REAL ESTATE is driven by two major factors: EMPLOYMENT AND INTEREST RATES We have both in the US overall.... Anyone that tries to compare housing to other "investments" simply does not understand the financial world. Housing is not meant to be an "investment"....it is shelter Prices will always ebb and flow depending on local situations.....over building, zoning, JOBS etc etc Housing ALWAYS has demand......!!!! Just like food....you have to live someplace And, please, don't respond with some sophomoric tale about someone who lost money speculating on "flips". The immense liquidity of the financial markets will very likely have a positive influence on the subprime loans.... The Topeka, Kansas market does not make news because it does not have big ups and downs..... One can say the same about 1000 other towns..... I am always amazed at the level of ignorance regarding residential real estate..... SteveD
SteveD... Does regulation and the interupption that it presents have any effect on the RE market...unemployment...bla bla bla...? should inflation be allowed to run? and interest rates that you agree that drive the RE market are allowed to float with inflation what would the result be? If the Banks owned all of the RE and all of us were renters...then agreed...Demand would remain the same...but isn't that really the case now and what drives things..traditional banking and their lobbies are well established...Bernacke and the Fed Reserve Let me give you an example of how demand can also shift demographics...just look at the movement of populations....migrating to housing How have disposable incomes changed and shifted in the last 30 years? How have the classes separated...what direction would you surmise if unemployment and interest rates remained the same....SteveD?
Hello Steve, Having just read your post on residential RE, I agree wholeheartedly with your statement above.
Why do I get the feeling I am posting with a bunch of middle aged RE agents, recovering from a divorce, in the last few posts?
Ignorance and more Ignorance. The lack of understanding Real Estate, not just housing but Commerical, allows one to be drawn into such an "HYPED" article. Of course there are subs in trouble. Hell they were the idiots who went out on RISK to allow individuals to borrow 5x their networth for a home. And yes, certain areas in the US are feeling the crunch. But a "MELTDOWN"....lol....a totaly "MELTDOWN" of "REALESTATE"...give me a break. Same Johnny Payck 9to5er who thought he could "DAY TRADE" decided to "FLIP" homes and now is caught holding inventory. And "Lower Income" individuals are now feeling the "pain" of bitting off more than they can chew. So the rotten fruit falls..... Plenty of stability in the Real Estate Market and Plenty of Money being made.
Steve D Housing is MEANT to be shelter, however as of late people have tended to view it as a risk free investment, not simply shelter. There will always be demand for shelter, but not necessarily home ownership should prices get to high or worse yet, prices decline and there is not a "built in" cushion because people are 125% mortgaged into their home's "value" when they didn't put 10 or 20% down like they used to. (I'm not looking for an argument per se, but a spirited discussion on this topic is very welcome)
I couldn't agree more Steve. With the exception of the 'Coasts" real estate is hideously cheap. In most of the U.S. a decent home can be had for under a quarter mil. With low rates, virtually full employment, two income couples who marry late with fewer kids, home ownership is hardly a struggle for middle America. With $60 Crude, $4 Corn and $670 gold, I wouldn't be selling too many hard assets. With all these illegals pumping out children (who are citizens by virtue of being born in the U.S.) we're going to see a squeeze in housing. SoFla has been notoriously overheated for several years and there's supply all around. Yet when the Sun-Sentinel prints the sales prices of recent transactions along with priors, I still see homes up almost 100% from 2003 and flat from 2006. Empirically I think some prices are down 20% here but jeez, that's almost transparent in a market that's risen 3 fold from the late 90's.
How many times have we heard this tired argument before. Yawn. I remember being in the heart of immigrant country last year - Tucson - and having a real estate broker tell me it's impossible to lose money on residential land because of the "explosion" in the immigrant population. Right. Since then, Centex, KB Homes and Pulte just wrote off a massive amount of forfeited deposits on land they had optioned from Tucson to Phoenix, because the markets are imploding, and housing in AZ is set for its biggest declines in real and nominal prices in more than a decade (it's already fallen 4% to 7% in AZ depending on locale).
Even their parents can buy a house with their credit card soon...apply now...B of A and Wells Fargo have a program for you... I would be curious how demand equalizes the states within the United states... Guess I will ask the local middle aged woman selling real estate in my neighborhood...no answers here... Greenspan taught Bernacke well...don't put fear in the masses, when their is a great concern... but we do not report how much money is printed anymore do we? Sorry China...(but I digress) With all these illegals pumping out children (who are citizens by virtue of being born in the U.S.) we're going to see a squeeze in housing.
The subprime market was 20% of the mortgage market for the last two years. REF: http://immobilienblasen.blogspot.com/2007/02/bleak-houses-who-get-caught-holding.html So the effect to housing will be significant, the question is how will this effect the rest of the USA economy. Meltdown, maybe not, but a trickle, thats turned into a creek !