Posted on 08/24/2006 8:44:42 AM PDT by Hydroshock
HERNDON, Va. -- For years, real-estate brokers and home builders promised that the soaring property market eventually would glide to a soft landing. These optimists predicted that home prices, which had more than doubled in parts of the country between 2000 and 2005, would continue to rise, but at a more normal pace of 5% or 6% a year.
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Interactive Tool • Use an interactive tool to search the latest data on housing inventories and price trends in 26 real-estate markets, at RealEstateJournal.com.
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It isn't working out that way. The rapid deterioration of the market over the past 12 months has caught many homeowners and builders off guard. Some are being forced to cut prices far below what their homes could have fetched a year ago. It's too early to say how hard the landing will be, but at a minimum it will be bumpy for many people who need to sell homes. And the economy as a whole, buoyed in recent years by the housing frenzy, could suffer.
WALL STREET JOURNAL VIDEO
David Seiders, chief economist for National Association of Home Builders, forecasts a cooling housing market.The pain that homeowners and home builders are now feeling follows a raging national house party. As Americans soured on the stock market after the tech bubble burst in 2000, they poured money into real estate, spurred on by the lowest interest rates in four decades and looser lending standards. Surging demand created home shortages in California, Florida and the Northeast. Over the five years ending Dec. 31, average U.S. home prices jumped by 58%, according to a federal housing index.
(Excerpt) Read more at online.wsj.com ...
And gee, great golly whiz, that created a bubble as well. What a surprise.
You the stand-in for ex-Tex? j/k
What is the next bubble - Gold? Oil Futures?
There are so many bubbles around these days, I think we're suffering a bubbles bubble.
But what are all the illegals going to do now that the construction work is drying up? There's no berry-pickin' in Virginia.
March in the streets demanding welfare and unemployment insurance...
Wait, they are already doing that. Nevermind.
the next bubble is copper which has tripled by high demand and a strike.
no housing means less need for copper.
Having trouble selling your home? You need the St. Joseph's Real Eastate Home Selling Kit!
This is just like the stock bubble. Stocks with sound fundamentals didn't get hit nearly as hard as tech stocks for companies that were purely speculative.
This bubble has the same characteristics. Property owners who are in for the long haul won't feel that much of an impact. Idiot speculators buying properties with the hope of flipping them quickly are gonna get burned, because now they have negative equity and rising rates on their adjustable mortgages.
Oil and gas futures, I hope.
THE homes in my neighborhood gone up 150,000 in the last year alone, so i will take this "hard landing"(LOL)
That is wise observation - except for one thing - the real estate market is in no way like the stock market or - even worse - the commodity market - because people can't / don't just up & sell their houses on a dime like they can dump stocks or sell-off gold, oil, etc. And even if they're so inclined to do so, people still need a place to live.
These people are completely crazy. The value was never there to begin with. There are going to be a lot of people who are going to be going into bankruptcy and/or skipping out on these bills. I'm currently watching "House Hunters" on HGTV and all these clowns can think of are the ameneties, space, etc., but no concern at all about the price. Sheer lunacy.
And the smart REIT investors who got out last year will be waiting to hoover them up from the suckers.
A lot of these were bought as investment properties, not residences. But your comment about the lack of liquidity is spot-on. Even if they wanted to bail today, it takes time - and during that time, prices can drop further.
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