Fate of World Economy Lies with U.S. Housing --Greenspan

Sign on San Diego ^ | 10/1/2007 | Sumeet Desai

[ex-Texan]

LONDON – The fate of the world economy hinges on what happens to house prices in America and that may not be a good thing, former Federal Reserve chairman Alan Greenspan said on Monday.

Speaking at the Reuters headquarters in London, the former Fed chair delivered a gloomy prognosis on the state of the global economy – U.S. house prices are likely to fall further and they could drag the rest of the world with them. * * *

“The critical variable in this judgement is the price of homes in the United States,” said Greenspan, who ran the U.S. central bank for more than 18 years until he stepped down in 2006.

“I would expect home price declines to continue until the rate of inventory liquidation reaches its peak,” Greenspan said, on stage with British Prime Minister Gordon Brown and finance minister Alistair Darling.

[ex-Texan]

“The critical variable in this judgement is the price of homes in the United States” * * *

“I would expect home price declines to continue until the rate of inventory liquidation reaches its peak"

And this proclamation comes from the guy who is most responsible for everything that is happening today. Thus Sprach Zarathustra . . . The real estate god is dead. Long live real estate. Do you see what is happening now all over the America . . . ? Do you really understand?

The builder was reported to be having "money problems" back in July. Now they are having a Banruptcy sale Nothing to see here. Time to move. Move alonmg people, move along now.

Prices reduced from $ 359,000 to $ 99,000 — !!! And even less. Want more details?

Casa Grande

Fiesta homes range from just under 1,500 square feet to over 2,100 square feet in size and most have 4 bedrooms with 2 to 2 1/2 bathrooms. Celebration homes are larger and range in size from just under 2,000 square feet to nearly 3,400 square feet.All homes to be auctioned in Casa Grande are BRAND NEW homes and starting bids will be as low as only $89,000. This is an amazing opportunity to own a beautiful home in this fast growing community.

Maricopa

aricopa is a charming city located just 20 miles south of Phoenix. Maricopas early influence from the hearty local farm economy which still thrives today has led to unprecedented growth and development. Know as A Community With A Heart, the safe neighborhoods, educational excellence, endless recreational and cultural opportunities and strong business community anchored with a unique small-town feel makes Maricopa a great place to live and work.Twenty-seven brand new homes in the Celebration and 26 brand new homes in the Fiesta communities of Maricopa will be featured at auction. Previously listed at over $353,000, starting bids on select units will be as low as $99,000!

Source Here

For all the real estate and mortgage shills out there i say "Save your bovine squat for your industry message boards. Nobody is buying it today. Except other people in the business."

These empty houses have been on the market for at least six months. The builder could not sell them. Even in the good times. So how much will they sell for? I suggest a few will sell slightly over the required minimum bid. Others may sell for a 40% price reduction. Others will sell for about 50 cents on the dollar. Maybe. Hurry, hurry, hurry! You can join the crowd and even put in bid yourself. Want to learn more? Or do you just want to throw stones at the messenger.

[Brilliant]

Give me a break, Greenspan. We make a lot more than just houses.

[Petronski]

[ex-Texan]

*Ping* !

[CaptainK]

It must be a relief to Alan that he had nothing to do with the situation.

[madvlad]

But wait! Isn’t the world economy decoupling from the US drivers?

Guess its not diff this time! bwahahahahahahahahaha

Wish houses in my area were being firesold!

MV

[in hoc signo vinces]

Exactly....he’s gone senile and his wife is a democrat journo hack...using is his prestige as a mouth piece that’s all the latest statements from Greenspan represent.

Sad end to his legacy.

[djf]

Hey, the biggest banks in the world can lose their keisters and the stock market just goes to new highs!

Kum Bay A, m’Lord, Kum bay A...

Somethins gonna hit the fan real quick here.

[Fairview]

Greenspan does not seem to know when to STFU. His mouth has caused more problems for this country.

[Popocatapetl]

Wise homebuilders should finally bite the bullet and evolve into a new market that hasn’t ever existed much in the US.

For years, homes have been “cheap and cheerful”, slapdash construction of biodegradable properties, that even with their poor quality have continued to appreciate in value. The pressure to change, to improve, has only resulted in the creations of “McMansions”, which are still cheaply built affairs, but written on a much larger scale. When homes and other buildings age at all, they are just torn down and replaced with the same.

But at no time has the idea of “quality” entered the picture. That is, building homes and other buildings on the idea that the US is no longer wildly growing, but is becoming a mature nation where property starts to become a long term family asset, with the same home owned for generations by the same family.

In all fairness, in years past this was much harder to do, because building materials were far less durable or prohibitively expensive. But this is much less the case today. In addition, there was always the problem that “castles” tended to be very expensive to maintain. But this, too, has been alleviated to a great extent with technology.

So why not build homes that will last a family for generations, without complete rebuilding, and designed for low cost operation and maintenance?

The design will be somewhat different, as it will have to be fashioned to support the needs of several generations at once, yet comfortably for all. Its initial costs will be much higher, because it will need to integrate features that while expensive, will save much money over time.

As much as possible, it will have to be self sustaining, with few resources entering and little waste leaving.

If such homes exist, the one great expense would be property taxes. The elimination of those would make this a popular model for everyone who could afford it.

[BeckB]

It sounds to me like a lot of international investors have been fueling the building speculation in this country.
Let them exploit some other country. ( maybe Greenspan is about to lose some investment money of his own ) .

[stylin19a]

oh no...a fly by night developer,
that's been around only a little bit,
took out huge loans/revolving lines of credit in 2004 using 450 desert "lots as collateral
is the basis of your today's "sky is falling" alert ?

[unixfox]

His mouth has caused more problems for this country.

It's called "Irrational Exuberence"

Somebody needs to stuff a sock in this asshats mouth.

[jpl]

Far be it from me to question someone as smart as Greenspan, but I would think that things such as the price of oil, the continued growth of China, and the stability (or lack thereof) in the Middle East would have far greater impact on the world economy than the real estate market correction in America.

[abercrombie_guy_38]

He fails to mention he had a (large) hand in the problem.

[DungeonMaster]

Fate of World Economy Lies with U.S. Housing --Greenspan

BS. This statement seems to be a setup to blame Bush for a lot of stooooopid loans. So now I suppose Bush is supposed to bail out the whole industry.

[Wolfie]

He probably doesn’t know.

[AZLiberty]

The biggest unspoken factor in current real estate prices is uncertainty about immigration. Immigration, substituting for our sub-replacement birth rate, has been driving the real estate market, providing a continuing flood of people entering the bottom of the market and allowing everyone else to "move on up". Without this, real estate will revert to its real value, which is what people are willing to pay out of cash flow rather than what they can pay out of their increasing equity.

Let's resolve the immigration crisis, cutting off the flow of illegals, and replacing it with a flow of deserving, capable, legal immigrants.

[Savage Beast]

You're right about this, Popo. In many cases, the heir or heirs to a home cannot afford to keep it because of heavy taxes and must sell it.

There are loop-holes to this--a Family Limited Partnership, for example--but they are cumbersome and difficult and have a downside.

The worst of it is that getting taxes away from the politicians is practically impossible. Once politicians--who form our de facto ruling oligarchy--get their greedy hands on our money, they NEVER let it go.

They use it, of course, for their own aggrandizement and to get and keep themselves in power.

Unfortunately millions of Americans cannot comprehend this. They accept the politicians' bribes of bread-and-circuses in return for votes, and they support these greedy parasites by feeding their hunger for more and more money and power.

If you can figure out how to solve this basic problem, you will save our beloved nation.

Our brilliant Founding Fathers foresaw it, but their vision was inadequate to prevent it.

[ga medic]

I think Bush has already promised to bail out the industry. Greenspan definately shares some of the blame for this, but I am not sure how much. I am not a big Bush fan, but I don’t see how he is responsible.

Honestly, I don’t know why this was so hard to predict. Rapidly rising housing prices, low interest rates, lots of speculation, and mortgages being issued for interest only loans, to qualify purchasers for the maximum home possible. Looked like disaster from the beginning to me.

I do think Greenspan is right here though. The housing market has the potential to seriously impact the US economy. America still has a major impact on the rest of the world. Without strong American investment, the world economy will suffer. Greenspan may have made some mistakes, but he controlled the Fed for 16 years, most of them very successfully. He isn’t an idiot.