"Housing far from bottoming": Roubini
#1
Posted 10 March 2007 - 12:02 AM
http://www.rgemonito...roubini/182196/
And Yale's Robert Shiller throws in his two cents....
Shiller agree that there is no bottom to housing yet...
Business Week MARCH 12, 2007
The Bubble Guru's Take On Housing
Yale's Robert Shiller thinks the market hasn't hit bottom, but he leaves room for the human factor
Market booms and busts fascinate Robert S. Shiller. The Yale University economist emerged from academic obscurity when Irrational Exuberance, which argued that the stock market had reached unsustainable heights, was published as the indexes were hitting their peaks in 2000. Shiller added a chapter on residential real estate in the 2005 edition, saying the same mania was at work. Confusion reigns over the direction of the home prices now, and Contributing Editor Christopher Farrell talked with Shiller about it.
Where are home prices headed?
Looking at our national home-price index [the Standard & Poor's/Case-Shiller Home Price Indices], it appears that the boom is over. [Prices] had been rising at an accelerating rate from the late 1990s through 2004. Since then the rate of increase has been decelerating.
We're going through a peak. There hasn't yet been a big price decline, like 20%. For instance, out of the 20 major cities in the country the biggest drops are in Detroit and Boston, which are down 5.9% and 5.1%, respectively. I think there's a good chance home prices will be down 10% to 30% over the next five years.
Developers are throwing in an SUV or granite countertops to lure buyers. Does this mean prices have fallen more than the data show?
Developers don't want to cut prices. They try to disguise [them]. The government's new-home price index doesn't take this into account. Prices for new homes are falling faster than the index says they are, but I don't know by how much.
Are low long-term mortgage rates supporting the market?
Mortgage rates have been falling for 25 years and when I look at the whole history of mortgages and home prices, I don't see a strong relationship. The psychology is more important. In the late '70s, interest rates rose to double-digit levels, and there was still a housing boom.
Are there any signs of strength?
Yes. One part of the National Association of Builders/Wells Fargo Housing Market Index measures the traffic of prospective buyers, and it has started to go up. It's possible that the boom could resume.
We're talking about human psychology. If people think home prices will go up for some time, it becomes a self-fulfilling prophesy.
What will bring the boom to an end?
Bubbles don't pop suddenly. The air comes out gradually. More and more people decide that the market is turning. The other large factor is a big supply of homes.
I've been reading old newspapers and advertisements to see how past booms ended. It's usually when stories start to circulate that embarrass people who believed in the boom. For example, there was a Florida land boom [in the 1920s]. There were stories of people buying land that was swamp. Booms end when prices start to fall, and then there are stories of buyer stupidity that are told and retold. I sense that's happening now.
There's a lot of news about defaults in subprime mortgages. Will that have an effect on prices?
It could. Problems like this can change market psychology. The subprime loan problem will get much bigger if prices really start falling.
Was the recent rise in home prices the biggest housing boom in U.S. history?
In the sense that it was the most pervasive. We've had booms before, but they didn't capture the whole country. This one started out in the glamour cities, and then it spread from place to place.
How has that affected homeowner psychology?
People think they can buy a house anywhere and get a high return. We have found that homeowners have very high expectations.
What kind of return should homeowners expect over the long term?
From 1890 to 1990 home prices went up an average of 3% annually. Most of the big gains were made after World War II and since 1998.
Written by Guest on 2007-03-08 10:48:34
#2
Posted 10 March 2007 - 11:53 AM
Mark S Young
Wall Street Sentiment
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#3
Posted 10 March 2007 - 11:55 AM
March 10, 2007
Last night, a condo-hotel developer who was a partner with celebrities in selling luxury perches from Miami to Chicago let the mortgage on the Royal Palm Hotel in South Beach, a trendy section of Miami Beach, expire. The missed deadline places another luxury condo project into the hands of bankers specializing in troubled mortgages.
“The market is separating the contenders from the pretenders,” Mr. Semilof said. “The consumer is not buying projects where they sell units and then do the conversions. People are willing to put money where they know where the building is going to be built.”
In February, Mr. Falor sued Paris Hilton’s sister, Nicky, and her agent, Paul Fisher, over their former proposed partnership to open in South Beach the “Nicky O” condo hotel. The hotels, he told The Miami Herald, were supposed to feature cupcakes.
BIGGEST SCIENCE SCANDAL EVER...Official records systematically 'adjusted'.
#4
Posted 10 March 2007 - 12:00 PM
“The market is separating the contenders from the pretenders,” Mr. Semilof said.
Well, half a lof is better than none!
Mark S Young
Wall Street Sentiment
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#5
Posted 10 March 2007 - 12:08 PM
[url=http://www.nytimes.com/2007/03/10/business/10real.html?ex=1331182800&en=442d8daf6bf56cac&ei=5090&partner=rssuserland&emc=rss][size=3] ... to open in South Beach the “Nicky O” condo hotel. The hotels, he told The Miami Herald, were supposed to [b]feature cupcakes.
A COOKIE is far better than a cupcake.
#6
Posted 10 March 2007 - 12:27 PM
Mark S Young
Wall Street Sentiment
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#7
Posted 10 March 2007 - 02:14 PM
Looks like things around here are doing OK.
http://www.sibcyclin...?...;s=COND&m=1
Doing OK, huh? How about Memphis:
" . . . there were 19,738 homes sold in 2006, and there were 18,155 residential foreclosures last year."
Memphis Business Journal
Repeat after me: "Real estate speculation is a national epidemic, and no one is immune to the consequences."
Write on the blackboard one hundred times.
Paste it on the top of your computer screen.
Tattoo it on your forehead.
This will be your lived reality for the next ten years.
#8
Posted 10 March 2007 - 03:12 PM
Mark S Young
Wall Street Sentiment
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#9
Posted 10 March 2007 - 09:26 PM
Edited by Iblayz, 10 March 2007 - 09:29 PM.
#10
Posted 10 March 2007 - 10:16 PM
http://www.hudson.or...rFeb15Event.pdf