Posted on 02/02/2008 4:43:07 AM PST by central_va
Edited on 02/02/2008 5:58:48 AM PST by Sidebar Moderator. [history]
As Washington policymakers struggle to keep the U.S. out of recession, the swirling confusion over the housing market is making their job a lot tougher. Will American consumers keep shopping or be forced to pull back? Will banks lend freely or be hamstrung by mortgage defaults? What are the best policy options right now? Those and other important questions simply can't be answered without a good idea of whether home prices will rise, flatten out, or keep dropping.
“While a 25% decline is unprecedented in modern times, some economists are beginning to talk about it.”
I gotta think that on a national scale the rise in home values thru this decade was ‘unprecedented’. The home I grew up in on Long Island NY went for 14,000 new in ‘62, it presently is valued at about half a million. Home values gotta shed a whole hell of a lot before they look sane to me.
Don’t you remember in 05, this was normal appreciation, it was going to go on forever! LOL
A lot of those scammers are still around here. They will be along shortly...
“Derivatives have permitted financial risks to be unbundled in ways that have facilitated both their measurement and their management…. As a result, not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.”
~~Alan Greenspan, May 2003
“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.”
~~Alan Greenspan, February 22, 2004
“The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions.”
~~Alan Greenspan, May 2005
“We’re not about to go into a situation where (real estate) prices will go down. There is no evidence home prices are going to collapse.”
~~Alan Greenspan, May 21, 2006
“The damage from the subprime market has been largely contained. Fortunately, the financial system and the economy are strong enough to weather this storm.”
~~Richard Fisher, Federal Reserve Bank of Dallas President, Apr 4, 2007
“All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”
~~Fed Chairman Ben Bernanke, May 17, 2007
“I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”
~~E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
~~Irving Fisher PhD, leading U.S. economist , New York Times, October 17, 1929
“If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market and so check the movement.”
~~Harvard Economic Society, October 19, 1929
“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”
~~R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
“Several brokerage houses tumbled; blue-sky investment companies formed during the happy bull market days went to smash, disclosing miserable tales of rascality; over a thousand banks caved in during 1930, as a result of marking down both of real estate and of securities; and in December occurred the largest bank failure in American financial history, the fall of the ill-named Bank of the United States in New York.”
~~”Only Yesterday: An Informal History of the 1920’s” by Fredrick Lewis Allen
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
~~Ludwig von Mises
Gee Cowboy, it looks like even Business Week is joining the circle you mentioned.
They must all be wrong, and you must be right. Things have never been better!
The same permabull touts that were saying real estate was not in a bubble last year are saying the subprime mess is no big deal.
Falling prices are a good thing, it makes housing more affordable, just like computers.
For some reason inflation is a bad thing-except for housing prices. I have never understood that....
Everything the article says is true ... about the specific markets that experienced the bubble (e.g. parts of Florida, Nevada and California). But the markets that did not go nuts are fine. For example, housing prices in Texas (ex-Austin) have been essentially flat real for years. And they continue to appreciate at roughly that pace.
The bubble markets will indeed implode as they must. The Banksters that drove the bubble are now being carried out. As they should be. It will be bumpy until the mal-investment in the housing and financial sectors have been liquidated. But I see no reason for panic at this time.
JOMO
Truthfully, I don't feel sorry for these people even a bit.
The doom and gloom media wants it both ways as usual.
During the boom, housing was too expensive for young couples. Disaster.
Now, prices are falling back toward historical norms. In a few years young couples will be able to buy much more affordable housing, but it's still a disaster.
Chart shows housing bubble even bigger than the tech bubble:
http://static.seekingalpha.com/uploads/homebuilders%20and%20nasdaq%20indexes%201995%20until%20present.png
Naw, they were too busy looking down on those who were not as smart as they were.
They remind me of the guy in the pickup speeding by in the left lane of the freeway after a snow storm, before the road is plowed. Everyone else is putzing along in the center or right lane, and sure enough a couple miles down the road, the truck is in the ditch.
The first wave of boomers is still a few years away from average retirement age. Some are downsizing, but a lot are relocating to expensive resort areas or just warmer climate areas. Baby boomers are going to be in the housing market of some type or another for several decades, IMO.
I doubt my property taxes will drop 25%.
First, any change that causes their own unwise investments or those of powerful media bosses to lose profitability is a disaster.
Second, any change that happens during a Republican administration, particularly a Bush administration, is automatically a disaster.
And of course, you can't sell newspapers with headlines like "EVERYTHING IS JUST FINE".
My thoughts exactly!
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