'Fannie and Freddie Were Lenders': U.S. Real Estate Bubble Nears Its End

Executive Intelligence Review. ^ | 6/21/02 | Richard Freeman

[Red Jones]

bump

[Dec31,1999]

Yeah, ya get more home, but ya don't get a job. Great for the retired, though.

[Phantom Lord]

California is not the only state that has jobs. Geez.

I left NY and a job to move to another state, and guess what, I quickly found a job paying me MORE.

[HamiltonJay]

Oh there is unquestionably a housing bubble going on, its already burst in the worst areas, like SF Bay area... when houses were going up 40% a year, there was no way it could sustain... and since 2001 they started falling at rates of 20-30% a year... still they are overpriced, but falling back to earth.

However as bad as these bubbles are, and they are rediculous, there are many areas where real estate is not insane.. and most of the country falls into this. 5% or less a year increase... and in some areas no growth or decrease. So if you live in the badly bubbled areas... have fun... you won't get your money out for decades if you bought at the high end. However the rest of the country is fine.

[Dec31,1999]

That's great! What State did you move to, and do you like it?

[Phantom Lord]

I moved to NC and have never regretted it for a single moment. I love it here, as does my wife, who also left NY and a job to move here. We were not married at the time either. It will take an act of God to get me to return to NY.

[CapandBall]

ping for your mortgage/refi search

[X-Servative]

The increase in double income households is a primary reason the housing market has continued to boom, as opposed to the drop it took in the late-80's and early-90's.

[Dialup Llama]

>All we have to do is lock in these rates, and hope we can keep our jobs and cash flow positive to pay the mortgage during the housing price decline.

There is one thing fueling this increase in housing prices. Working couples are devoting huge percentages of their income to feeding the home. Why do this? Because a mortgage has been called a form of enforced savings. People are foregoing investments because housing keep rising.

However if housing prices are flat or simply don't increase as much as alternative investments, then enforced savings becomes a money pit.

People won't simply hang on to an expensive house and hope to make the payments as you suggest, if they are falling behind and their retirement is threatened as a result.

The housing market is on a knife edge. It looks like a sure thing. But all that has to happen is for for the economy to pick up to any degree, and suddenly housing will look like a very bad deal.

[monkeyshine]

I think it depends on where you are. If the economy picks up, housing in some areas may very well rise even further. You cannot remove the element of supply and demand from the equation.

[Kevin Curry]

Go to the bank and apply to purchase a home where the mortgage payment will be 50% of your gross income and see how quick your application is turned down.

I don't know. There are a lot of no-income verification loans being made almost solely on the basis of credit scores (at a slightly higher interest rate). I suspect many of these loans push 50 percent of gross true income or worse.

[AdamSelene235]

By the way, you wouldn't happen to work in the precious metals industry, would you?

No, but since your post here in 2002 gold has gone up 260%.

Oh, and Fannie has dropped 62% in dollar terms. Far far more in terms of hard assets.

[Stand Watch Listen]

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