Replies (7)
- sunnyview
- Contributions:26916
I think prices will reset about to early 2004 where I am since the bubble started fairly late compared to other places looking at the charts. Right now, prices are at about early 2005. That's another 10-15% max to go not 50%. Time will tell I suppose.
- hpvanc
- Contributions:3086
Both federal government and the Federal Reserve are doing everything they can to prevent deflation, and their actions if they succeed will result in massive inflation at some point in the future. The key is whether they will succeed.
There have been several episodes of significant deflation in the US, all but 2 of them before the Civil War. The 2 since that time were from 1873 to 1879, followed by a nearly flat period until 1901. The last episode was from 1930 to 1933, and did not completely reverse until the buildup of manufacturing prior to WWII in 1939 or 1940.
What looks most alarming to me is that Japan entered a period of deflation in 1989, kicked off by the dual collapse of a real estate bubble and stock market bubble. In spite of continuous attempts to get inflation started, it is not clear if they have succeeded yet. 2009 housing prices peaked in 1989 or 1990 and were back down to 1973 levels in 2009.
- Craig1976
- Contributions:69
All this house hunting is kind of frustrating, looking all the time and never doing anyting. I wish prices would just go where they are eventually going to go anyway. That's my rant for today.
- avickrey
- Contributions:25
A little dramatic to say that the home prices have another 50% to fall or that we are headed toward a Japan-style deflationary period. The United States has a strong nonfinancial sector and businesses have reacted through layoffs and expense cuts. Japan has a negative output gap.
The goal of the tax credit was an attempt to match supply of homes with demand. It will spread losses from the mortgage market to all constituencies involved, including the taxpayer, as opposed to concentrating them solely on homeowners and banks. The imbalance of market forces which cause things such as bankruptcies and acquisitions of U.S. assets to foreigners is what the government attempts to protect. I don't disagree with an attempt to do this, though I question how much bang for the buck that a $20 billion dollar price manipulation effort got us. What the American consumer wants is not necessarily a handout from the Federal Government, but rather accountability of the unscrupulous actions from those in the industry through a price concessions rolled into the purchase. Perhaps, there could be a way to force agents to pitch some of their commissions into the deal, or make it easier for FSBO and buyers without agents to transact. If there was a way to clear many of the agents/players out who were in full force in 2005-2007, then perhaps individuals would be interested in buying homes once again. Demand will come back, but we'll have to wait a little bit longer until those sitting on the sideline enter the market. The household debt/service ratio is signaling that we're at early 2005 levels -- and as the private sector continues to add jobs and wages increase, things should turn around sooner than the bears would like to admit (or the NAR if their goal is to obtain another Gov't handout). However, while sentiment on the direction of interest rates continue to be lower, no one is going to jump the gun. Any repeat-sales index incorporating short-sales or foreclosures have not hit the bottom, which will be another 5-10%.
For those that hate all of the players in the housing mess, one piece of good news today. Habitat for Humanity is now one of the top homebuilders in the U.S. market.
- Clay Branch, "Georgia Loans"
- Contributions:8829
"In Suttmeier's own words: The Case-Shiller Index was 100 in 1999. It's currently 150. It will fall to 1999-2000 levels. A decline from 150 to 100 is a 33% drop, NOT a 50% drop. Bad math."
"Suttmeier's comments make you wonder what he has shorted ..."
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
The earth Could go out of it's orbit next Saturday. Is that a false statement? .... Happy funding, Rudi
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
Well this isn't good...
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