total implosion of the u.s. real estate market

Quote from Longhorns:

You've been saying that for the last 3 years.

You're the Larry Kudlow of real estate. :D
More...

I can't deny that. Interest rates are STILL so darn low that anyone who can buy with a fixed loan will be real happy they did it in hindsight. And I can't see payments going much lower because they are a function of interest rates (low right now) and price (temporarily lower).

Lastly, when I first started saying, "Buy real estate", I always said buy it on fixed rate notes. That was even in my signature file for a while...the "fixed notes" part. And anyone who took that advice 3 years ago, or even 2 years ago, would have done really well, even if they didn't get out and took a 10% haircut. Is there a minority that took more than a 10% haircut? Absolutely, but blanket advice isn't for everyone...thats just common sense.

Real estate is a refuge from inflation and taxes, and its going to get damn hard to buy investment property very soon if its not already too late. That means that rents will rise, and those that don't buy a house to live in will regret it because they can't lock in on the low payments and rents will spiral up. And those who don't buy investment property will miss out on the tax advantage, inflationary protection, and the inevitable rising rents as it gets damned hard to break into the landlord business due to more rigid borrower requirements that are coming down the pipe.

Yeah, I'm bullish on it. But now its for different reasons...back then, it was about appreciation and net worth. Now its about cash flow, and getting in while you still can.

SM
 
Smart Money said ""and the inevitable rising rents as it gets damned hard to break into the landlord business due to more rigid borrower requirements that are coming down the pipe.""

That's key, and also a point missed by many who aren't keeping an eye on RE.
Not only do banks have less to lend, they're closing the gates except to an 800 fico score and 20% cash down pymt.
Avg. Joe American just doesn't have that, whether he wants to play landlord OR home owner.
 
Quote from IanMacQuaide:

Not only do banks have less to lend, they're closing the gates except to an 800 fico score and 20% cash down pymt.
Avg. Joe American just doesn't have that, whether he wants to play landlord OR home owner.
More...

Less buyers = Less sales = More inventory = Lower prices

RE is going much lower.
 
the San Diego crash is now at 20% from highs, but barely begun. Foreclosures here are 257% over last year, and inventories still keep rising. Another 20% and maybe time to buy.
 
Quote from IanMacQuaide:

Smart Money said ""and the inevitable rising rents as it gets damned hard to break into the landlord business due to more rigid borrower requirements that are coming down the pipe.""

That's key, and also a point missed by many who aren't keeping an eye on RE.
Not only do banks have less to lend, they're closing the gates except to an 800 fico score and 20% cash down pymt.
Avg. Joe American just doesn't have that, whether he wants to play landlord OR home owner.
More...

Thanks for noticing. I just saw this quote in an on-line article about a Bernanke speech:

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Instead, the Fed chief's speech stuck closely to steps the Fed is taking to prevent prospective homebuyers from getting burned in the future when they take out a mortgage.

On this front, the Fed has a proposal that would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value. The proposal also would curtail misleading ads for many types of mortgages and bolster financial disclosures to borrowers.

"The combination of stricter regulation and better disclosure will not solve all the problems," Bernanke said. "We do believe, however, that this proposal will give consumers much better information," he added.

********

So their way of handling the crisis is, apparantly, to make it even harder for the folks in trouble to refinance, and harder for someone to buy the troubled seller's house? Wow. This move will start cleansing the banks from here forward, but, I have to wonder if it won't erode the value of the bank's assets faster than it firms them. Instead of throwing money out the window to save Bear Sterns, they should use money to insure the refinance of risky borrowers from ARMs to Fixed rate loans.

So, some of you who think that real estate values may fall more from here may be right in light of how the FED is handling things...(i.e., making it harder to buy a house). But the advice still stands that I think it will be better to buy a house, or houses, now than in hindsight.

SM
 
all this will get worse

edmund s phelps winner of the nobel prize in economics 2006
said today in the wsj pg a19

THE PERMANENT DECREASE IN HOUSE PRICES WILL PERMANENTLY DECREASE THE JOBS IN RESIDENTAL INVESTMENT ACTIVITY

READ HIS ARTICLE 2X

G
 
and yes since my last post it has gotten worse ....much worse

yet the full fury of real estates downside is yet to be felt

its the beginning of the end .....and the story ends tragically

appx .....2.25 yrs to go
 
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