. They will find a way out of it. But if there is no growth then its hard to find ways out of it; consumer spending is not going to cut it. -gariki
Housing has to go to a price that reflects the average income of the area.....3 or 4 times income is the price of the house....this will, of course, change throughout the country as incomes vary a lot. Also, once CNBC and other media stops focusing on "housting numbers" that will be a sign the bottom is close. Housing is a shelter, a place to live, it is not an investment. People will purchase or rent according to their individual needs and situation. I don't really think of housing or the homebuilders as "real estate". Housing is shelter. Homebuilders are manufacturing companies. SteveD
What is a "taxpayer subsidy"? Homes will go for about 3.5-4 times income...5% cash down, with 15% PMI, and a long term mortgage. Incomes and source of cash will be documented. The tax deduction will be phased out over a 5-10 time period. 2 times income or less would indicate a massive world wide depression.... SteveD
No, they have problems with millions of people living in a poverty so dire that not even the most right wing libertarian conservative American would tolerate. And China is not far behind.
the way we did it was, 25% to the mortgage and 25% to utilities and 25% to service debt and what was leftover was discretionary. Some used it for groceries, and some of us used it to buy stocks. Kids could really mess up a portfolio.
"5% down" is the taxpayer subsidy. As are 10% down and 20% down. There are no such mortgages without Fannie/Freddie and all the MBS shenanigans that ultimately entails. A free market mortgage is along the lines of 50%, 5 year balloon. With those kinds of loans, median home price would be south of 2x median income. Likely well south, as saving 20% of gross for 5 years would be required just to get to the first "1x". Indeed. That is why TARP and the rest of the alphabet soup is quite correctly termed a bail out of Main Street. Non-exclusive, of course. With lots of intermediaries needing to take a cut, naturally.
Agreed. No place to hide. Canada maybe? but it generates 80% of its GDP (or something like that) from it neighbor to the south. So its no good either.