11 replies to this topic

[greenie]

All data will show that the housing market bottomed in December/January and is on a upswing. Housing stocks will go up, and housing bears will look like thebiggest idiots on earth.

How is that for a surprise????


Only three months later (March-April), it will be discovered that the observation is a statistical artifact, because the government statistics did not include cancellations.


[I borrowed this from someone else, but do not remember the link]

[caspary]

it's already started:

http://www.bloomberg...6...&refer=home

an error here, an error there, soon ...

[caspary]

Pricing Error on Mortgages Led to Lender's Collapse (Update4) By Bradley Keoun and Jody Shenn Jan. 12 (Bloomberg) -- Mortgage Lenders Network USA Inc., a provider of home loans to people with poor credit, said ``human error'' caused it to lend $600 million at below-market rates, fueling losses that led to the closure of its biggest unit. The mistake cost Middletown, Connecticut-based MLN about $20 million at a time when a slowdown in the mortgage market was eroding the value of another $2 billion in loans the company planned to sell, Chief Executive Officer Mitch Heffernan said in an interview yesterday. Creditors demanded $40 million in additional collateral, half of MLN's capital. etc etc...

[cgnx]

What makes a home price go up? Cost of materials and labor? Lack of supply? Seems to me both issues are not favorable for higher prices. It is my belief that home price escalation occurred due to wealth creation form the 2000 stockmarket bubble. Indications of saturation and valuations beyond true investment value have begun the topping out of prices and the commensurate fall. This fall should continue until prices become attractive to true investors. The Players in this arena may trade out of this sector until a bottom is found causing further depreciation. So can someone explain why home prices would go up? How will more buying than selling pressure occur?

[selecto]

To phraphrase a rule: Home prices rise to absorb the amount of money which can be made available for their purchase. And conversely.

[dcengr]

What makes a home price go up? Cost of materials and labor? Lack of supply? Seems to me both issues are not favorable for higher prices.

It is my belief that home price escalation occurred due to wealth creation form the 2000 stockmarket bubble. Indications of saturation and valuations beyond true investment value have begun the topping out of prices and the commensurate fall. This fall should continue until prices become attractive to true investors.

The Players in this arena may trade out of this sector until a bottom is found causing further depreciation.

So can someone explain why home prices would go up? How will more buying than selling pressure occur?

Home prices can go up if there's rise in inflation as value of money decreases. Hence all prices will grow, including home prices.

But since homes are very overvalued, they may just sit flat. This was a phenomenon that occured in japan. They had their realestate boom which went to ungodly values, then the home prices dropped a bit, but never came crashing down like stock prices. What happened then is that the home prices held steady while inflation went up, which basically devalued the homes, but did not cause prices to decay further.

[jawndissedi]

This was a phenomenon that occured in japan. They had their realestate boom which went to ungodly values, then the home prices dropped a bit, but never came crashing down like stock prices. What happened then is that the home prices held steady while inflation went up, which basically devalued the homes, but did not cause prices to decay further.

Time for a little reality check:

Home prices in Japan 1997 - 2005: down 28%

Source: The Economist

I don't know what happened during the 1989 - 1996 period, but you can be fairly sure it was more of the same. Now you may not call this "crashing down," but my neighbors certainly will if the same thing happens to them.

BTW, at the outset of their deflationary downcycle, most Japanese households had at least ten years worth of living expenses squirreled away in their postal savings accounts. Today, most American households have about ten days worth living expenses in reserve. But what the heck, we sure had a lot of fun along the way, didn't we?

[dcengr]

This was a phenomenon that occured in japan. They had their realestate boom which went to ungodly values, then the home prices dropped a bit, but never came crashing down like stock prices. What happened then is that the home prices held steady while inflation went up, which basically devalued the homes, but did not cause prices to decay further.

Time for a little reality check:

Home prices in Japan 1997 - 2005: down 28%

Source: The Economist

I don't know what happened during the 1989 - 1996 period, but you can be fairly sure it was more of the same. Now you may not call this "crashing down," but my neighbors certainly will if the same thing happens to them.

BTW, at the outset of their deflationary downcycle, most Japanese households had at least ten years worth of living expenses squirreled away in their postal savings accounts. Today, most American households have about ten days worth living expenses in reserve. But what the heck, we sure had a lot of fun along the way, didn't we?

28%.. thats like a pumple on an elephants @ss (as da cheif would say ). Now if it went to 28% of the high value, thats a crash like the stock market.

You cannot compare the devastation of the nasdaq or dow of 1926, or of japan's nikki to a housing price reduction of 28%. Or maybe you can, if you bought a multi million dollar california outhouse..

[jawndissedi]

This was a phenomenon that occured in japan. They had their realestate boom which went to ungodly values, then the home prices dropped a bit, but never came crashing down like stock prices. What happened then is that the home prices held steady while inflation went up, which basically devalued the homes, but did not cause prices to decay further.

Time for a little reality check:

Home prices in Japan 1997 - 2005: down 28%

Source: The Economist

I don't know what happened during the 1989 - 1996 period, but you can be fairly sure it was more of the same. Now you may not call this "crashing down," but my neighbors certainly will if the same thing happens to them.

BTW, at the outset of their deflationary downcycle, most Japanese households had at least ten years worth of living expenses squirreled away in their postal savings accounts. Today, most American households have about ten days worth living expenses in reserve. But what the heck, we sure had a lot of fun along the way, didn't we?

28%.. thats like a pumple on an elephants @ss (as da cheif would say ). Now if it went to 28% of the high value, thats a crash like the stock market.

You cannot compare the devastation of the nasdaq or dow of 1926, or of japan's nikki to a housing price reduction of 28%. Or maybe you can, if you bought a multi million dollar california outhouse..

Just what this board needs (not) -- another class clown.

[HiFiGuy]

28%.. thats like a pumple on an elephants @ss (as da cheif would say ). Now if it went to 28% of the high value, thats a crash like the stock market.

You cannot compare the devastation of the nasdaq or dow of 1926, or of japan's nikki to a housing price reduction of 28%. Or maybe you can, if you bought a multi million dollar california outhouse..

A 28% drop in home values would wipe out 100% or more of most homeowner's equity... leverage works both ways....if this were to happen, it would devastate the balance sheets of nearly everyone - except perhaps those lucky few at GS, MER, LEH, etc.