Housing doom and gloom - ENOUGH already !!

The bottom line is our dollar isn't worth much right now, and though there might be extra supply, building costs are high as hell, so it will get absorbed. How fast is anyone's guess, but trust me that the newspapers will always print the nightmare scenarios.
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Building costs are plumetting like a rock. Lumber prices have dropped by more than half since 2004, despite rampant USD$ inflation and devaluation. Plenty of cheap Mexican day labourers are available for almost nothing if you know where to find them.

This bubble won't be over until it doesn't make any sense whatsoever to build. But even at current prices, theres still plenty of money to be made building houses. Sure, builders might be taking losses on their inventories of land and they might be struggling to make their machinery payments, but they'll keep building until such a point where they can't cover their variable costs (supplies, labour, and fuel). And even then, the builders will all go into Chapter 11, and rape whoever leased or lent them money to buy their construction machinery for all they can (just like the airlines seem to do every few years).

The government, IMHO, needs to desperately find a way to re-shape the home building industry into an infrastructure development and construction industry. Theres thousands of bridges that are out of date, interstate highways are crumbling, and public works in many places everywhere are in serious states of decay. The longer that the industry stagnates, the harder it will be to gear it back up.
 
The economy sucks because of the Bush government.

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I'm not a BUSH FAN but this has to be on of the most idiotic statements made by "Idiots" today. He did loosen the lending rules for the POOR and MIDDLE CLASS sheeople, but in no way is the economy due to BUSH.

It is so F*&( stupid that I will not waste my time trying to prove the "STATEMENT" invalid and unsound.
 
Quote from Trader5287:

This has always been a bitching hard question for me. The answer is probably yes for sure with two groups. The first is those inside of the Wall Street/IB Industrial complex. Those bonuses do seem to go into RE. The other group is the wealthy and market gains and market turmoil (tax policy also) do seem to drive investment in RE. And of course the rest of us emulate the rich in whatever way we can - though far too many of us have to use borrowed money to do it.

Let's face it this was the biggest building boom in a 100 years anyway - probably since Reconstruction era.

"But few gain sufficient experience in Wall Street to command success until they reach that period of life in which they have one foot in the grave. When this time comes, these old veterans of the Street usually spend long intervals of repose at their comfortable homes, and in times of panic, which recur sometimes oftener than once a year, these old fellows will be seen in Wall Street, hobbling down on their canes to their brokers' offices.

Then they always buy good stocks to the extent of their bank balances, which they have been permitted to accumulate for just such an emergency. The panic usually rages until enough of these cash purchases of stock is made to afford a big 'rake in.' When the panic has spent its force, these old fellows, who have been resting judiciously on their oars in expectation of the inevitable event, which usually returns with the regularity of the seasons, quickly realize, deposit their profits with their bankers, or the overplus thereof, after purchasing more real estate that is on the up grade, for permanent investment, and retire for another season to the quietude of their splendid homes and the bosoms of their happy families."

- Henry Clews, Twenty-Eight Years in Wall Street (1887)
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Quote from united46:


I'm still trying to find time to answer an earlier post because it requires some detailed input. However on this question, the answer is a very simple no. Just do some historical research on housing price declines.


Over here in the UK, house prices declined from late 89 to mid 95 i.e almost 6 years. The average decline was around 35%, some areas saw declines over 50%. We were in an official recession, unemployment was higher than now and rose substantially, repossessions ( foreclosures) went up to record levels, debt was high, trade and budget deficits were are record levels etc etc ( does this sound familiar). I'm sure you had very similar problems in the US.

What happened in the stockmarket? In that 6 year period, we had one down year.

So go back and look at data and see what happened in other periods of falling house prices, you may be surprised!

People see what they want to see and usually only look at recent history ( recency bias) to make judgements on whats happening now and in the future. Behavourial finance deals with this and I will say more in a later post as I was accused of not taking into account physchology of market.

On the MEW subject, all you believers in those graphs, have you actually done any research into how the figures presented are made up? Please do, don't just believe because it fits with your own beliefs ( another behavioral finance mistake). Break the data down. See if it's possible to come to the same conclusion when you examine the data.

To be continued........
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Thanks to you all for your inputs. :) It did help a lot.
 
Quote from 1flyfisher:

26,000 foreclosures in the city of Las Vegas alone.....Ouch.

http://www.realtytrac.com/MapSearch/MapSearch/MapSearch.aspx?zipcode=las vegas, NV&zipOnly=true
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Can you look at it this way:

Its a shame that 10 million Americans opted to rent rather than put a roof of their own ? Money paid on rent goes down the drain and you pay hefty taxes from your paycheck. There is nothing to show and your kids cannot have that puppy this year, and they have to play on the street dodging passing cars?

I mean how stupid people can be when it comes to making choices in life. They bury their heads in the sand and life passes them by...
 
Quote from HedgefundTrader2:

Can you look at it this way:

Its a shame that 10 million Americans opted to rent rather than put a roof of their own ? Money paid on rent goes down the drain and you pay hefty taxes from your paycheck. There is nothing to show and your kids cannot have that puppy this year, and they have to play on the street dodging passing cars?

I mean how stupid people can be when it comes to making choices in life. They bury their heads in the sand and life passes them by...
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Or the millions of people that committed financial suicide buying a home they couldn't afford with the help of the REIC.

Yeah another way to look at it.

Rent a depreciating asset for 1/3 the cost of buying a home in my area is an intelligent choice for those that don't drink the NAR kool-aid. Even after tax benefits, you're still way ahead renting and haven't suffered a loss of equity/down payment.

Buying is NOT always a good choice.
 
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