Posted on 08/08/2005 7:46:52 AM PDT by .cnI redruM
This is the way the bubble ends: not with a pop, but with a hiss.
Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust.
So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already have started.
(Excerpt) Read more at nytimes.com ...
There is nothing that comes from the "Old Gray Liar" that I care to read about.
Gee...supply & demand. Who knew ?
this article is old news.
Of COURSE real estate has no "pop".
Of COURSE real estate is less liquid than stocks.
This article recycles old news.
The NYT as always is a day late and a dollar short. Providing old news that might be of interest is hardly the way to revamp the dying paper.
Wishful thinking on Krugman's part. Wants any kind of bad news to stick on Bush. Don't believe it.
Real money in the hands of the people buys houses, land, businesses, cars, vacation homes, and much more.
Nothing succeeds like success, and nothing like a great economy (continuing housing boom) makes liberals and democrats look like bigger a$$es.
What's really astounding is, all this is happening with crude oil heading toward $65/bbl.
It wasn't very long ago that I couldn't believe someone would (had to) pay $200K for a McMansion. Now people are paying $1.2M (interest only loans) and not batting an eyelash.
I do not think it can continue.
perhaps but he would have been better off to have published this about three or four YEARS ago.
As pointed out, this is all recycled information with a touch of Krugman's usual "be very afraid" hysteria. The land is everything and they are not making any more of it. As long as mortgage rates stay low, and people have jobs, housing prices will stay high. That doesn't mean that prices won't fluctuate in different parts of the country. Krugman makes it sound like the only thing keeping us from sinking into depression is building new homes? This is silly. New homes aren't built unless there if demand. Besides, if housing prices drop then Krugman should be happy that the less wealthy will be more able to afford home ownership. Ooops there I go saying that dirty word...ownership. That's the one that keeps Krugman angry.
The economic history of the world is full of bubbles.
Most of the time the popping of a bubble causes a lot of economic pain.
The biggest stock market bubble in history had formed by the end of Clintoon's Presidency. It popped without causing much pain, mostly because of low interest rates and tax cuts.
Now we have a real estate bubble. The big questions are:
1. WHEN will it pop?
2. How much damage will it cause when it does?
Economists like to refer to real estate, particularly residential real estate, as "sticky in the downward direction". Rather than sell at a loss, residential real estate owners will often simply decide not to sell. This leads to long flat markets, without dramatic drops.
If that is what we get this time, we will see an end to the easy money in real estate, coupled with flat prices and difficulty finding buyers. Some markets, such as San Diego and silicon valley in California, may get hit harder. The real estate crash in Houston when the oil boom ended in the 1980's is an example of what can happen in hard hit areas.
A related issue is the impact rising real estate prices are having on the economy overall. People are borrowing against the increase in value of their homes to finance all kinds of things. At the same time, the overall savings rate in America right now is zero. If real estate quits rising, will people stop spending and start to save?
What?????????
"" won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory"""
So let me get this straight. Demand declines, inventory increases and prices do what?
No need to read further. Wish I could get paid for filling in blank space on a paper with worthless drivel
"hissing sound is Krugman passing gas."
Or as Taft said about his huge stomach when asked by a nasty reporter of his day what he would name the baby.
"If it is a boy, junior. If it is a girl, Helen. If, as I suspect, it is gas, I will name it....(name of reporter)....Paul Krugman"
Truly a world class gas pocket or as Dick Chaney said--aworld class @@hole.
vaudine
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