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total implosion of the u.s. real estate market
- Thread starter the gardner
- Start date
more bad news from the builders today
massive levels of unsold homes......massive numbers
the saga continues
massive levels of unsold homes......massive numbers
the saga continues
I think everyone is burning out with this slow-mo real estate 'crash '
That is how real estate markets usually correct. Real slow. The last California correction in the early 90's took 7 years. It is much more inflated this time around, so theoretically we could see flat to lower prices for a decade.
I think, in Cal at least, you will see modest to somewhat painful drops (depending on the city), and then flat line for years until incomes catch up. As it is now, not too many people could afford an average home with conventional financing (min of 10% down, and 30 yr rates, + documented income to support such a mortgage).
I think, in Cal at least, you will see modest to somewhat painful drops (depending on the city), and then flat line for years until incomes catch up. As it is now, not too many people could afford an average home with conventional financing (min of 10% down, and 30 yr rates, + documented income to support such a mortgage).
Whats so interesting about housing price correction occuring is that you have two components: 1) inflationary (building cost, land cost) and 2) speculative.
I do agree it'll take a few more years to shake out, and there's much downside, but housing is never going back to where it was pre-boom (1999 prices); mainly because nowadays construction costs are too high. Land values will see some intense pressure, though.
If I were to guess, the new home builders are going to force prices down further to get rid of inventory. Affter that revaluation (which isn't probably much below where we are at now truthfully), it'll merely take time for buyers to become interested again.
Not unless oil, cement, timber, and every import cost deflate (not going to happen with this Fed) does housing collapse much more.
I do agree it'll take a few more years to shake out, and there's much downside, but housing is never going back to where it was pre-boom (1999 prices); mainly because nowadays construction costs are too high. Land values will see some intense pressure, though.
If I were to guess, the new home builders are going to force prices down further to get rid of inventory. Affter that revaluation (which isn't probably much below where we are at now truthfully), it'll merely take time for buyers to become interested again.
Not unless oil, cement, timber, and every import cost deflate (not going to happen with this Fed) does housing collapse much more.
Quote from Jayford:
That is how real estate markets usually correct. Real slow. The last California correction in the early 90's took 7 years. It is much more inflated this time around, so theoretically we could see flat to lower prices for a decade.
I think, in Cal at least, you will see modest to somewhat painful drops (depending on the city), and then flat line for years until incomes catch up. As it is now, not too many people could afford an average home with conventional financing (min of 10% down, and 30 yr rates, + documented income to support such a mortgage).
The bubble this time is at least 300% larger. I would be stunned if it only took a decade. Would require some real steep drops for it to revert that fast.
I remain on the fence over future valuations. On Sunday a good friend of mine sold a new construction townhouse for just over $900,000. I'm shocked.
He built the place at a cost of 700k. From everything I've heard it's a kickass home but on a busy commercial street in Chicago (Ashland Av) in a less than great neighborhood. He sat on it for at least half a year.
When I heard of the sale the first thing I thought was that I should immediately cover my index shorts. I'm not kidding and I wish I had. There's clearly something going on here that few on ET understand. When capital is virtually free to borrow and the currency worthless, it's hard to argue that asset prices are weakening.
I can't emphasize this enough: With mortgages under 6%, SPX above 1500, gold above $800 and the dollar at 76, there isn't going to be a "crash" in home prices. As of right now it's the same trend as the past 5 years. The risk is not being caught long assets but rather being long cash. I hope some of that changes (I'd rather see my house come down in value in exchange for additional purchasing power/stability of my savings) but being short anything 'cept dollars has been a real loser.
He built the place at a cost of 700k. From everything I've heard it's a kickass home but on a busy commercial street in Chicago (Ashland Av) in a less than great neighborhood. He sat on it for at least half a year.
When I heard of the sale the first thing I thought was that I should immediately cover my index shorts. I'm not kidding and I wish I had. There's clearly something going on here that few on ET understand. When capital is virtually free to borrow and the currency worthless, it's hard to argue that asset prices are weakening.
I can't emphasize this enough: With mortgages under 6%, SPX above 1500, gold above $800 and the dollar at 76, there isn't going to be a "crash" in home prices. As of right now it's the same trend as the past 5 years. The risk is not being caught long assets but rather being long cash. I hope some of that changes (I'd rather see my house come down in value in exchange for additional purchasing power/stability of my savings) but being short anything 'cept dollars has been a real loser.
Great post. As bearish as I want to be about housing, I have to agree with you about the factors propping up asset prices, namely the cost of money and USD strength (or lack of).
Quote from Pa(b)st Prime:
I remain on the fence over future valuations. On Sunday a good friend of mine sold a new construction townhouse for just over $900,000. I'm shocked.
He built the place at a cost of 700k. From everything I've heard it's a kickass home but on a busy commercial street in Chicago (Ashland Av) in a less than great neighborhood. He sat on it for at least half a year.
When I heard of the sale the first thing I thought was that I should immediately cover my index shorts. I'm not kidding and I wish I had. There's clearly something going on here that few on ET understand. When capital is virtually free to borrow and the currency worthless, it's hard to argue that asset prices are weakening.
I can't emphasize this enough: With mortgages under 6%, SPX above 1500, gold above $800 and the dollar at 76, there isn't going to be a "crash" in home prices. As of right now it's the same trend as the past 5 years. The risk is not being caught long assets but rather being long cash. I hope some of that changes (I'd rather see my house come down in value in exchange for additional purchasing power/stability of my savings) but being short anything 'cept dollars has been a real loser.
Quote from Pa(b)st Prime:
I remain on the fence over future valuations. On Sunday a good friend of mine sold a new construction townhouse for just over $900,000. I'm shocked.
He built the place at a cost of 700k. From everything I've heard it's a kickass home but on a busy commercial street in Chicago (Ashland Av) in a less than great neighborhood. He sat on it for at least half a year.
When I heard of the sale the first thing I thought was that I should immediately cover my index shorts. I'm not kidding and I wish I had. There's clearly something going on here that few on ET understand. When capital is virtually free to borrow and the currency worthless, it's hard to argue that asset prices are weakening.
I can't emphasize this enough: With mortgages under 6%, SPX above 1500, gold above $800 and the dollar at 76, there isn't going to be a "crash" in home prices. As of right now it's the same trend as the past 5 years. The risk is not being caught long assets but rather being long cash. I hope some of that changes (I'd rather see my house come down in value in exchange for additional purchasing power/stability of my savings) but being short anything 'cept dollars has been a real loser.
He might have lied to you.