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Housing boom could be history soon, experts say
Signonsandiego.com ^ | 12/08/2004 | David Washburn

Posted on 12/10/2004 9:05:07 PM PST by nanak

OK. This time they mean it, really. Economists in San Diego and around the country are saying the biggest housing boom in the region's history is slowing and may be finished by the end of 2005.

"The phenomenon of doubling your money in three years is over for this cycle," said Jim Teak, a San Diego-based economist with Prudential Realty of California.

A lot of people agree with Teak. The influential UCLA Anderson Forecast says in a report out today that 2005 could be the year that "reality and reason" finally cool off the housing market.

Higher interest rates will keep overall price increases in the single digits, and may force small price drops in the more expensive neighborhoods, the report said.

Although most homeowners will be able to weather the slowdown, it could be bad news for first-time home buyers and speculators who have bought in recent months.

"If you locked into a great long-term rate, then you are OK," Anderson economist Edward Leamer said. "But people who think they are going flip – get in and get out in the next several years – are the people who need to rethink their strategy."

Of course, some economists have been saying the housing market is overpriced for the past year or longer. UCLA's economists said a year ago that they were starting to worry about a housing bubble, but prices have continued to rise.

The median price for existing single-family homes in San Diego County reached $489,000 in October, up nearly $100,000 from a year ago and a 44 percent increase from October 2002.

Leamer said the elevated prices are more the result of easy-to-get financing than robust economic growth. In the end, economic growth is needed to support the prices, he said.

There are indications all over the county that the market is already softening. Houses that in April would have sold in six days are staying on the market for 90 days, Teak said. Owners of higher-priced homes are being told to prepare to have their homes on the market for as long as six months.

"Six months ago, if you had a house at $900,000, you would have gotten it," Teak said. "Now you're lucky to get $850,000."

The housing slowdown won't be limited to Southern California and could shave as much as a half-point off the growth in the country's gross national product in 2005, Leamer and others said.

"Housing will be the one sector driving the anticipated slowdown in economic growth next year," said Bill Strauss, a senior economist with the Federal Reserve Bank of Chicago.

Beyond 2005, economists are concerned about the large number of adjustable-rate mortgages being sold and what would happen if the rates go up. Several are concerned about the growing possibility of a housing-led recession.

Leamer said the only reason a housing bubble didn't burst in the recession of 2001 was aggressive cuts in short-term interest rates by the Federal Reserve.

The Federal Reserve worked to keep mortgage rates low by cutting the federal funds rate from 6 percent to 1 percent from January 2001 to June 2003. Those low interest rates helped push home prices to the point where the ratio of prices to rental rates has reached record highs.

Leamer likens this ratio to the price-to-earnings ratio on a stock. And as anyone who studies the stock market knows, inflated price-to-earnings ratios are often a sign of a coming bust.

"We are in very uncertain times," said Robert Shiller, a Yale economist who studies economic bubbles. "Some of the adjustables (mortgages) people got in a couple years ago are already losing their interest-rate protections."

Shiller sees the possibility of a long, slow slide similar to what happened in Southern California in the 1990s. Los Angeles home prices dropped more than 30 percent from 1991 to 1997, and prices in San Diego dropped nearly 10 percent from 1991 to 1995.

It could get ugly if prices drop and consumers are unable to handle the increased mortgage debt on top of all the installment debt they have piled up in recent years.

"It may well be that the big win for reality and reason will come in 2006," Leamer wrote in his report. "We are talking a recession driven by a plunge in consumer spending on homes and durables."


TOPICS: Business/Economy; News/Current Events
KEYWORDS: chickenlittle; goldbuggery; goldbugmoonbat; goldgoldgold; goldmineshaft; realestate
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I can see a clear parallel between 20ies and 90ies.
1 posted on 12/10/2004 9:05:07 PM PST by nanak
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To: nanak
I don't think we necessarily have to endure a depression or recession. But it is clear that home prices can't just keep going up and up while wages remain relatively stagnant. I feel really bad for the first-time homebuyer today. When I bought my first house in 1992, I paid $95,000 for it. First-time homebuyers today aren't going to find anything under $200,000 in my area.

In fact, I'm in the ridiculous position of not even being able to afford to buy my own house. I paid $262,000 for my present house in 1998 and it is assessed at $450,000 just six years later. This rate of appreciation just isn't sustainable.

2 posted on 12/10/2004 9:14:26 PM PST by SamAdams76 (No intolerant liberal is going to take my Christmas away from me)
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To: nanak

It's already happening. There are more million dollar homes around here then there are multi-millionaires to buy them. Folks are building these huge homes with little down and low adjustable rates, but a half-point upswing on a very expensive home can make you homeless overnight.


3 posted on 12/10/2004 9:17:12 PM PST by quantim (Victory is not relative, it is absolute.)
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To: nanak

house prices are nutz in alot of states.


4 posted on 12/10/2004 9:17:33 PM PST by atari
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To: SamAdams76
In fact, I'm in the ridiculous position of not even being able to afford to buy my own house.

You're not alone in that.

5 posted on 12/10/2004 9:17:50 PM PST by skip_intro
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To: nanak

Five years into a 30 year fixed at 7.125%, refinanced to 15 years at 4.5%, with additional monthly principal. Looking forward to being mortgage free in 10 years.


6 posted on 12/10/2004 9:17:54 PM PST by NautiNurse
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To: nanak
I agree that prices in SoCal can't continue to increase at the recent rate.

One thing I don't see discussed in these articles is demand. Demand continues to be high in SoCal. Driven by population and the old reasons, weather, location etc. Demand my reduce the increase and not result in too drastic of a drop in values.

7 posted on 12/10/2004 9:20:11 PM PST by verifythentrust
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To: nanak
I agree that prices in SoCal can't continue to increase at the recent rate.

One thing I don't see discussed in these articles is demand. Demand continues to be high in SoCal. Driven by population and the old reasons, weather, location etc. Demand my reduce the increase and not result in too drastic of a drop in values.

8 posted on 12/10/2004 9:21:24 PM PST by verifythentrust
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To: nanak
"Six months ago, if you had a house at $900,000, you would have gotten it," Teak said. "Now you're lucky to get $850,000."

Yeah, I hate it too when my little 3 bedroom townhouse rental property that I bought for $90,000 ten years ago drops to $850,000. What a pisser...

The market will do what it always does. Dip a little, stay flat, then take off in 10 to 20 years. Over, and over, and over, it does this...

9 posted on 12/10/2004 9:25:14 PM PST by 69ConvertibleFirebird (Never argue with an idiot. They drag you down to their level, then beat you with experience.)
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To: NautiNurse

Cute, then you'll only have to pay ever-increasing property taxes to keep from being put in the nursing home where you once might have worked.


10 posted on 12/10/2004 9:28:44 PM PST by Old Professer (The accidental trumps the purposeful in every endeavor attended by the incompetent.)
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To: verifythentrust
Demand continues to be high

Bingo! The Washington D.C. area has 3% unemployment and is projected to be SHORT 220,000 houses by the year 2020. Prices won't be dropping. If telecommuting takes off and everyone can live wherever they want to do their job then big city housing (read TERRIBLE traffic) is in trouble.

11 posted on 12/10/2004 9:29:38 PM PST by 69ConvertibleFirebird (Never argue with an idiot. They drag you down to their level, then beat you with experience.)
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To: Old Professer
Gee, OP...nobody could be as smart and sassy (crusty) as you.

Never worked in a nursing home--are you disappointed?
Here in FL, we have a cap on tax increases--max 3% annually. Property value has tripled in the past 5 years--waterfront, no bridges to the GOM. Have already done the math.

12 posted on 12/10/2004 9:35:39 PM PST by NautiNurse
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To: nanak; Howlin; marty60

This does not apply to the housing boom that has happened since Bush came into Office in 2000. That housing boom was lower and middle income class families buying homes as a result of his tax breaks. This "study" or opinion of "economists" is just that, and is not the result of anyone being queried in the housing industry.

More lies from the liberal media; anything to try to tear down what President Bush has accomplished. If the people on here agree with them (liberals) so readily, then why the hell did you pretend to vote for him in the first place??


13 posted on 12/10/2004 9:39:55 PM PST by RedBloodedAmerican
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To: Old Professer

Yea, it's all Bush's fault, isn't it?


14 posted on 12/10/2004 9:40:52 PM PST by RedBloodedAmerican
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To: nanak

Median price of $489,000. That means a family has to make close to $125,000 a year (if I did my math correctly) to be able to realistically afford that house. How many families in California make that much?

BTW, what's property tax in California? Does prop 13 protect homeowners from ever rising property tax?


15 posted on 12/10/2004 9:41:52 PM PST by Fishing-guy
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To: nanak

What goes up must come down.

I kinda feel sorry for those folks in extremely overinflated areas, places like Seattle, Chicago, New York and San Fran.

Maybe I should just say in the blue counties.


16 posted on 12/10/2004 9:43:16 PM PST by proudpapa (of three.)
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To: Fishing-guy

prop 13 protects those who don't move. If you stay the assessment doesn't increase. If you move it's based upon value of home you purchased. There is a one time exemption for seniors who move to an equal value or les property.


17 posted on 12/10/2004 9:45:03 PM PST by verifythentrust
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To: NautiNurse

Just funnin' ya; did the water ever recede?


18 posted on 12/10/2004 9:45:26 PM PST by Old Professer (The accidental trumps the purposeful in every endeavor attended by the incompetent.)
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To: RedBloodedAmerican

Give it time, it probably will be seen that way.


19 posted on 12/10/2004 9:46:21 PM PST by Old Professer (The accidental trumps the purposeful in every endeavor attended by the incompetent.)
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To: Old Professer
Honey, I'm on high ground. The water across the canal did recede, and the neighbors are fine.

I figure my property value can only increase after surviving Hurricane Season 2004 relatively unscathed.

20 posted on 12/10/2004 9:47:58 PM PST by NautiNurse
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To: nanak
As someone from the financing side, there is another shoe that could drop too. Long term rates are still pretty low, but it's the short term rates that are going up rather quickly. This is very worrisome to someone that has an adjustable rate that are tied to 6 month or 1 Year LIBOR or treasury rates. I think the 6 month LIBOR is at 2.6%, one year LIBOR at 2.90% and the 1 year treasury at 2.65%. These rates were 1.00% less than that only 6 or 7 months ago! You can probably add another .25% to that in a week when the fed raises the discount rate again. For someone holding an ARM that will be adjusting soon on a conventional mortgage loan based on the one year t-bill, the new rate will be about 5.375%, not bad, but still a payment that was higher than the previous year.

Also, what could really start a collapse are interest only loans being done for homebuyers that use this product because it's the only way they can afford to buy homes at inflated prices. They may be (barely) able to afford the payment now, but in a few years there could be a double whammy. First, (assuming a 5 year interest only loan), now a loan becomes payable in 25 years rather than 30, and second, the rate that was in the low 5's is now in the 7 and 8 range (the rate could go as high as 10% or 11% depending on the ARM terms). Assuming a $200,000 loan at a starting rate of 5%, someone with an interest only payment could see their mortgage payment go from $833 per month to $1413 at a 7.00% rate, or $1817 if rates go up to 10% during the next 5 years. You could have quite a few foreclosures along with a limited number of buyers because they can't afford the home prices, even with interest only financing. I blame the mortgage investors for lowering the qualifying standards. They have made it too easy to qualify for financing. People making $25-30k a year in salary really shouldn't be buying homes 5 - 6 times their incomes. Personally, I plan on renting for a while and whether the upcoming storm.

I remember getting some unplanned upon money in 1999. I remember I wanted to get in on the tech stocks so I ended up buying a couple of tech/internet sector funds when the NASDAQ was 12,000. I believe both of those funds are now worth about 30% of what I paid for them. I definitely got in at the wrong time. I think people that have been buying homes after the big run up in home appreciation might have the same experience. I hope they got a fixed rate and a good home, because it doesn't look like they'll be going anywhere for the next few years.

21 posted on 12/10/2004 9:48:34 PM PST by Subsonic22
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To: nanak

I watched a similar report on the Nightly Business Report on PBS
[Excerpt and link: http://www.nightlybusiness.org/

2/07/04:Real Estate Meets Irrational Exuberance

PAUL KANGAS: Part of the reason consumers have been in the mood to spend this year is a strong housing market. Home prices have continued to soar, despite rising mortgage rates. But now some experts say American`s passion for real estate is becoming irrationally exuberant. Erika Miller reports.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Imagine a situation where home prices plunge 10 to 20 percent over a few years, where houses languish on the market for months, even as sellers desperately slash their asking prices. Some economists say that`s not out of the realm of possibility. They warn the U.S. residential housing market is a bubble ready to burst.

IAN MORRIS, CHIEF US ECONOMIST, HSBC SECURITIES: There are warning signs flashing. Firstly, prices have nearly doubled in many states right across the U.S. over the past five years. Also, valuations are extremely rich, particularly if you look at prices relative to income or prices relative to rent.

MILLER: Morris is also troubled by what he sees as a bubble psychology among homebuyers. He says many assume that because real estate prices have skyrocketed the past few years, they will continue to do so. Another concern is rising interest rates, because they make borrowing more expensive. The Federal Reserve began nudging up rates over the summer and is expected to keep raising rates next year.

MORRIS: It typically takes more than just one or two rate hikes as well. You need usually a good series of them, say, over a year, before people see the monetary tightening having an influence on their asset price expectations for the future. So, difficult to say, but we suspect that by the middle of next year, the party will be over.

MILLER: But not everyone buys those arguments. The housing bulls point out that although interest rates are rising, they are still at historically low levels.

DOUG NAIDUS, CEO, MORTGAGEIT: Notional interest rates are still relatively low. If they rise by a percent or 2 percent over the next couple of years, they`ll still be relatively low. And if they continue to rise in a manageable way, the way they have in the past year -- most particularly the last six months -- that is something that will be absorbed into the market.

MILLER: Plus, optimists say the popularity of adjustable rate mortgages has made borrowing more affordable for many Americans. And some say the longer there`s talk of a bubble, the less likely it is to actually happen.

NAIDUS: The mere fact that we`ve been talking about a bubble now for a year and a half has added duration to what people would call a soft landing.

MILLER: A downturn in housing-- if it comes-- could have serious implications for the overall economy. Some economists predict that if home prices fall 5 to 10 percent nationwide, the economy`s growth rate could be cut in half. Erika Miller, NIGHTLY BUSINESS REPORT, New York.]

I think the report was slanted as you watched the video toward the bubble bears from the liberal think tanks (true real world experts/sarcasm)

I'd like to note that your article focuses on local markets affected adversely by federal, state, and local zoning issues with high environmental controls and prohibitions on building that inflates the prices of real estate to unrealistic levels (eg. San Diego and all). Note that NJ real estate prices have sailed through the roof with Gov McGreedy's control on housing growth/taxation measures. Real world house costing $250,000 in 1994 costs over $400,000 because of NJ's environmental, judicial, and governmental intrusion into the free market.

I don't quite find the connection between this biased pseudo-economic report mirroring the 1920's?


22 posted on 12/10/2004 9:50:55 PM PST by sully777
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To: Subsonic22

can you explain what's driving the short-term rates?


23 posted on 12/10/2004 9:52:21 PM PST by verifythentrust
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To: 69ConvertibleFirebird

Telecommuting already took off...the jobs went to India.


24 posted on 12/10/2004 9:56:17 PM PST by durasell (Friends are so alarming, My lover's never charming...)
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To: Subsonic22
Let's not forget 95-100% mortgage financing, the increase in qualifying from roughly 26% to 38% income, and zillions of home equity loans signed when interest rates were "too low to pass up."

Kleenex and Puffs Plus will be lucrative stocks when the debt hits the fan.

25 posted on 12/10/2004 10:00:47 PM PST by NautiNurse
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To: nanak
Then you don't know anything at all about previous real estate BUBBLES. Why and I not surprised? LOL

Yes,the market BUBBLE of the mid '20s (America was actually in a recession in the early '20s and the stock market hadn't zoomed yet!)-'29 and the TECH BUBBLE of the mid '90s,which broke in March of 2000,have similarities a plenty;however,that has less than nothing to do with the supposed real estate Bubble that "experts" have been calling for for years and years now.

The last two real estate BUBBLES,were in 1873 and 1890. Real estate,like most things,go in cycles and has ups and downs;however,BUBBLES are something quite different.

26 posted on 12/10/2004 10:04:05 PM PST by nopardons
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To: 69ConvertibleFirebird

Exactly so! :-)


27 posted on 12/10/2004 10:06:17 PM PST by nopardons
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To: RedBloodedAmerican

Correct!


28 posted on 12/10/2004 10:07:32 PM PST by nopardons
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To: proudpapa

Have you looked at prices in Florida.....in the RED counties? It's just as bad.


29 posted on 12/10/2004 10:08:45 PM PST by nopardons
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To: nopardons

Florida real estate bubble mid-1920s


30 posted on 12/10/2004 10:09:40 PM PST by durasell (Friends are so alarming, My lover's never charming...)
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To: nopardons
Just curious. Would you call the housing price downturn of early 1990's a bubble.

I remembered that some of the upper-end houses actually dropped 40-50% in value in California.
31 posted on 12/10/2004 10:11:57 PM PST by Fishing-guy
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To: durasell
That was a con game,not exactly a BUBBLE,but very close.The proverbial swamp land was sold to the gullible.

I was referring to actual,historical real estate BUBBLES that had nothing at all to do with the stock market,which the '20s Florida land cons did.And once the market crashed,lots of things,including real estate fell apart.Whereas the properly named real estate BUBBLES of 1873 and 1890,where separate and distinct BUBBLES on their own.

Today's real estate prices have been tied,more or less, to the market and the stock market hasn't crashed.:-)

32 posted on 12/10/2004 10:15:16 PM PST by nopardons
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To: nopardons
I think the poster of this thread is a troll. Read their posts.

In the meantime, this is not on FR as its own thread. But check the article date and the source

I am so sick of the doomsayers and liberals around here.

http://www.nbnnews.com/NBN/issues/2003-03-24/President%27s+Message/2.html

Don’t Believe Everything You Read in the Papers

Week of March 24, 2003

Don’t believe everything you read in the Wall Street Journal — at least if it’s about housing. On the editorial page and even in its news coverage, over the past year or so this venerable newspaper has launched a steady barrage of attacks against the industry: Housing is the next big financial bubble that will burst. Fannie Mae and Freddie Mac are the nation’s next Enron. Housing is setting the nation up for a major economic tumble.

These inflammatory stories are being published by the most respected, most widely read financial newspaper in the country. But that doesn’t make them true. Underlying the Journal’s coverage is the assumption that housing values are speculative and prices are headed for a big fall. That assumption ignores a mountain of evidence that the fundamentals for housing are strong and likely to remain strong for years to come:


33 posted on 12/10/2004 10:15:43 PM PST by RedBloodedAmerican
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To: Fishing-guy
Real estate has ups and downs,without ever being a "BUBBLE".

True real estate BUBBLES are usually,though not always,not centered in just one city/area/state.

I'm not an expert,by any means,and I'm not all that familiar with real estate prices and its history in California.But for a BUBBLE to burst,it really has to cover more than just the highest end of the market.Sounds like just a downturn to me,though.

34 posted on 12/10/2004 10:19:56 PM PST by nopardons
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To: nopardons

B-b-but that fine Mr. Ponzi was a player in the real estate crash of the 1920s. He would never get involved with anything dubious...

I've had this discussion with others here. My theory is that certain home owners are the next Argentina. The market crashes, but the banks will hustle to do work out agreements -- re-structuring the loans -- as to not take a loss. Some people may walk away from a $500,000 mortgage on a $275,000 home, but not many.


35 posted on 12/10/2004 10:20:01 PM PST by durasell (Friends are so alarming, My lover's never charming...)
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To: RedBloodedAmerican; MeekOneGOP

I vote troll since we haven't heard from the poster since its conception.


36 posted on 12/10/2004 10:21:46 PM PST by sully777 (The enemy within pits the constitution against the constitution & capitalism against capitalism)
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To: RedBloodedAmerican
The poster of this thread IS a troll! I've run into him/her before.

Very interesting article! Thanks for posting it and the link. :-)

37 posted on 12/10/2004 10:22:31 PM PST by nopardons
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To: RedBloodedAmerican

to be fair should I trust the NBN to give me fair and balanced info on house buidling :-)


38 posted on 12/10/2004 10:23:31 PM PST by atari
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To: atari

err...housing markets..not buildings


39 posted on 12/10/2004 10:25:07 PM PST by atari
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To: durasell

I'd like to add another factor to the mix before I join the boss in bed. I see a trend in our area to three income purchases. Grandpa or grandma moving in with a working husband or wife. Or working kids in their 20s. Loans being based upon three incomes.


40 posted on 12/10/2004 10:26:19 PM PST by verifythentrust
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To: atari

this had a big effect on house prices

http://www.facstaff.bucknell.edu/pagana/mg312/bank.html


41 posted on 12/10/2004 10:27:10 PM PST by atari
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To: verifythentrust

This is interesting. I've been predicting the demise of the nuclear family and return of the extended family for a decade. Guess the housing market served to hasten it along.


42 posted on 12/10/2004 10:28:13 PM PST by durasell (Friends are so alarming, My lover's never charming...)
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To: durasell
Ponzi was really something...but posting rules preclude me from saying exactly what! LOL

It isn't possible for the entire housing market in the USA to crash.And,yet again,I'll reiterate the salient fact you are ignoring...real estate prices go up and they go down. I have lived through this many times over and I am not ancient.Real estate is a commodity,just like pork bellies and gold and soy beans and all kinds of other things. And like them,goes through natural cycles of ups and downs and booms and busts.Actual real estate BUBBLES are really quite rare and more often than not,are area specific.

43 posted on 12/10/2004 10:28:45 PM PST by nopardons
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To: nopardons

"...As it became increasingly clear that the nation’s lackluster economy needed a jumpstart, NAHB was the key housing organization in Washington to sign on to President Bush’s plan to create new jobs and boost economic activity by cutting taxes. NAHB lent the White House its support throughout a tough legislative process and led efforts to ensure that providing tax relief on dividends would not inadvertently undermine the effectiveness of the Low Income Housing Tax Credit. The final tax measure provided lower tax rates on capital gains that also applied to dividend income, and it actually created a new incentive for corporations to invest in the housing tax credit.
The Administration’s tax stimulus made effective this year across-the-board rate reductions that were scheduled to occur in 2004 and 2006. In addition to lower capital gain tax rates, which reach 0% in 2008, the package contained more good news for the businesses of NAHB members: an increase in bonus depreciation from 30% to 50% throughout 2004, an increase in small business expensing from $25,000 to $100,000 and an increase in the phase-out threshold from $100,000 to $400,000 through 2005..."

http://www.nbnnews.com/NBN/issues/2004-01-12/President%27s+Message/index.html


44 posted on 12/10/2004 10:29:23 PM PST by RedBloodedAmerican
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To: atari

If you think S&L was a big scandal, wait and buckle up for coming FANNIE MAE storm.


45 posted on 12/10/2004 10:33:18 PM PST by nanak (Tom Tancredo 2008:Last Hope to Save America)
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To: nopardons

I agree with you 100% on Ponzi and the cycle thing. However, if interest rates start rising across the country, it will impact prices across the country. Naturally those properties most impacted will be those most over-valued (or with a sales demographic of the fewest potential buyers). Also, I have no idea what happened with banks in the last decade. Banks used to place conservative bets and bankers were cautious. It seems as if they all went a little nuts with their lending practices and home buyers bought into the insanity.


46 posted on 12/10/2004 10:33:39 PM PST by durasell (Friends are so alarming, My lover's never charming...)
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To: RedBloodedAmerican

WOW...lots of neat info there!


47 posted on 12/10/2004 10:34:20 PM PST by nopardons
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To: durasell

remember the boomers are hiting 59 and they may go on for quite a while. Some will stay with the kids. If it means another bedroom, no problem if moms brings a retirement and soc sec check.


48 posted on 12/10/2004 10:34:32 PM PST by verifythentrust
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To: RedBloodedAmerican

"That housing boom was lower and middle income class
families buying homes as a result of his tax breaks."

I think you are giving WAY too little credit to low interest rates and loose money.


49 posted on 12/10/2004 10:36:47 PM PST by OneTimeLurker
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To: Fishing-guy
Median price of $489,000. That means a family has to make close to $125,000 a year (if I did my math correctly) to be able to realistically afford that house. How many families in California make that much?

What that means is that "old timers" and kids who inherit California property can afford that real estate but first time home buyer "outsiders" cannot.

I bought a 3 bedroom San Diego house in a nice neighborhood during residency in the early 1980's for $117,000. (That was considered pricey back then.) That is now our rental property. My in-laws bought their 4 bedroom house on 10 acres in Central California 15 years before for much less.

If the "death tax" goes away and stays away, that means that my kids and everyone else in the same "old real estate" boat will be trading multi-million dollar California properties just like the kid in the old joke that traded his million dollar puppy for two half million dollar cats.

Everyone else will be SOL.

What it will probably mean is that more and more families will be paying the $1400/month rent for houses such as our rental property because they can't afford to buy.

Such price levels are financed by new home-buyers being in debt up to their eyeballs.

What negative social consequences that will bring, only time will tell.

BTW, what's property tax in California? Does prop 13 protect homeowners from ever rising property tax?

Prop 13 protects me. Back in the 1980's, I thought it was terribly unfair since my next door neighbor paid half the property taxes that I did. Now that I pay 1/4 of the taxes that the average new San Diego property owner pays, I think Prop 13 is the greatest thing since sex. :-)

50 posted on 12/10/2004 10:36:57 PM PST by Polybius
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