You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
housing crash
- Thread starter silk
- Start date
And what's worse, the rate changes every 6 months thereafter (and I dont see any details on the maximum adjustment per change or lifetime cap). Looks like the perfect way for someone to get in over their head by qualifying for a loan they can't afford.Quote from crackedback:
They charge 2.25 points so they aren't starving as brokers and makes up for any benefit gained fromthe low payment. The rate changes after 6 months to a more normal/expected interest rate.
One analyst's view with a quote from a Fed Pres.,
In the 70s I remember Homebuilders just leaving sites unfinished. Houses just sat that way. When the slump was over, those houses needed extensive rework to complete and sell.
It was weird to be driving down the street and see a bunch of unfinished homes, looking weathered, with weeds growing all around.
Big Bubbles and Crashes are times you don't forget. I guess it makes life interesting.
Not that I'm predicting a crash. It could be just a slump. Who knows.
``Unavoidable economic logic suggests that eventually this situation will prove unsustainable,ââ Cathy Minehan, president of the Federal Reserve Bank of Boston, said in a speech today.
Unusual times defeat all types of analysis except the fundamental reality of a US dollar "systemic" disorder. This disorder is the non- sustainability of making ends meet with out-of-control deficits. If these deficits were in control, then the day old statements from the Secretary of the Treasury would not seem so incredible.
Utterances such as a "strong dollar policy" bring questions from dollar holders as to what the policy of the current administration actually is. Pointing today to the reduction in the Federal Budget deficit in December due to increased income from corporate tax receipts says nothing about decreasing spending nor will it allay the reality that the triple deficits of US Budget, US Trade and thence the US Current Account are non sustainable.
Non sustainable means that foreign investors, both private and public, will not continue to finance this spending via the purchase of US Treasuries. That will send the bulk of Federal borrowing into the USdebt market, driving interest rates higher and - surprise, surprise - the dollar lower.
In the 1970s it took 14 7/8% on ten year money before the decline of the US dollar could be arrested. When it breaks this time it will take even higher rates to arrest the decline. Yet the chart readers have been yelling for a dollar rally along with every other type of market analyst.
The real question is will there be enough short covering now around the .8000 level to steady any dollar declines.
In the 70s I remember Homebuilders just leaving sites unfinished. Houses just sat that way. When the slump was over, those houses needed extensive rework to complete and sell.
It was weird to be driving down the street and see a bunch of unfinished homes, looking weathered, with weeds growing all around.
Big Bubbles and Crashes are times you don't forget. I guess it makes life interesting.
Not that I'm predicting a crash. It could be just a slump. Who knows.
Quote from BlueHorseshoe:
This last part is what really grabs my attention.
I would like to see or compile an economic profile of the Japanese economy reaching back at least 20 years, ideally further. The profile would include Nikkei index, JBG rates, RE prices, domestic inflation, Yen/$, bank NPLs, budget and trade balances.
Anyone here studied the Japanese bubble in detail and can recommend some sources?
Yes I can compile this information myself but ... sure would be nice to find a shortcut.
Try "The Bubble Economy" by Christopher Wood.
Japan is not a typical bubble case, because the government responded to the crash with extremely socialist economic policies (mostly their huge program of Keynesian deficit spending on white elephant public works) which turned what would have been a 2-3 year recession into a decade long depression. The only real parallel is the 1930s US Great Depression. In contrast, most crashes are transitory and the economy gets back on foot within 2-3 years if the government lets the market adjustment process work out, and the central bank adjusts interest rates appropriately. Examples include the early 90s property crash and bank crisis in the US, the Taiwan bubble of the late 80s, the Asia crisis in 1997-98, the Hong Kong and Singapore property crash of the late 90s/early 2000s, the Brazilian devaluation and crash of the early 2000s. In all these cases, the governments generally maintained a reasonably hands-off approach, and a seemingly disastrous crisis cured itself within a few years.
There are lots of interesting parallels between Japan of the 90s and the USA of the 1930s. For a study of the latter, you might want to try "America's Great Depression" by Murray Rothbard. It doesn't cover all the 1930s period, but gives an idea of what economic policies were adopted, and what effects they had.
Quote from Cutten:
Try "The Bubble Economy" by Christopher Wood.
Japan is not a typical bubble case, because the government responded to the crash with extremely socialist economic policies (mostly their huge program of Keynesian deficit spending on white elephant public works) which turned what would have been a 2-3 year recession into a decade long depression. The only real parallel is the 1930s US Great Depression. In contrast, most crashes are transitory and the economy gets back on foot within 2-3 years if the government lets the market adjustment process work out, and the central bank adjusts interest rates appropriately. Examples include the early 90s property crash and bank crisis in the US, the Taiwan bubble of the late 80s, the Asia crisis in 1997-98, the Hong Kong and Singapore property crash of the late 90s/early 2000s, the Brazilian devaluation and crash of the early 2000s. In all these cases, the governments generally maintained a reasonably hands-off approach, and a seemingly disastrous crisis cured itself within a few years.
There are lots of interesting parallels between Japan of the 90s and the USA of the 1930s. For a study of the latter, you might want to try "America's Great Depression" by Murray Rothbard. It doesn't cover all the 1930s period, but gives an idea of what economic policies were adopted, and what effects they had.
Thanks. Wood's book has been sitting in my Amazon wish list for a while now. (Nobody noticed for Xmas!) He is very highly regarded out here ... still does strategy from HK for CLSA.
Was flipping through Kindleberger's "Manias, Panics, and Crashes" this afternoon, Asia time.
He mentions at length a book put out in 1933 by Homer Hoyt entitled "One Hundred Years of Land Values in Chicago." In summary, Hoyt linked the boom and crash of the stock market to the same cycle in real estate over that 100 year period.
Kindleberger then draws a parallel to the Japan bubble and aftermath. Actually, looking again, he describes at length the relationship between Japan's stock and real estate bubbles.
My working assumption at this point is that the stock market bubble we experienced in '95-'00 in fact wasn't allowed to deflate, except for tech. This is quite apparent if we look at a small cap index, DOW, or most other indices. Both the broader indices and RE are still bubblin'. My bet is that a continued rise in raw material prices will continue to push up inflation and interest rates, and that will herald the down turn in both equity and property markets.
The canary in the cage may be UK's inverted yield curve and the US rapidly flattening curve. Anyway, that's my guess and I'm stickin' to it, for tonight anyway.
He mentions at length a book put out in 1933 by Homer Hoyt entitled "One Hundred Years of Land Values in Chicago." In summary, Hoyt linked the boom and crash of the stock market to the same cycle in real estate over that 100 year period.
Kindleberger then draws a parallel to the Japan bubble and aftermath. Actually, looking again, he describes at length the relationship between Japan's stock and real estate bubbles.
My working assumption at this point is that the stock market bubble we experienced in '95-'00 in fact wasn't allowed to deflate, except for tech. This is quite apparent if we look at a small cap index, DOW, or most other indices. Both the broader indices and RE are still bubblin'. My bet is that a continued rise in raw material prices will continue to push up inflation and interest rates, and that will herald the down turn in both equity and property markets.
The canary in the cage may be UK's inverted yield curve and the US rapidly flattening curve. Anyway, that's my guess and I'm stickin' to it, for tonight anyway.
I worked with MDC for awhile in the 80s. It was a RE broker play. I was the infill builder with high end homes. MDC owned the RE company and put a little team together to generate RE sales for their staff. So I got to know the owner and his main man. They had BIG banking friends.
MDC made it thru the late 80s, but just barely. I think their stock hit $.39. Look at it today.
One might think that they had just started in the '80s and stock was cheap. Nope. They were one of the largest in the country in the early '80s. So their stock plumetted to almost nothing. US Homes went broke. They were the biggest.
I'm looking forward to the turn. A KBH can fall a long way. It looks like a roller coaster at the very top of the rail line.
I had about 350K of RE equity in the early 70s. Then the slump hit. It was so fast that all I could do was give my 13 properties away before they drug me down. I ended up with just 30K cash in about 6 months. And I felt real lucky to have that and good credit. The rents just plumetted. And the renters that were left were mostly hurting bad.
The books are right about being careful. Living thru a real crash is very tough.
The early 90s weren't bad, IMO. I built right thru the slump and did fine.
MDC made it thru the late 80s, but just barely. I think their stock hit $.39. Look at it today.
One might think that they had just started in the '80s and stock was cheap. Nope. They were one of the largest in the country in the early '80s. So their stock plumetted to almost nothing. US Homes went broke. They were the biggest.
I'm looking forward to the turn. A KBH can fall a long way. It looks like a roller coaster at the very top of the rail line.
I had about 350K of RE equity in the early 70s. Then the slump hit. It was so fast that all I could do was give my 13 properties away before they drug me down. I ended up with just 30K cash in about 6 months. And I felt real lucky to have that and good credit. The rents just plumetted. And the renters that were left were mostly hurting bad.
The books are right about being careful. Living thru a real crash is very tough.
The early 90s weren't bad, IMO. I built right thru the slump and did fine.