Karl Case sees normalcy in housing market

[limo_888]

Peter, that is a really good point. What you are saying is that in “normal housing market”, the home value must align with income and rent and that the unemployment should be less than 6.5% in regardless of region or states. So, if the economy is in a recession, the umemployment rate will increases, wages will be stagnant and rent will be less which put pressure on home value. Did I get that right?

[peterb]

Both Bruce Norris and Carlos Royal studied this pretty closely and came to this same conclusion regarding trends in real estate prices. As unemployment rises over ~6.5% real estate prices start to get very soft. Who takes on a 30 year commitment when they’re afraid of losing their job? Especially when it’s a lot higher than their rent? There was a point in the 1980’s where CA real estate was going through the roof and the mortgage interest rate was ~12%, but unemployment was under 5%. Of course, many factors contribute, but by far the most powerful looking factor seems to be unemployment.

[peterb]

Both Bruce Norris and Carlos Royal studied this pretty closely and came to this same conclusion regarding trends in real estate prices. As unemployment rises over ~6.5% real estate prices start to get very soft. Who takes on a 30 year commitment when they’re afraid of losing their job? Especially when it’s a lot higher than their rent? There was a point in the 1980’s where CA real estate was going through the roof and the mortgage interest rate was ~12%, but unemployment was under 5%. Of course, many factors contribute, but by far the most powerful looking factor seems to be unemployment.

[peterb]

Both Bruce Norris and Carlos Royal studied this pretty closely and came to this same conclusion regarding trends in real estate prices. As unemployment rises over ~6.5% real estate prices start to get very soft. Who takes on a 30 year commitment when they’re afraid of losing their job? Especially when it’s a lot higher than their rent? There was a point in the 1980’s where CA real estate was going through the roof and the mortgage interest rate was ~12%, but unemployment was under 5%. Of course, many factors contribute, but by far the most powerful looking factor seems to be unemployment.

[peterb]

Both Bruce Norris and Carlos Royal studied this pretty closely and came to this same conclusion regarding trends in real estate prices. As unemployment rises over ~6.5% real estate prices start to get very soft. Who takes on a 30 year commitment when they’re afraid of losing their job? Especially when it’s a lot higher than their rent? There was a point in the 1980’s where CA real estate was going through the roof and the mortgage interest rate was ~12%, but unemployment was under 5%. Of course, many factors contribute, but by far the most powerful looking factor seems to be unemployment.

[peterb]

Both Bruce Norris and Carlos Royal studied this pretty closely and came to this same conclusion regarding trends in real estate prices. As unemployment rises over ~6.5% real estate prices start to get very soft. Who takes on a 30 year commitment when they’re afraid of losing their job? Especially when it’s a lot higher than their rent? There was a point in the 1980’s where CA real estate was going through the roof and the mortgage interest rate was ~12%, but unemployment was under 5%. Of course, many factors contribute, but by far the most powerful looking factor seems to be unemployment.

[4plexowner]

Seems to me that most major cities have built a glut of high-rise condos

These condos are still being built – will there be buyers for them?

Perhaps we should say ‘normal markets’ as long as you aren’t on either coast or talking about condos

http://realestate.msn.com/buying/articlenewhome.aspx?cp-documentid=386136
The great American condo glut
The number of available condos is at an all-time high — and there aren’t enough buyers to snatch them up. …

http://seekingalpha.com/article/49594-every-reason-to-panic-over-portland-condo-glut
Every Reason to Panic over Portland Condo Glut
The city has a condo glut, and thousands more are rising out of the ground. In the past six years, developers built 4042 downtown condos, …

http://blog.lucidrealty.com/2008/05/18/the-chicago-condo-glut/
The Chicago Condo Glut
In the South Loop area alone the MLS currently has 1,116 condominiums on the market, 390 of which are over $500,000 with $400+/month assessments plus taxes.

[4plexowner]

Seems to me that most major cities have built a glut of high-rise condos

These condos are still being built – will there be buyers for them?

Perhaps we should say ‘normal markets’ as long as you aren’t on either coast or talking about condos

http://realestate.msn.com/buying/articlenewhome.aspx?cp-documentid=386136
The great American condo glut
The number of available condos is at an all-time high — and there aren’t enough buyers to snatch them up. …

http://seekingalpha.com/article/49594-every-reason-to-panic-over-portland-condo-glut
Every Reason to Panic over Portland Condo Glut
The city has a condo glut, and thousands more are rising out of the ground. In the past six years, developers built 4042 downtown condos, …

http://blog.lucidrealty.com/2008/05/18/the-chicago-condo-glut/
The Chicago Condo Glut
In the South Loop area alone the MLS currently has 1,116 condominiums on the market, 390 of which are over $500,000 with $400+/month assessments plus taxes.

[4plexowner]

Seems to me that most major cities have built a glut of high-rise condos

These condos are still being built – will there be buyers for them?

Perhaps we should say ‘normal markets’ as long as you aren’t on either coast or talking about condos

http://realestate.msn.com/buying/articlenewhome.aspx?cp-documentid=386136
The great American condo glut
The number of available condos is at an all-time high — and there aren’t enough buyers to snatch them up. …

http://seekingalpha.com/article/49594-every-reason-to-panic-over-portland-condo-glut
Every Reason to Panic over Portland Condo Glut
The city has a condo glut, and thousands more are rising out of the ground. In the past six years, developers built 4042 downtown condos, …

http://blog.lucidrealty.com/2008/05/18/the-chicago-condo-glut/
The Chicago Condo Glut
In the South Loop area alone the MLS currently has 1,116 condominiums on the market, 390 of which are over $500,000 with $400+/month assessments plus taxes.

[4plexowner]

Seems to me that most major cities have built a glut of high-rise condos

These condos are still being built – will there be buyers for them?

Perhaps we should say ‘normal markets’ as long as you aren’t on either coast or talking about condos

http://realestate.msn.com/buying/articlenewhome.aspx?cp-documentid=386136
The great American condo glut
The number of available condos is at an all-time high — and there aren’t enough buyers to snatch them up. …

http://seekingalpha.com/article/49594-every-reason-to-panic-over-portland-condo-glut
Every Reason to Panic over Portland Condo Glut
The city has a condo glut, and thousands more are rising out of the ground. In the past six years, developers built 4042 downtown condos, …

http://blog.lucidrealty.com/2008/05/18/the-chicago-condo-glut/
The Chicago Condo Glut
In the South Loop area alone the MLS currently has 1,116 condominiums on the market, 390 of which are over $500,000 with $400+/month assessments plus taxes.

[4plexowner]

Seems to me that most major cities have built a glut of high-rise condos

These condos are still being built – will there be buyers for them?

Perhaps we should say ‘normal markets’ as long as you aren’t on either coast or talking about condos

http://realestate.msn.com/buying/articlenewhome.aspx?cp-documentid=386136
The great American condo glut
The number of available condos is at an all-time high — and there aren’t enough buyers to snatch them up. …

http://seekingalpha.com/article/49594-every-reason-to-panic-over-portland-condo-glut
Every Reason to Panic over Portland Condo Glut
The city has a condo glut, and thousands more are rising out of the ground. In the past six years, developers built 4042 downtown condos, …

http://blog.lucidrealty.com/2008/05/18/the-chicago-condo-glut/
The Chicago Condo Glut
In the South Loop area alone the MLS currently has 1,116 condominiums on the market, 390 of which are over $500,000 with $400+/month assessments plus taxes.

[Anonymous]

Most housing is purchased with other peoples’ money. In this respect, it is a bit different than normal supply and demand, since there are three “people in the equation” (buyer, seller, lender). Inventories must go down, but lending must also return to “normal” for sales to pick up.

One thing I have been looking for is a good indicator of how willing lenders are to lend. I think the best indicator is the spread between what the FED charges for lending and what banks charge borrowers (this is increasing). Mortgage apps only show how much buyers WANT to buy.

[Anonymous]

Most housing is purchased with other peoples’ money. In this respect, it is a bit different than normal supply and demand, since there are three “people in the equation” (buyer, seller, lender). Inventories must go down, but lending must also return to “normal” for sales to pick up.

One thing I have been looking for is a good indicator of how willing lenders are to lend. I think the best indicator is the spread between what the FED charges for lending and what banks charge borrowers (this is increasing). Mortgage apps only show how much buyers WANT to buy.

[Anonymous]

Most housing is purchased with other peoples’ money. In this respect, it is a bit different than normal supply and demand, since there are three “people in the equation” (buyer, seller, lender). Inventories must go down, but lending must also return to “normal” for sales to pick up.

One thing I have been looking for is a good indicator of how willing lenders are to lend. I think the best indicator is the spread between what the FED charges for lending and what banks charge borrowers (this is increasing). Mortgage apps only show how much buyers WANT to buy.

[Anonymous]

Most housing is purchased with other peoples’ money. In this respect, it is a bit different than normal supply and demand, since there are three “people in the equation” (buyer, seller, lender). Inventories must go down, but lending must also return to “normal” for sales to pick up.

One thing I have been looking for is a good indicator of how willing lenders are to lend. I think the best indicator is the spread between what the FED charges for lending and what banks charge borrowers (this is increasing). Mortgage apps only show how much buyers WANT to buy.

[Author]

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