If the real estate market takes a breather, this should allow investors to place their money in the stock or bond markets instead of buying a house.
ok. money transfer from one medium to another maintaining low interest rates...i can go along with that to a point, but it is a rather simplistic view. the other more probable scenario is that TONS of jobs are going to be lost as a result of the housing slowdown. During the past 5 years, housing is the only component of the economy that has kept us out of major recession. other components of the economy have been strong (like energy but they are a much smaller part of the GDP overall.) I think when you see that housing slowdown in 2006-2007 HUGE amounts of jobs will be lost in Home building, home lending, banking, sales, home improvement, retail, construction equipment, specialty services, specialty retailers.....and the list goes on. In addition to layoffs and high unemployment, many of the investors with thier "disposible income" that they invested into real estate are going to be sitting on depreciating real estate unable to sell...bankruptcies will pop up all over the place as the baby boomer generation wonders what happened to their retirement....... ill stop there. i dont think floods of money will be coming into the market mainly becuse the supply of real estate will greatly outpace demand..they CANT sell, not without taking a loss. most of the people who will cash out at a profit, already have. we have had a VERY brief run up the past few months, but i wouldnt hold your breath. ..the single largest component of our economy is teetering on the edge of disaster.
I wish I could not agree with this ... but i do. I will gladly raise a glass on my dime with my colleagues two years from now if I am wrong. In my mind the only unknown is the degree to which all this will happen: I am not expecting a disaster but I am expecting an ongoing drag on the US economy for several years - something akin to the tech mania/meltdown - as all the bubble business and investments unwind or change course(for the survivors).
go go Greenie$$$ Run that press at full throttle baby ! http://www.newyorkfed.org/markets/omo/dmm/temp.cfm
hate to beat a dead horse...the yield curve just inverted. That has almost always caused a recession. the only time it didnt was 1998, due to foreign crises. the odds of recession the next few years are quite high as a result. If you would let me know all the stocks you are buying, i will GLADLY take the other side of the trades. hell, ill give you my address and you can just mail me a check, makes things eaiser for you!
I have 4 cars. 1 is a race car though..so that doesn't really count, not street legal. where are you going with that comment? not sure i follow? what does that have to do with housing and my recession predictions?
Yield curve inversion means nothing this time as rates are so historically low anyway.... I would say you are correct if rates were even remotely close to any other time period where they inverted
that is a valid point. .. I wouldnt say "nothing" based on the abundance of historical data to support the aftermath of an inverted yield curve is pretty strong, but it does lower the risk. true we are certainly no where near the 70's interest rates (15%+ at the max i think in 80) which caused recession as far as "remotely close" 2000 interest rates which slowed the economy pretty dramatically, and they were only about 1.5 from where we are now. ever year and every situation is different..granted. I think the economy will be hit much more from the housing slow down than low interest rates can make up for. The combination of an inverted curve, and housing should put significant downward pressure on the economy, which is why the fed is probably halting the rate hikes...they also see it coming.