[AdamSelene235]

This article is borderline hysterical (understandably)and positioning for yet another political power grab. However, the arguments presented are accurate, IMO.

[Phantom Lord]

Or you could live in the Southern Tier of NY and see your homes value decline faster than you can lower the sales price to finally get someone to buy it.

[Poohbah]

What's going to happen to EIR when Lyndon LaRouche shuffles off this mortal coil? Are they still going to charge $500 a year for a subscription?

[RightWhale]

It's a bubble alright. Can it burst? We're just sitting here waiting.

[Phantom Lord]

Millions of families are spending 35 to 50% of their annual income on mortgage or rent payments.

Thats funny, the Freddie and Fannie "Debt to Income" guideline is 28% for the mortgage payment (including property tax, hazard insurance, and private mortgage insurance if required) and 36% on the "back end". Back end is the total monthly debt including the mortgage.

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.

Now, with 'sub-prime' lending its another story, but even they shy away from front end ratios of 50%

[oc-flyfish]

Hmmm... This article definately has some food for thought. We are going to be purchasing one of these hyper inflated homes in Southern California very soon. Maybe we should sell our home and then wait it out a year...

[mombonn]

'Fannie and Freddie Were Lenders'. . .

I thought this was going to be a Doug from Upland parody set to "Frankie and Johnny."

[Stand Watch Listen]

Related Araticles

Fannie Mae, Freddie Mac Probed
Source:The Washington Post; Published: March 9, 2001;
Author: Marcy Gordon

Fannie & Freddie in the Hot Seat
Source: INSIGHT magazine; Published: April 20, 2001;
Author: Catherine Edwards

Free Congress Weighs in on Fannie Mae, Freddie Mac
Source: INSIGHT magazine; Published: April 27, 2001;
Author: Catherine Edwards and Stephanie K. Taylor

Caveat Emptor With Fannie Mae And Freddie Mac
Source: Toogood Reports; Published: July 3, 2001;
Author: Paul M. Weyrich

[narby]

Money people invest like fish in a school. All turning the same direction at the same time. For the last decade or so, they've gone the Wall Street route, and as long as they all went that way, the Street exploded. But they've turned direction now, the market is tanking, and all noises from the investment clique say they're moving to Real Estate because of its safety.

And Larouche thinks its the real estate market that's about bust? Who's he kidding?

[Joe Hadenuf]

Well I don't know about the rest of the country, but I can tell you, here in Southern California there is no leveling off or price adjustments down, in sight.

Example: On Wednesday, a neighbor put his home on the market, and yesterday, Sunday, it has a sold sign on it.

They continue to sell for record prices in record time. The available homes for sale, or the inventory is almost non existent.

When a home goes on the market, it's like a feeding frenzy and the homes are getting full price offers!

Realtors are fighting for listings, as very few are selling, as buyers are lined up. Again, no inventory. Supply and demand.

I am not saying at some point they wont level out, but I can tell all, that at this point, it is one hot housing market in So. Cal.

[Carry_Okie]

The U.S. financial system is now dependent to an unprecedented degree upon one prop: the greatest housing-real estate bubble in human history. A hyperinflationary spiral has sent home prices shooting up by 10-40% annually in recent years?depending on the region of the country?and artificially pushed the price of millions of homes into the $400,000 to $1 million range or above.

Three words explain this phenomenon: Sustainable Development and Immigration. It is all a function of housing inelasticity.

If anyone wants to know why, the answer is banks want the reserves to lend against. People borrow against their houses and supply liquidity to the economy.

It's a bubble all righty, but it is driven by the marginal unit cost of house construction. Sustainable Development addresses that too with the continuing outrage of $50,000 building permits, environmental costs on materials (having nothing to do with the environment, most of it is paperwork), and of course the squeeze on buildable land.

It is simply corruption. It is a system that closes itself to competition through purchased political favors.

[Petronski]

Mr. Chicken Little, pick up the red courtesy phone. Mr. Little, the red phone, please.

[sphinx]

I was skimming it with some interest until he quoted Lyndon LaRouche as an authority. Life is too short to wade through any more ....

[johniegrad]

Bookmarked for further review.

[Rebelbase]

"Already in 2001, one out of every ten homes for sale in the United States was priced at $1,000,000 or more. "

B.S. Maybe in Hawaii and parts of CA.

[Stefan Stackhouse]

On May 28, the 2004 Presidential pre-candidate Lyndon LaRouche told an international webcast audience. . .

One hardly needs to read past that line. Typical quasi-marxist claptrap. Apparently the thought that the law supply & demand (increasing population = increasing demand, limited property available WHERE PEOPLE MOST WANT TO LIVE = limited supply) might have anything to do with increasing housing prices is a thought that has never crossed this author's mind.

[monkeyshine]

This article is hysterical (not the funny kind, but the panic kind) and also a bit out in fantasyland.

Take this sentence for example "The banks pre-figure what principal and interest cash stream they want to realize from a mortgage, and then set the price of the house." Since when does the bank set the price of the house? It doesn't, the market does. This is too tin-foily for me to accept.

I agree housing prices are rediculous. What am I to do, though? Sell my house, move to a rental, and wait for prices to go down? I suppose a small minority of people will do that, or retirees or people who's kids have grown and moved out might consider it (in fact that would be smart to downsize)... but the vast majority of us will stay put and ride out the devaluation of homes, which will surely occur once interest rates begin rising again.

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.

[Greeklawyer]

Two points,

1. I believe the inflation of home prices is two incomes equates with homes costing more and

2. I think it is a mistake to live in a home owners association / development. Read the fine print and see exactly who you are agreeing to maintain your common area and just how much they can claim in maintainance fee amounts.

[MassExodus]

What is really scary is the practice of borrowing money against the rising "value" of ones home.

It reminds me of a method of catching monkeys whereby a treat is placed in a box with an opening large enough for a monkeys EMPTY hand .

When the monkey grabs the treat, his fist is too large to pull back out and his own desire keeps him trapped.

[spokanite]

Good read, especially about the quality of construction these days. Homes built 100 years ago were built much better than the ones of today. Middle class families were able to afford those homes on one salary, but if you were to build a home today using those same materials of yesteryear, middle class folk couldn't touch it even with two incomes.

[Tom Jefferson]

"It is under the control of Fed Chairman Greenspan, acting on behalf of the Wall Street-City of London oligarchical financiers."

A writer who thinks as above is a leftist anti-capitalist who thinks that there are people like Greenspan who control the economy on behalf of a select group (oligarchy) of manipulative capitalists who are running everything. He lost credibility with me when I read that sentence.

There are some valid points in the article, but there are also several fallacies. I would take it with the proverbial grain of salt.