Posted on 05/18/2006 7:34:39 PM PDT by doc30
NEW YORK (Reuters) - Former Federal Reserve Chairman Alan Greenspan said on Thursday that the "extraordinary" boom in the U.S. housing market in recent years is over.
"This has been quite an extraordinary boom," Greenspan told a Bond Market Association dinner in New York. "The boom is over. I think we can safely say that with a strong degree of confidence."
Greenspan said there was a "high degree of froth in the system," and that it was clear that home equity extraction and the turnover of home sales was waning.
(Excerpt) Read more at today.reuters.com ...
An appropriate analogy for sure!
How many of those are second/vacation homes?
my home has increased 700% since we bought it 22 years ago. I am just amazed.
My sister laughed at me when we bought our home for less than 100k. She told me we overpaid for it then.
I don't know much about real estate in Hawaii, but I've seen it crash here in NYC. It always happens the same way -- in slow motion. Folks think it happens like a crash on the commodity markets or Wall Street, but the truth is, it can take 6 months to a year before the downward momentum accelerates enough to become noticeable.
Opportunity...buyers market.
Northeast, Kalifornia, Florida.
In Oklahoma, for example, prices have only risen about 5% annually. And that only in the larger metropolitan areas, viz., Tulsa.
I wouldn't expect to see huge market adjustments in these areas.
Hey Lou - do you think the areas, such as OK, that are not over-inflated will see a rise in sales from people moving away from overpriced regions?
Greeny is a retired fossil. Time to STFU!
Many businesses can survive a few bad years but not a dozen years of stagnation. If there is a correction coming it may be better to get it over with than to string it out over a long period.
Rural areas are another ball of wax. Many of them are de-populating. The population growing older as young people move away in search of jobs. In some places in Kansas, for example, they will give you free land if you agree to stay for a set amount of time.
I saw property values take a hit in Marin in the early 90s. Don't know about the other areas. They don't let people like me near La Jolla or Carmel...
The Fed Chairman who did all the heavy lifting under Mr. Reagan was Volcker. Greenbean wasn't een a player in the 'Reagan revolution', AND was the only Fed Chairman to preside over TWO stock mkt crashes, October 1987 and the March 2000 (et seq) bubble pop.
As ol' Casey Stengel used to say: ''You could look it up.''
how did you miss this? ping
Property prices on the Big Island went down in the 80s. According to friends who sell property, way down, when a lot of Japanese who had invested in real estate bailed out.
BTW, three friends in Sacramento who sell real estate are not making any money. One's going back to her previous profession, one's just broke and has another job. They all got in a little late. One told me yesterday that there are so many houses on the market that nothing is moving, prices haven't dropped a lot (price reductions are happening) but more and more houses are on the market, just sitting there.
Housing may slow down or remain static for a while, but should bounce back.
Two major reasons--the $250/$500 thousand tax deduction off of capital gains profits upon sale, and you can't outsource the real estate business.
Right now people are a little nervouse and trying to cash out their capital gains tax free profits. Also since a lot of people who purchased 2nd and 3rd properties because or this provision only found out about it two or three years ago, you have a lot of people who have put in their two required years, and now want to get their money out to move on to better things, or another fixer upper. Of course this applies to active housing markets, not rural areas that are losing population. Then again maybe there is something to be said for immigration. :-)
Possible. We're seeing investors from California picking up Tulsa real estate. It's not happening often enough to spike the prices, but it is happening often enough that we are taking notice.
One thing, investors/buyers from California historically have tended to pay asking price for a property instead of negotiating.
This is how real estate reacts. Very slowly. I'm familiar with the Sac market, and the prices are going to go down. Builders/developers will not hold onto property that will not sell.
In real estate, if your house is not selling, you've got the price too high.
For the most part, the feeding frenzy is over. Granted, there are some exceptions, but there always are. But they are the exceptions.
Greenspan artificially fueled the industry with ridiculously low interest rates. But everyone knew that such tactic was not sustainable indefinitely.
The real winners were those who were a) able to "flip" properties and b) Harry Homeowner who was able to refinance.
But as interest rises you're going to see record numbers of young buyers, who came in on the tailend of the frenzy, walk away from their homes.
And IIRC, in California, you can do that with no serious repercussions. The bank cannot make you pay.
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