[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Bob]

The above article is a good read, but I take issue with naming it the “driver of the current economic problems”. Rather, the article decribes some of the symptoms of the problem – a problem which was, and continues to be, the Federal Reserve.

No matter how one slices it, the fact is, the Federal Reserve had the constitutional authority to mandate tighter lending guidelines on all lenders. Greenspan could have stopped the ridiculous practices by lenders which gave loans to people with no money down, bad credit scores, etc…But he didn’t because the banks which he represents were bringing in record profits during the boom. When Bernanke took over, he was slow to act as well. It wasn’t until it was painfully obvious that a severe contraction in the housing market was occurring did Bernanke finally mandate new lending guidelines, but by then it was too late to stop the deflationary contraction. Once Bernanke realized the true extent of the problem on Wall St. he jumped in and paved the way for bailouts for the big banks.

[Bob]

I don’t think Temecula will go ghetto anytime soon, because it already a bedroom community for San Diego. But I do think the Temecula/Murrieta housing market will remain flat for at least another 12-18 months before a slow recovery begins. Whereas other parts of Riverside county will continue to drop in prices for another year at least. I really don’t see a recovery for places like Hemet, Perris, and that whole corridor anytime soon. And if gas prices and interest rates go up, things could get really ugly.

What the Temecula cheerleaders don’t understand is this – unemployment is getting worse, not better. And while its true, many investors are jumping in now because of the low rates, they are creating an oversupply of rentals. Rental prices are going down as a result. At some point in the not too distant future, the market won’t be as attractive because positive cash flow situations won’t be as easy to find. When that happens, and it WILL happen, the market will find its bottom once again. Factor in higher interest rates that are coming later in the year, and its not hard to see why the market will remain flat well into 2010, and maybe longer.

Futhermore, as I stated in another post, northern San Diego county has yet to hit bottom. Considering the fact that a sizable percentage of TV commuters work in San Diego, its only logical that they would first shop for an affordable home in San Diego rather than making the long drive to TV. Once the bottom hits and prices start going up in northern San Diego, only then will TV become an attactive area for those shoppers who actually want to live in the house they are purchasing.

[Bob]

I don’t think Temecula will go ghetto anytime soon, because it already a bedroom community for San Diego. But I do think the Temecula/Murrieta housing market will remain flat for at least another 12-18 months before a slow recovery begins. Whereas other parts of Riverside county will continue to drop in prices for another year at least. I really don’t see a recovery for places like Hemet, Perris, and that whole corridor anytime soon. And if gas prices and interest rates go up, things could get really ugly.

What the Temecula cheerleaders don’t understand is this – unemployment is getting worse, not better. And while its true, many investors are jumping in now because of the low rates, they are creating an oversupply of rentals. Rental prices are going down as a result. At some point in the not too distant future, the market won’t be as attractive because positive cash flow situations won’t be as easy to find. When that happens, and it WILL happen, the market will find its bottom once again. Factor in higher interest rates that are coming later in the year, and its not hard to see why the market will remain flat well into 2010, and maybe longer.

Futhermore, as I stated in another post, northern San Diego county has yet to hit bottom. Considering the fact that a sizable percentage of TV commuters work in San Diego, its only logical that they would first shop for an affordable home in San Diego rather than making the long drive to TV. Once the bottom hits and prices start going up in northern San Diego, only then will TV become an attactive area for those shoppers who actually want to live in the house they are purchasing.

[Bob]

I don’t think Temecula will go ghetto anytime soon, because it already a bedroom community for San Diego. But I do think the Temecula/Murrieta housing market will remain flat for at least another 12-18 months before a slow recovery begins. Whereas other parts of Riverside county will continue to drop in prices for another year at least. I really don’t see a recovery for places like Hemet, Perris, and that whole corridor anytime soon. And if gas prices and interest rates go up, things could get really ugly.

What the Temecula cheerleaders don’t understand is this – unemployment is getting worse, not better. And while its true, many investors are jumping in now because of the low rates, they are creating an oversupply of rentals. Rental prices are going down as a result. At some point in the not too distant future, the market won’t be as attractive because positive cash flow situations won’t be as easy to find. When that happens, and it WILL happen, the market will find its bottom once again. Factor in higher interest rates that are coming later in the year, and its not hard to see why the market will remain flat well into 2010, and maybe longer.

Futhermore, as I stated in another post, northern San Diego county has yet to hit bottom. Considering the fact that a sizable percentage of TV commuters work in San Diego, its only logical that they would first shop for an affordable home in San Diego rather than making the long drive to TV. Once the bottom hits and prices start going up in northern San Diego, only then will TV become an attactive area for those shoppers who actually want to live in the house they are purchasing.

[Bob]

I don’t think Temecula will go ghetto anytime soon, because it already a bedroom community for San Diego. But I do think the Temecula/Murrieta housing market will remain flat for at least another 12-18 months before a slow recovery begins. Whereas other parts of Riverside county will continue to drop in prices for another year at least. I really don’t see a recovery for places like Hemet, Perris, and that whole corridor anytime soon. And if gas prices and interest rates go up, things could get really ugly.

What the Temecula cheerleaders don’t understand is this – unemployment is getting worse, not better. And while its true, many investors are jumping in now because of the low rates, they are creating an oversupply of rentals. Rental prices are going down as a result. At some point in the not too distant future, the market won’t be as attractive because positive cash flow situations won’t be as easy to find. When that happens, and it WILL happen, the market will find its bottom once again. Factor in higher interest rates that are coming later in the year, and its not hard to see why the market will remain flat well into 2010, and maybe longer.

Futhermore, as I stated in another post, northern San Diego county has yet to hit bottom. Considering the fact that a sizable percentage of TV commuters work in San Diego, its only logical that they would first shop for an affordable home in San Diego rather than making the long drive to TV. Once the bottom hits and prices start going up in northern San Diego, only then will TV become an attactive area for those shoppers who actually want to live in the house they are purchasing.

[Bob]

I don’t think Temecula will go ghetto anytime soon, because it already a bedroom community for San Diego. But I do think the Temecula/Murrieta housing market will remain flat for at least another 12-18 months before a slow recovery begins. Whereas other parts of Riverside county will continue to drop in prices for another year at least. I really don’t see a recovery for places like Hemet, Perris, and that whole corridor anytime soon. And if gas prices and interest rates go up, things could get really ugly.

What the Temecula cheerleaders don’t understand is this – unemployment is getting worse, not better. And while its true, many investors are jumping in now because of the low rates, they are creating an oversupply of rentals. Rental prices are going down as a result. At some point in the not too distant future, the market won’t be as attractive because positive cash flow situations won’t be as easy to find. When that happens, and it WILL happen, the market will find its bottom once again. Factor in higher interest rates that are coming later in the year, and its not hard to see why the market will remain flat well into 2010, and maybe longer.

Futhermore, as I stated in another post, northern San Diego county has yet to hit bottom. Considering the fact that a sizable percentage of TV commuters work in San Diego, its only logical that they would first shop for an affordable home in San Diego rather than making the long drive to TV. Once the bottom hits and prices start going up in northern San Diego, only then will TV become an attactive area for those shoppers who actually want to live in the house they are purchasing.

[Bob]

[quote=4plexowner]”I’d rather buy a cheaper house with a high interest rate than an expensive house with a low interest rate”

amen to that – high interest rates is one of the things that will cause a real market bottom – as interest rates rise housing prices will drop – at the extreme, interest rates would be so high (mortgages in the 1980s were as high as 21% with 14% being typical) that only cash buyers would be able to purchase real estate (and you can imagine what prices would be like in that environment)
[/quote]

I’ve spent a few posts discussing this very issue, and let me say one thing. History always seems to repeat itself. The Federal Reserve and the Obama administration have implemented spending policies to create long term inflation. This was designed to fight the current deflationary cycle we’ve been in the last year or so. The problem is that in fighting deflation, they are creating an even bigger problem down the road, which is the devaluation of the dollar and inflation.

As a previous poster suggested, the Federal Reserve is currently buying TRILLIONS of dollars worth on US treasuries to jumpstart the economy after seeing that none of the other measures implemented by the Feds were working. But the Feds admit they won’t continue purchasing US treasuries indefinately, nor could they even if they wanted to. What does that mean ? It means long term interest rates will go higher as the economy improves, and the possibility of a bond market bubble.

Although I’m not predicting it, I wouldn’t be surprised if rates on a 30 year fixed went up to 8% by the end of 2010. As rates go up, fewer people will be able to afford loans, and housing prices will remain stagnant.

[Bob]

[quote=4plexowner]”I’d rather buy a cheaper house with a high interest rate than an expensive house with a low interest rate”

amen to that – high interest rates is one of the things that will cause a real market bottom – as interest rates rise housing prices will drop – at the extreme, interest rates would be so high (mortgages in the 1980s were as high as 21% with 14% being typical) that only cash buyers would be able to purchase real estate (and you can imagine what prices would be like in that environment)
[/quote]

I’ve spent a few posts discussing this very issue, and let me say one thing. History always seems to repeat itself. The Federal Reserve and the Obama administration have implemented spending policies to create long term inflation. This was designed to fight the current deflationary cycle we’ve been in the last year or so. The problem is that in fighting deflation, they are creating an even bigger problem down the road, which is the devaluation of the dollar and inflation.

As a previous poster suggested, the Federal Reserve is currently buying TRILLIONS of dollars worth on US treasuries to jumpstart the economy after seeing that none of the other measures implemented by the Feds were working. But the Feds admit they won’t continue purchasing US treasuries indefinately, nor could they even if they wanted to. What does that mean ? It means long term interest rates will go higher as the economy improves, and the possibility of a bond market bubble.

Although I’m not predicting it, I wouldn’t be surprised if rates on a 30 year fixed went up to 8% by the end of 2010. As rates go up, fewer people will be able to afford loans, and housing prices will remain stagnant.

[Bob]

[quote=4plexowner]”I’d rather buy a cheaper house with a high interest rate than an expensive house with a low interest rate”

amen to that – high interest rates is one of the things that will cause a real market bottom – as interest rates rise housing prices will drop – at the extreme, interest rates would be so high (mortgages in the 1980s were as high as 21% with 14% being typical) that only cash buyers would be able to purchase real estate (and you can imagine what prices would be like in that environment)
[/quote]

I’ve spent a few posts discussing this very issue, and let me say one thing. History always seems to repeat itself. The Federal Reserve and the Obama administration have implemented spending policies to create long term inflation. This was designed to fight the current deflationary cycle we’ve been in the last year or so. The problem is that in fighting deflation, they are creating an even bigger problem down the road, which is the devaluation of the dollar and inflation.

As a previous poster suggested, the Federal Reserve is currently buying TRILLIONS of dollars worth on US treasuries to jumpstart the economy after seeing that none of the other measures implemented by the Feds were working. But the Feds admit they won’t continue purchasing US treasuries indefinately, nor could they even if they wanted to. What does that mean ? It means long term interest rates will go higher as the economy improves, and the possibility of a bond market bubble.

Although I’m not predicting it, I wouldn’t be surprised if rates on a 30 year fixed went up to 8% by the end of 2010. As rates go up, fewer people will be able to afford loans, and housing prices will remain stagnant.

[Bob]

[quote=4plexowner]”I’d rather buy a cheaper house with a high interest rate than an expensive house with a low interest rate”

amen to that – high interest rates is one of the things that will cause a real market bottom – as interest rates rise housing prices will drop – at the extreme, interest rates would be so high (mortgages in the 1980s were as high as 21% with 14% being typical) that only cash buyers would be able to purchase real estate (and you can imagine what prices would be like in that environment)
[/quote]

I’ve spent a few posts discussing this very issue, and let me say one thing. History always seems to repeat itself. The Federal Reserve and the Obama administration have implemented spending policies to create long term inflation. This was designed to fight the current deflationary cycle we’ve been in the last year or so. The problem is that in fighting deflation, they are creating an even bigger problem down the road, which is the devaluation of the dollar and inflation.

As a previous poster suggested, the Federal Reserve is currently buying TRILLIONS of dollars worth on US treasuries to jumpstart the economy after seeing that none of the other measures implemented by the Feds were working. But the Feds admit they won’t continue purchasing US treasuries indefinately, nor could they even if they wanted to. What does that mean ? It means long term interest rates will go higher as the economy improves, and the possibility of a bond market bubble.

Although I’m not predicting it, I wouldn’t be surprised if rates on a 30 year fixed went up to 8% by the end of 2010. As rates go up, fewer people will be able to afford loans, and housing prices will remain stagnant.

[Bob]

[quote=4plexowner]”I’d rather buy a cheaper house with a high interest rate than an expensive house with a low interest rate”

amen to that – high interest rates is one of the things that will cause a real market bottom – as interest rates rise housing prices will drop – at the extreme, interest rates would be so high (mortgages in the 1980s were as high as 21% with 14% being typical) that only cash buyers would be able to purchase real estate (and you can imagine what prices would be like in that environment)
[/quote]

I’ve spent a few posts discussing this very issue, and let me say one thing. History always seems to repeat itself. The Federal Reserve and the Obama administration have implemented spending policies to create long term inflation. This was designed to fight the current deflationary cycle we’ve been in the last year or so. The problem is that in fighting deflation, they are creating an even bigger problem down the road, which is the devaluation of the dollar and inflation.

As a previous poster suggested, the Federal Reserve is currently buying TRILLIONS of dollars worth on US treasuries to jumpstart the economy after seeing that none of the other measures implemented by the Feds were working. But the Feds admit they won’t continue purchasing US treasuries indefinately, nor could they even if they wanted to. What does that mean ? It means long term interest rates will go higher as the economy improves, and the possibility of a bond market bubble.

Although I’m not predicting it, I wouldn’t be surprised if rates on a 30 year fixed went up to 8% by the end of 2010. As rates go up, fewer people will be able to afford loans, and housing prices will remain stagnant.

[Author]

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