Posted on 09/13/2006 7:31:40 AM PDT by Hydroshock
I don't really think the purpose of this is to say that everyone is in terrible shape, or is doomed. Its more just trying to have a discussion about the economy.
It is a fact that the residential housing market has been a big part of the US economy since 9-11, when the Fed began to lower interest rates. Their policy worked - we avoided deflation - by having a stimulus to an interest rate sensitive sector of the economy. However, with every such policy, even if in the aggregate it was the right medicine at the right time, there have been some localized speculative excesses. These markets, South Florida, Phoenix, San Diego, Wash D.C. among some others, have created a lot of jobs, but a lot of the housing that has been built there is not occupied, and held by "investors" the same sort of speculator who was day-trading internet stocks in the previous cycle.
There will be a hangover, not fatal!, but significant, which is going to slow growth in this country. Other parts of the economy are quite healthy, which will cushion the blow. The Fed acknowledge all of this, including this slowdown, very forthrightly.
I don't see any reason why someone who is not a speculator and who owns his home with a manageable mortgage ought to panic if house prices decline somewhat, but not all real estate holders are in that position, and in some markets, the ratios of such healthy owners are surprisingly low.
Thank you for a more reasoned response. So much better than:
"It's going to get really ugly..."
"Wait till next year...it's going to be bad"
And then firing off some drive-by statistics to support it.
I agree that in some markets, prices will/have retreat(ed) and that those who foolishly signed on for more house/debt than they can afford are going to get burned. But, they should have read the fine print.
For those with the financial flexibility, an ARM can be a nice tool to free up additional cash. But for most, my opinion is that a fixed 15 or 30 year mortgage (while not too sexy in the short term) is a solid way to build equity and ride out any downturns.
I know that's a simplistic look at it, but I am not an economist...just getting tired of the daily drumbeat of doom from some people.
You obviously don't follow the daily postings from hydroshock and/or ex-Texan. Every negative story from any and all sources about the upcoming housing bubble exploding gets posted. Never any balance, just the worst doom stuff makes the grade. Certainly the housing market is going to have to correct a bit, but the stuff that they say is over the top, like 30-40% drops over the next 6 months or other such stupidity.
Doom & Gloom - Ping !
Trillions in lost equity - Ping !
I might be right one of these days - Ping !
Worst economy since Hoover - Ping !
ARMs fate worse than death - Ping !
A neighbor just sold their house in 1 day for above asking price, and I had a realtor come by asking if we are interested in selling our home. He has buyers looking for homes in my neighborhood.
Oh well, I wonder what the market will look like when it is actually doing well.
(I'm in south San Jose)
No, that couldn't have happened...remember WE'RE ALL DOOOOOOMMMMED!!!
I think what ACTUALLY happened is that you knew a guy, who had a friend, who's brother's boss' nephew bought a $750,000 home with a 1/2% ARM that reset 3 days later to 38%, and now he can't afford the payment.
He's doomed.
Fair enough, constant emphatic repetition of a dumbed down message is not very convincing.
And once again, I'll ask what you think we (citizens, those homeowners, the government, etc.) should do about it? You warn about this crisis in every thread about the R/E market, but so what? OK, let's say it's going to happen. Are you proposing that something be done about it? Or should we just curl up in a ball and cry? What's the point?
His proposed course of action is two-fold:
(1) Sell in a desperate panic.
(2) But first, be sure to click on his pathetic doomwhoring website.
Far better to just role up in a ball, Mannaggia. Or just 'Wax on, wax off.' Everything is going to be handled by Congress. The same way they handled our open borders.
You forgot your link. I fixed it for you.
Fearmongering blogpimpery.
I haven't been on Freerepublic for too long, but this is allowed to continue day after day, because...?
I have no idea.
I've been wondering the same thing myself.
Well sure there's the entertainment value as posters refute their doom and gloom, but I'm not sure that's enough to allow it to go on indefinitely.
They've made their point: "one way or another, we're all doomed"
...how about a new subject?
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