Posted on 11/09/2006 5:17:47 PM PST by MeneMeneTekelUpharsin
Sacramento.
There is no frickin way the gains can be sustained that we have seen in the past couple years. Salaries are not increasing at a 20% gain year after year right now.
I have watched many people, including myself, completely priced out of even the condo market here in Seattle and have given up.
Something has to give sooner or later, no matter how many exotic loans the banks keep pushing to the masses.
Don't forget the fed leaving interest rates too low, for too long, thus dumping a gallon of gasoline onto this bbq.
It can't happen. If they cut the rates too much there will be no one to buy our government bonds -- the way we finance our public debt -- and then we are really screwed (unless we cut spending). It's a delicate balancing act.
I'm living in my 3900 sq ft 3 br 2 1/2 BA on 1/3 acre house in the Pocatello area. Free and clear. Just annual property taxes. In Feb 2005 I took a $9300 state and federal tax refund and used that a total cash out of pocket to purchase a 2068 sq ft home 2 BR, 1 BA on 1/4 acre for $82,900. I'm in no hurry to rent it. The tax and interest comes off my income tax and principal is going into equity. It's a 30 year loan at 5% fixed. I did that to keep the monthly payment low relative to fair market rental values. It takes about 2 hours every Sunday to mow the lawns.
yes, but housing is still based primarly on the "supply vs demand" factor.
And in Seattle right now, inventory has doubled since May of homes for sale, but prices continue to rise. Supply vs Demand has been thrown right out the window and is currently sinking to the bottom of Puget Sound.
While the market will eventually self-correct. That doesn't mean its going to self correct in a nice easy way.
Don't forget all the billions in subprime loans that get packaged into mortgage backed securities and sold to domestic and foreign investment firms.
As the default rates on these loans increase as they readjust, there is going to be some blood flowing.
Though, it may just be the nature of Florida -- the whole state is just so flat that powerful hurricanes can easily do major damage as they cross over from the Atlantic to the Gulf (or vice versa).
No matter, it's a harsh situation for you or anyone else that wants to sell.
Actually those who remain ignorant of tulip mania, the dot-com bubble and every other get rich scam are to blame for not knowing their history.
Actually the fed is to blame for propping up a faltering economy with cheap dollars (low interest) instead of letting the downturn run its course.
That's not true. Longer term bond rates are set by the market. The Fed rates only affect the shortest term securites.
The yield curve has been flat to inverted for some time now, so in no way has the Fed been propping up the economy.
Wasn't there a point where the Japanese cut their interest rates to zero percent and the real estate market nevertheless continued to fall?
How very true.
If you want to learn more about why the Japanese housing market never recovered just take a look at the tax liability on any capital gains realized from a sale. It's staggering and effectively kills any motivation to sell.
Are you claiming that market corrections aren't healthy and need to be blamed on someone? When the stock market corrects do you blame greedy speculators, stupid investors and indescribable stock brokers? What are the long term trends with respect to the stock market and the value of real estate? Who should those trends be blamed on?
Also, a 0% interest rate was actually too high because the economy was contracting.
==I'm in real estate, although anectdotal, prices are going down in a lot of areas and houses are not selling at all, a lot of houses aren't even getting any showings, these same houses would have sold in a weekend.==
Well I wonder why what with the crap they're building these days and the money they expect for it.
While there are a few similarities, I never like to compare what happened to the Japanese, to what goes on in the US.
They have very different ways of doing business over there and how their banks operate. A person or business can have the worst credit in the world, but if they have the right political contacts, they can get whatever loans they want. Most European and US banks have found it impossible to setup shop there and succeed or buy major interests in the japanese banks and bring some western style banking practices in.
Japans problems started with years of trade and financial manipulation against the US. It slowly but surely inflated the value of the yen against the dollar to obscene amounts. This let them go on major shopping sprees gobbling up real estate all over the US, even when what they were obscenely over paying. The banks were pressured to hand out these loans. When I was living on Oahu throughout all this, for a couple years, we would get knocks on our doors by japanese people. There would be a white limo parked on the street and some translator who would ask us if we would like to sell our house. The offers would be atleast 10 to 20 percent above resonable market prices. One Japanese businessman, I remember his last name was Kawamoto, probably bought over 100 homes in our suburb within a year by doing this.
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