Posted on 10/14/2006 9:48:44 AM PDT by GodGunsGuts
You're right, in a market like this you need to be sure you are building a desirable house in a good area. Add a few amenities that would not be there in a normal market, keep the price in a marketable range, and 'presto' (yeah right!) you've got a buyer.
Hate to burst their bubble, but our market has already turned.
Big builders had stopped new construction earlier in year; now over supply is shrinking and getting back in balance. Home are moving much faster in the last 2 weeks. Lower interest rates and increased confidence with lower fuel prices are a big plus.
That's funny right there, I don't care who y'are.
Our free market system is a marvel of immediate adjustments to changes in the economy. When the economy started to slow down, bond traders brought down interest rates immediately and caused a quick adjustment in mortgage rates that prevented a serious housing slowdown. You'd never see that in a government-controlled economy. Our economy is so quick and flexible and responds to changing conditions in just a couple of days. Free markets are by far the best economic managers.
"Unexpectedly" to whom?
"Reno is one of the fastest declining real estate markets in the country. . . . Home prices in Reno Nevada have dropped by at least 10% in the last 6 months and are widely forecasted to drop another 10% or more in the next year. . . . If you want to buy a home in Reno Nevada - you have unprecedented negotiating clout to make "low-ball" offers on a wide variety of beautiful homes across the region. With home inventories of 6 months or more on the market - sellers (many are already in foreclosure) are often desperate to take any semi-reasonable offer to move on with their lives. "
Wow! House going down in price 20% in about one year. Nevada properties are jumping off a cliff just like lemmings. Too far fetched? Naaah! This looks to be the normal result of novices playing flipper games. Real estate is not as simple as monopoly. [Learn More?] Oh, well . . .
To "experts"
Ah yes, Pinetop in the beautiful White Mountains. Next weekend, I'm going up there for a day trip. The 5.0 liter V8 in my SUV is going to burn two tanks of gasoline at the new low price of $2.15 per gallon. Just got the oxygen sensor replaced thanks to AZ state vehicle inspections and it's running much better now...it fixed that annoying knock I had for a couple of months. Yes, October is the "most wonderful time of the year" in Phoenix when the weather cools off.
Why is my old wedding ring so valueless? I was thinking of selling it and the first and only place I went so far offered only 48.00. I know I paid much more than that for it some 20 years ago. Just curious.
Maybe it's fake? Just kidding. The gold alone should be worth a lot more than that!
He is not very convincing but the dancing girl seems very happy.
Debt free here!
Most people aren't.
Strange direction this thread is taking. Yes, real estate experts (I cannot vouch for individual veracity of such) had expected all three catgegories to decline due to rising inventories and heretofore slackening demand. They did not. Sales and prices in New York picked up marketedly, and in contrast to practically every other metro area nationwide.
Enjoy your trip to the mountains. Do not think I would like to drive up and back in one day. Have a safe trip.
When I speak of a credit bubble, I don't just mean artificially low interest rates, I also mean loose lending standards. These two things combined to fuel the real estate bubble IMO. Not only did declining interest rates make ever more expensive houses more affordable, but loose lending practices encouraged people to take on risky loans *and* engage in speculation. As you can see from the following graph, house prices have a close correlation with household income. When house prices rise above household income, as can be clearly seen in the early 1980s and mid 1990s, a housing bubble followed. And if this chart is any indication of things to come, the bubbles of the early '80s and mid '90s will be considered mild in comparison to the bubble we find ourselves in now.
And for that matter, population and building cost increases don't explain the phenomenal rise in home prices either:
Nor do inadequate supply explain the rapid appreciation in housing prices. Indeed, it's just the opposite. We have built millions more homes than there are buyers:
http://www.safehaven.com/article-5841.htm
So unless you can give me a solid alternative explanation, it would appear that low interest rates combined with loose lending standards are the cause of the current housing bubble.
And finally, let me leave you with an idea of how housing bubbles deflate. The following three housing busts occured in the 1980s and 1990s. Notice how long the corrections lasted, and how far they fell in real terms. My contention is the next housing bust will be nationwide, last longer, and take a huge toll on the larger economy:
"That the US housing bubble will disappear someday is a certainty."
Everything must go away someday I suppose.
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