Discussion: This isnt the bubble popping

[waiting hawk]

This is for that speculators are only leaving idea and everythings fine from here that was posted.

http://www.forsakencraft.com/easy.wav

Can anyone answer why I named it easy.wav?

My website tracking Inland Empire

[MH]

Let's not forget the impact of transaction costs as well.  A good rule of thumb – you'll lose roughly 10% between buying and selling.  Obviously that's a very rough figure, but including the commissions and fees and points and the little "fix-ups" before you sell, its not a bad data point.

When you think houses will at least keep up with inflation and when the house is largely affordable, the psychological urge to own is very powerful and rational.  But, I think buyers will be (should be) very hesitant to buy for quite some time. 

Certainly no one, not even NAR, is arguing that housing will go up significantly in the next few years.  But, lets just say we think it'll keep up with inflation (yeah, right). Would you be willing to pay ~ $50k in transaction costs just to keep up with inflation?  Oh, and add in there the costs of carrying the house while you're selling it too.  No thanks.

That realization, I think, will haunt the RE market for decades.  Add in that you are tremendously leveraged in a house – good when the price is going up but what do you do when its deflating and you're now upside down?  Why would a rational person with a short (or uncertain)time-horizon want to tie his financial health to an non-liquid asset that has little chance of beating the return on a MMF?

Seemed like everyone just "KNEW" the "FACT" that RE never went down.  Oops.  Now that sanity has gained a foothold, I think it will be some time before rational investors (the irrational ones won't have any $$$ to buy anymore anyway) will want to jump back into homebuying.

 

[BikeRider]

I was getting my truck inspected this morning. Talking with a fellow that builds decks and other jobs related to residential homes. After his truck was fixed he was on his way to pressure wash some driveways for a “Parade of Homes” that was going on this coming weekend. I asked him how things were, did he think there was a housing bubble. He got real serious looking and state that “yes, there is some kind of bubble deflating”. He said that even six months ago he saw people bidding against each other for homes. He said now if they have twelve homes listed they are lucky to have one couple come look. He stated that he wants to see interest rates go back down to around 5% and fuel prices go down so people will start buying. I’m on the East coast in central Virginia. We aren’t really in a bubble area, but realestate has slowed dramatically. About a year ago a sub-division started going in and the sign said “Homes from the 800’s” For our area, that would be a friggin mansion. And these homes are now getting completed and they look like mansions. They must be 4500 sq ft, all brick. And I don’t see many cars in driveways. I am wondering if they will even sell now with the slow down.

[Author]

Posts