Lower Home Prices Can Fix What Government Can’t: Caroline Baum

[Arraya]

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yes, SDR, I am well aware of the *intentions* in keeping RE elevated. however, intentions are one thing and real world is another.

They still need to find job growth to keep the party going. Without that, things will go down, on way or another. Either that or some fed wizardry inflation everybody seems to be expecting to prop prices up. Though, I don’t see any reason for that in the near term and really, without evidence of freshly printed $$ washing over the land, it’s just a faith based assertion. All evidence points to $$ becoming more scarce amongst the populace.

We depleted a good bit of pent up demand since last spring and with negative job growth there is a lot less left. how much is the question as well as the supply releasing issue.

I can’t imagine them going through too many of the 10 million delinquent FBs, too fast. Which means supply will be slow to market. Which matches up with slowing demand from depletion.

This year probably will be a lower sales volume year as compared to last as demand and supply is depleted. Though, I believe low velocity comes with its own set of deflationary problems.

[Arraya]

[quote=Hobie][quote=EconProf]The government is in a quandry: they need construction to build more residential and commercial buildings in order for the economy to revive. Yet the solution to the real estate glut of all categories is to NOT build for several years, allowing demand to sop up the accumulated surplus.
We are in the morning after/hangover stage, which must last a while longer.[/quote]

Agreed. A certain portion of our economy is tied to the building industry but we could achieve growth with a thriving manufacturing base. This would require a more practical look at environmental and energy policies.[/quote]

Sounds nice, but you have to convince a bunch of Americans to take sweatshop jobs that pay less than their unemployment benefits. It’s a tough sell.

[Arraya]

[quote=Hobie][quote=EconProf]The government is in a quandry: they need construction to build more residential and commercial buildings in order for the economy to revive. Yet the solution to the real estate glut of all categories is to NOT build for several years, allowing demand to sop up the accumulated surplus.
We are in the morning after/hangover stage, which must last a while longer.[/quote]

Agreed. A certain portion of our economy is tied to the building industry but we could achieve growth with a thriving manufacturing base. This would require a more practical look at environmental and energy policies.[/quote]

Sounds nice, but you have to convince a bunch of Americans to take sweatshop jobs that pay less than their unemployment benefits. It’s a tough sell.

[Arraya]

[quote=Hobie][quote=EconProf]The government is in a quandry: they need construction to build more residential and commercial buildings in order for the economy to revive. Yet the solution to the real estate glut of all categories is to NOT build for several years, allowing demand to sop up the accumulated surplus.
We are in the morning after/hangover stage, which must last a while longer.[/quote]

Agreed. A certain portion of our economy is tied to the building industry but we could achieve growth with a thriving manufacturing base. This would require a more practical look at environmental and energy policies.[/quote]

Sounds nice, but you have to convince a bunch of Americans to take sweatshop jobs that pay less than their unemployment benefits. It’s a tough sell.

[Arraya]

[quote=Hobie][quote=EconProf]The government is in a quandry: they need construction to build more residential and commercial buildings in order for the economy to revive. Yet the solution to the real estate glut of all categories is to NOT build for several years, allowing demand to sop up the accumulated surplus.
We are in the morning after/hangover stage, which must last a while longer.[/quote]

Agreed. A certain portion of our economy is tied to the building industry but we could achieve growth with a thriving manufacturing base. This would require a more practical look at environmental and energy policies.[/quote]

Sounds nice, but you have to convince a bunch of Americans to take sweatshop jobs that pay less than their unemployment benefits. It’s a tough sell.

[Arraya]

[quote=Hobie][quote=EconProf]The government is in a quandry: they need construction to build more residential and commercial buildings in order for the economy to revive. Yet the solution to the real estate glut of all categories is to NOT build for several years, allowing demand to sop up the accumulated surplus.
We are in the morning after/hangover stage, which must last a while longer.[/quote]

Agreed. A certain portion of our economy is tied to the building industry but we could achieve growth with a thriving manufacturing base. This would require a more practical look at environmental and energy policies.[/quote]

Sounds nice, but you have to convince a bunch of Americans to take sweatshop jobs that pay less than their unemployment benefits. It’s a tough sell.

[CA renter]

I’ll take the contrary side here and suggest the falling sales numbers are due to **lower inventory,** not slack demand. There just aren’t any reasonably-priced houses to buy!

While I agree that they’ve (once again!) pulled lots of buyers forward, **at this point in time** it appears that there is enough demand out there for a lot more supply. Yes, prices would be lower, but that’s exactly what SHOULD happen after we’ve experienced the **artificial** run-up in the 2001-2006 period. We have still not wrung out all the artificial price gains, and we will not get out of this recession until we do.

[CA renter]

I’ll take the contrary side here and suggest the falling sales numbers are due to **lower inventory,** not slack demand. There just aren’t any reasonably-priced houses to buy!

While I agree that they’ve (once again!) pulled lots of buyers forward, **at this point in time** it appears that there is enough demand out there for a lot more supply. Yes, prices would be lower, but that’s exactly what SHOULD happen after we’ve experienced the **artificial** run-up in the 2001-2006 period. We have still not wrung out all the artificial price gains, and we will not get out of this recession until we do.

[CA renter]

I’ll take the contrary side here and suggest the falling sales numbers are due to **lower inventory,** not slack demand. There just aren’t any reasonably-priced houses to buy!

While I agree that they’ve (once again!) pulled lots of buyers forward, **at this point in time** it appears that there is enough demand out there for a lot more supply. Yes, prices would be lower, but that’s exactly what SHOULD happen after we’ve experienced the **artificial** run-up in the 2001-2006 period. We have still not wrung out all the artificial price gains, and we will not get out of this recession until we do.

[CA renter]

I’ll take the contrary side here and suggest the falling sales numbers are due to **lower inventory,** not slack demand. There just aren’t any reasonably-priced houses to buy!

While I agree that they’ve (once again!) pulled lots of buyers forward, **at this point in time** it appears that there is enough demand out there for a lot more supply. Yes, prices would be lower, but that’s exactly what SHOULD happen after we’ve experienced the **artificial** run-up in the 2001-2006 period. We have still not wrung out all the artificial price gains, and we will not get out of this recession until we do.

[CA renter]

I’ll take the contrary side here and suggest the falling sales numbers are due to **lower inventory,** not slack demand. There just aren’t any reasonably-priced houses to buy!

While I agree that they’ve (once again!) pulled lots of buyers forward, **at this point in time** it appears that there is enough demand out there for a lot more supply. Yes, prices would be lower, but that’s exactly what SHOULD happen after we’ve experienced the **artificial** run-up in the 2001-2006 period. We have still not wrung out all the artificial price gains, and we will not get out of this recession until we do.

[SD Realtor]

Well Arraya all I can tell you is that you are not taking buyers out showing homes. Nor are you trying to sell them. I am doing both. We have bought and sold 10 homes in 9 months on our own. I have so many frustrated buyers right now who cannot find a home in PQ or Scripps, or Poway or in a decent school district that it is ridiculous. Once more, sitting behind a computer is one thing, but being out in the field and actually being in the business is another. The fact that it is all a house of cards is not being argued. Can you explain why the market rally over the past year has been the strongest in history? Wall St and the govt are interchangeable. Yes the house of cards will come down but not because of what happens domestically. We have been squeezing the toothpaste tube for many years right? As long as bond sales are successful then things will be fine. Even when they fail, we will monetize (or continue to monetize) our debt. Then rates will skyrocket and things will crash. Look we are doing what the govt wants us to do. We are doing what the govt does. We spend, we are told to spend, our govt encourages entitlement, that is simply the way it is. No it cannot go on forever but the crash is not happening tomorrow or next year.

[SD Realtor]

Well Arraya all I can tell you is that you are not taking buyers out showing homes. Nor are you trying to sell them. I am doing both. We have bought and sold 10 homes in 9 months on our own. I have so many frustrated buyers right now who cannot find a home in PQ or Scripps, or Poway or in a decent school district that it is ridiculous. Once more, sitting behind a computer is one thing, but being out in the field and actually being in the business is another. The fact that it is all a house of cards is not being argued. Can you explain why the market rally over the past year has been the strongest in history? Wall St and the govt are interchangeable. Yes the house of cards will come down but not because of what happens domestically. We have been squeezing the toothpaste tube for many years right? As long as bond sales are successful then things will be fine. Even when they fail, we will monetize (or continue to monetize) our debt. Then rates will skyrocket and things will crash. Look we are doing what the govt wants us to do. We are doing what the govt does. We spend, we are told to spend, our govt encourages entitlement, that is simply the way it is. No it cannot go on forever but the crash is not happening tomorrow or next year.

[SD Realtor]

Well Arraya all I can tell you is that you are not taking buyers out showing homes. Nor are you trying to sell them. I am doing both. We have bought and sold 10 homes in 9 months on our own. I have so many frustrated buyers right now who cannot find a home in PQ or Scripps, or Poway or in a decent school district that it is ridiculous. Once more, sitting behind a computer is one thing, but being out in the field and actually being in the business is another. The fact that it is all a house of cards is not being argued. Can you explain why the market rally over the past year has been the strongest in history? Wall St and the govt are interchangeable. Yes the house of cards will come down but not because of what happens domestically. We have been squeezing the toothpaste tube for many years right? As long as bond sales are successful then things will be fine. Even when they fail, we will monetize (or continue to monetize) our debt. Then rates will skyrocket and things will crash. Look we are doing what the govt wants us to do. We are doing what the govt does. We spend, we are told to spend, our govt encourages entitlement, that is simply the way it is. No it cannot go on forever but the crash is not happening tomorrow or next year.

[SD Realtor]

Well Arraya all I can tell you is that you are not taking buyers out showing homes. Nor are you trying to sell them. I am doing both. We have bought and sold 10 homes in 9 months on our own. I have so many frustrated buyers right now who cannot find a home in PQ or Scripps, or Poway or in a decent school district that it is ridiculous. Once more, sitting behind a computer is one thing, but being out in the field and actually being in the business is another. The fact that it is all a house of cards is not being argued. Can you explain why the market rally over the past year has been the strongest in history? Wall St and the govt are interchangeable. Yes the house of cards will come down but not because of what happens domestically. We have been squeezing the toothpaste tube for many years right? As long as bond sales are successful then things will be fine. Even when they fail, we will monetize (or continue to monetize) our debt. Then rates will skyrocket and things will crash. Look we are doing what the govt wants us to do. We are doing what the govt does. We spend, we are told to spend, our govt encourages entitlement, that is simply the way it is. No it cannot go on forever but the crash is not happening tomorrow or next year.

[Author]

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