Posted on 07/02/2007 7:13:14 PM PDT by Moonman62
WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson said on Monday the U.S. housing market correction was "at or near the bottom" although it could be some time before an upturn.
"In terms of looking at housing, most of us believe that it's at or near the bottom," he told Reuters in an interview. "It's had a significant impact on the economy. No one is forecasting when, with any degree of clarity, that the upturn is going to come other than it's at or near the bottom."
Paulson added that global economic growth remained solid, and a resilient U.S. consumer and strong labor markets were underpinning the domestic economy.
"We are making this transition successfully (from) a growth rate that wasn't sustainable to one that is sustainable," Paulson said.
Asked about any spillover from the well-publicized problems in the subprime mortgage sector, Paulson acknowledged that excesses can build in benign economic periods with ample liquidity, which can lead to an erosion of standards.
"We've certainly seen it in a number of areas. Borrowers need to be wary of the risks they're taking on in times of low interest rates, particularly if they haven't fixed their rates. Lenders need to be wary," he said.
Recent jitters in financial markets stemming from troubles in the subprime sector of the mortgage market underscored the risks and can serve as a "call for vigilance," he added. Markets have been unsettled as two hedge funds at Bear Stearns ran into trouble with subprime bets that went bad.
Paulson, who was chairman of Goldman Sachs Group Inc. before taking the top Treasury post last year, said he monitored financial markets closely, and aside from the subprime situation, they remained healthy.
"Markets are volatile," he said. "I haven't seen a single thing that surprises me -- it's hard to surprise me."
Hasn’t even started yet.
Is he going to run for President again?
Both Bernanke and Paulson are saying that the subprime mess isn’t going to spread. Maybe they are wrong.
Is he using one of those black balls you shake and turn over to get the answer?
Well then let's throw out those hundreds of thousands of illegal construction workers occupying all those jobs that Americans would LOVE to do. (They came to pick lettuce, but found out construction jobs pay more.)
Resale Home Prices Are Likely to Fall in Many Markets
We calculated how much prices would have to fall for housing costs (including mortgage payments, property taxes and down payments) to return to each market’s typical ratio of housing costs / income. We identified 10 markets where prices will have to fall 30% or more to return to its normal ratio, and another 31 markets that are clearly overpriced. The most likely scenario in these markets is that resale prices will fall, but not as much as we calculated, unless something terrible happens like mortgage rates spike or the economy enters a prolonged recession. Nonetheless, here are our calculations, with a commentary that follows:
City / Current Price / Price Drop % / Price Drop $
Miami, FL $350,000 -41.4% -$145,000
Riverside-San Bernardino, CA $390,000 -41.0% -$160,000
Los Angeles, CA $570,000 -39.5% -$225,000
Baltimore, MD $284,858 -37.2% -$105,858
Orange County, CA $720,000 -34.0% -$245,000
Washington D.C., DC-VA-MD-WV $404,517 -33.3% -$134,517
Las Vegas, NV $305,975 -33.0% -$100,975
Seattle, WA $415,000 -31.9% -$132,500
Portland, OR-WA $280,000 -31.4% -$88,000
Oakland, CA $635,500 -30.0% -$190,500
Sacramento, CA $375,000 -29.3% -$110,000
San Diego, CA $565,000 -29.2% -$165,000
check out the rest of the story here: http://www.realestateconsulting.com/local/local200706.html
Seattle... -31.9%? LOL! As Wayne Campbell used to say, “yeah, and monkeys might fly out of my butt...”
I won't bottom till a lot of the insane prices fall back to down to earth.
What about buyers from out of the area such as investors or people wanting a second home? Are their incomes factored in there too?
I know there is about a 0% chance of a 30% correction in housing prices in Seattle. But I still believe a 10 to 15% correction is likely. Especially when Seattle is going to be flooded with new condos over the next 2 years that are currently being built. This article wasn’t about saying where things will go, it was just stating where prices would have to go for prices to get in sync with local incomes.
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