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U.S. housing bubble may pop
San Diego Tribune ^ | 6/21/05 | Dean Calbreath

Posted on 06/21/2005 9:42:59 AM PDT by ambrose

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To: montag813
Only in the last paragraph do they quote a contrarian who calmy states the 3 reasons why home prices will continue to rise for the forseeable future, but that is only after 4 pages of bubble-hysteria. Please understand that the MSM sees the housing boom as the only thing holding up this economy and consumer spending. If they can derail that boom and wreck the economy, they can wreck George W. Bush and set the table for Hillary. That is the primary reason why the MSM is in total lockstep manic mode about this.

Just before the stock market bubble burst in 2000, the MSM was also quoting contrarians who calmly gave three or four reasons why the stock market bubble was a myth and how the new economy was different and why traditional fundementals were for losers, yada, yada, yada. The only difference then is that the MSM qouted the contrarians at the beginning of the articles rather than at the end in an effort to prop up Little Willie Clinton's economy. I went 90% cash in March, 2000, not because of what the MSM said or didn't say, but because of my own research and gut. I was very right then and I made a lot of money during the crash by simply not losing money.

I've applied a similar analysis based up traditional fundementals and values with a healthy dose of my "gut" to the current real estate market, and I believe we are already in the beginning stages of a real estate bear market, which will become a major meltdown in many (althought not all) markets. Mark my word. Eighteen months from now, you will see how very right I am.

121 posted on 06/21/2005 2:19:49 PM PDT by Labyrinthos
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To: IMRight

And how many houses become unusable and need to be replaced? I bet it's more than the difference.>

Also, the new trend is to own two or more homes -- the extra for vacation, rental or future retirement. With the price of building supplies swinging up with the price of oil, it might be a bubble or the way it's gonna be...

122 posted on 06/21/2005 2:23:05 PM PDT by GOPJ (Deep Throat(s) -- top level FBI officials playing cub reporters for suckers.)
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To: durasell
One of my strangest memories is seeing a Palestinian and an Israeli store keeper yelling in two different languages at a confused Italian American cop for ticketing an old Irish lady who happened to be a customer in both their stores.

Now THAT is funny....I love the U.S. when reading something like that....

123 posted on 06/21/2005 2:26:51 PM PDT by dakine
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To: KC_for_Freedom
The load agencies I mentioned are currently under scrutiny for padding their portfolios w/ various loans (aka cherry picking) to bolster their bottom line. Leaving aside any argument about whether a quasi gvt body should be in the mortgage business to make a profit, this obviously means they carry some loans on their books.

In the event of a massive default, like I said, "guess who'll pay?" Its not really that there's a hard and fast requirement for the gvt to step in, but in practice they'd have to given the size and scope of the debacle.

Secondly, re the banks eating the cost: Hearken back if you will to the S&L crisis of the 80's. Who picked up that tab?

Need I say more?
124 posted on 06/21/2005 2:58:56 PM PDT by Pessimist
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To: dakine

Walk into any bar in NYC, L.A., Chicago or any number of U.S. cities and you'll see people whose ancestors one, two or four generations ago would have been at each other's throats in a murderous rage. And know what they'll be doing? Playing pool, hitting on the waitress and discussing real estate, etc. etc. etc. etc.

Hitler thought this was our weakness. Radical Islam thinks it's our weakness. It's our strength.


125 posted on 06/21/2005 3:00:00 PM PDT by durasell (Friends are so alarming, My lover's never charming...)
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To: superiorslots
I agree - it will be worse.

My thinking is that we (the taxpayer) end up picking up the tab anyway. Banks can't get blood out of a turnip, and if the drop is big enough they cry catastrophe and the gvt will back them up like they did during the S&L problem in the 80's.
126 posted on 06/21/2005 3:02:28 PM PDT by Pessimist
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To: ambrose

I saw some good data on So Cal hosuing prices going back to 1982.


Right now the bubble is probably worse than in 1987-90 as hte run up from 2001-04 has been greater than in 1987-90.

When the bubble did burst in CA prices fell about 20% but it took 5-6 years to bottom out. What you had wasnt really a popping as much as air coming out of the balloon. From 1991-96 housing prices fell by 1-5% each year. Each individual year didnt look to bad but cumulative it was pretty bad


127 posted on 06/21/2005 4:16:07 PM PDT by atlanta67
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To: ambrose

""Is Atlanta on the list of bubble real estate markets?""


not even close...4% annual appreciation in home values...HOWEVER GA leads the nation in interest only loans


128 posted on 06/21/2005 4:18:43 PM PDT by atlanta67
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To: Toddsterpatriot

""I think it's more likely that an economic slowdown will pop housing prices than the other way around.

But I could be wrong. :^)""


youre actually 100% correct....there has never been a housing price decrease in the USA without a recession preceeding it.

In So Cal in the early 1990s, prices peaked in 1990-91, but the recession began in 1990.

A recession will pop the bubble, the popping bubble will reinforce the recession.


Bubbles dont pop on their own, they need some outside variable to do it


129 posted on 06/21/2005 4:21:07 PM PDT by atlanta67
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To: narby

I wonder how often people say, "if only I hadn't bought that house twenty years ago".


130 posted on 06/21/2005 4:24:00 PM PDT by Doe Eyes
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To: atlanta67
Bubbles dont pop on their own, they need some outside variable to do it

Sounds right to me!

131 posted on 06/21/2005 4:24:00 PM PDT by Toddsterpatriot (If you agree with Marx, the AFL-CIO and E.P.I. please stop calling yourself a conservative!!)
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To: TheDon

My parents bought a house in Palm Springs for $289,000 in April of 2004, now it's worth $389,000 ,Amazing


132 posted on 06/21/2005 4:31:52 PM PDT by cmsgop (catch A+BERT in "The Sisterhood of the Traveling Pants")
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To: atlanta67
.HOWEVER GA leads the nation in interest only loans

I thought CA did ?
133 posted on 06/21/2005 4:35:58 PM PDT by cmsgop (catch A+BERT in "The Sisterhood of the Traveling Pants")
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To: Pessimist
Secondly, re the banks eating the cost: Hearken back if you will to the S&L crisis of the 80's. Who picked up that tab?

Recall in this case that the government agreed to reimburse the S&Ls for losses owed to their "depositors" they had no requirement to reimburse borrowers. When the S&Ls went under because the S&L loaned depositors money (all of which was covered by the government) on bad loans, the government was on the hook to protect the S&L depositors. The borrowers were still on the hook for the loans unless they could declare bankruptcy in which case the banks took a loss. This loophole in the depositor protection was fixed and new limits for S&L deposits on hand were implemented. and deposits are now only protected by the FDIC and savings and loan group with the same function, (Up to 100K) per depositor. But this does not mean the gov steps in to cover bad debts.

I believe this "crisis" will not result in a massive government bailout. But I guess we will see.

134 posted on 06/21/2005 5:06:26 PM PDT by KC_for_Freedom (Sailing the highways of America, and loving it.)
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To: atlanta67

forgive my ignorance, but what is an "interest-only" loan?


135 posted on 06/21/2005 5:06:39 PM PDT by stands2reason (It's 2005, and two wrongs still don't make a right.)
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To: stands2reason

where for the longest time you are only paying interest on the loan, no principle


136 posted on 06/21/2005 6:18:35 PM PDT by atlanta67
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To: stands2reason; atlanta67

As was stated below a loan where you only pay the interest for a long time, eventually though the principle comes due. A variation on the old Baloon mortage.

Shockingly according to Money magazine in 2005 these itnerest only loans accounted for about 1/3 of all new mortgages, with ARMs making up almost another 1/3 and another 5-10%(?) or so of subprime or noncomforming.


137 posted on 06/21/2005 7:23:43 PM PDT by festus (The constitution may be flawed but its a whole lot better than what we have now.)
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To: stands2reason; atlanta67

Correction the article said that regarding 2004.


138 posted on 06/21/2005 7:24:03 PM PDT by festus (The constitution may be flawed but its a whole lot better than what we have now.)
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To: atlanta67
Bubbles dont pop on their own, they need some outside variable to do it

If I recall correctly, the stock market sold off heavily the day the feds sued microsoft and it was all downhill from there.

139 posted on 06/22/2005 5:33:16 AM PDT by bankwalker (You get what you believe.)
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