Skip to Content.
Sympa Menu

homestead - Re: [Homestead] Home sales and prices forecast by NAR

homestead AT lists.ibiblio.org

Subject: Homestead mailing list

List archive

Chronological Thread  
  • From: WILLIAM <billymegab AT yahoo.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] Home sales and prices forecast by NAR
  • Date: Tue, 12 Sep 2006 09:34:33 -0700 (PDT)

Real Estate (and most other commodity) prices go up and from time to time
they back off. Fortunately for most of us, trend in real estate is higher
and if you are prudent, over time you have built a nice little nest egg in
that the value of your house has increased since you bought it and you have
steadily whittled down the mortgage (hopefully to zero). Historically that
has been the pattern for most people. .

Ever since the Fed lowered interest rates the cost of borrowing went down
and the amount you could finance increased immensedly. Prices (especially in
high demand urban areas and vacation spots) responded by going up
proportionately.

This proceeds merrily until the interest rate party is over and the Fed
starts tighening. Now if you are buying you can afford less house (keeping
the monthly paments equal). If you are paying a variable rate mortgage your
payments go up! If you have to sell you have to accept less. Works just
like the Bond Market.

It really was only a question of time till the bubble burst.

Never pays to treat you house like a piggy bank. Owning your home, debt
free is a really good feeling and should be every homeowner's goal.
Sophisticated investors leverage the value in their house to fund other
investments but there is obviously a risk involved.

Clansgian AT wmconnect.com wrote:
In a message dated 9/12/2006 7:53:58 AM Eastern Daylight Time,
genegerue AT ruralize.com writes:


> An item with which most are not knowledgeable is that Lereah bought a
> Florida condo as an investment about a year ago. That would appear to
> indicate that he believed what he was saying.

It would. I didn't know that and I can't imagine anyone making that big an
investment while not thinking the prices would remain high, not even for
cheerleading's sake.

But whether Lereah's predictions are based on deception, honest
miscalculation, or just buying into his own hype is a moot point to those who
made
financial decisions based on his recommendations.

The thing that surprises me is that raw logic would say that housing prices
can't go up that fast and that much out of line with income and there not be
consequences. Also there's the epitome of foolishness of our time of viewing
a
rise in equity in your home as if it were dollar bills oozing from the walls.
My nearest neighbor is a good example. She bought her house for $95K some
seven or so years ago. It was appraised 18 mo ago at $165K and so she refied
and took $60K cash which she spent. Now her ARM is readjusting and she can't
make the payments. If she sold the house to meet the loan, she'd have no
place
to live. And yet, you can't give away remote rural property here right now
because people are spooked that gas prices will go way back up ... and so her
house may be actually worth the original $95K or even less.

There are a million people like her. It is said that what gave the economy
such an upturn was the perception of wealth. People viewed themselves as
wealthy because the theoretical value of their homes kept going up. People
who
see themselves as wealthy spend money. There was also the perception that ate
at people that they might be missing out on the "boom". The strongest
criticism leveled at David Lereah is the advice in his book Are You Missing
the Real
Estate Boom? (subtitled) The Boom Will Not Bust and Why Property Values Will
Continue to Climb Through the End of the Decade - And How to Profit From
Them.
In this book Lereah says that if you have a paid off home mortgage (or never
had one) you are financially unsophisticated and are missing out on money you
could be accumulating. We've all heard from real estate investors that those
of us who didn't take out equity loans on our homes to invest in other real
estate were just jealous of those who did and were making money.

But many looked at the illogic that wealth, spendable wealth, wealth for
investing was suddenly appearing out of thin air for every property owner in
the
country. The blogs that Lisa quoted in a post to this thread have been around
for more than two years warning that the bubble was going to burst. Lereah's
and NAR's sudden surprise that the market has gotten a lot worse than they
thought still smacks to me as somewhat disingenuous.

>
> >As for national housing stats credibility, what source do you recommend?

Single source? I doubt that there is one. It's much easier to point out the
picadillos of a source than to come up with one that is credible. "Thus let
it be with Caesar .." as Brutus said. (The lack of credibility lives after
them, the accuracy is often interred with their bones... as it were). The
point
is that with the modern phenomenon of blogging, it is exceedingly difficult
to get away with much. When, as in this case, the NAR reports rosey, or not
so
dismal, stats, there are 1000 people with access and knowledge of the skewing
who immediately report it. For example to make the time that existing homes
on the market are taking to sell seem shorter, the NAR allows members to pull
their MLS listing and then relist the property as if it were a new listing. A
clear deception.

Now we are beginning to experience the opposite of the wealth effect of the
past few years. The idea that you might miss out because real estate prices
keep going up and up and up is rapidly giving way to the idea of why buy any
real estate because prices are going down. Who knows how low they may go?
Fewer
people buy which depresses the prices further which makes more people shy
away and wait which depresses the prices further etc. The effect on consumer
spending might turn out to be grim.

I've gleaned the blogs from which Lisa quotes and other sources and, like
many, come to my own conclusions. Foremost is the debunking of the notion
that
it's only a local phenomenon. Worse in some places, I suppose, but happening
all over. The blogs mainly consist of newspaper blurbs, radio and TV
interviews, and the like. The thing as a whole reads like the script for
Stevem
Martin's 'The Jerk':

The housing market is sound. Prices keep going up, sales keep going up, and
demand is high.
Except Florida of course.
But other than Florida, prices are high and sales are good.
Excep Southern California.
Other than Southren california and Florida sales are good and values are
increasing.
And Washington.
But sales are good, except Florida, Washington, and California.
And the midwest.
(Etc. etc. until finally now of days)
Sales are good. Equity continues to go up. Except in Florida, Hawaii,
California, Alaska, the South, Eastern Seaboard, Wyoming, Seattle, Texas, the
MidWest, Arizona-New Mexico, expensive houses, beginning houses, condos, new
homes,
existing homes, New York, the Great Lakes area, and Atlanta.
But other than those places equity is up and sales are brisk. So you see
it's just a local phenomenon.
_______________________________________________
Homestead list and subscription:
http://lists.ibiblio.org/mailman/listinfo/homestead
Change your homestead list member options:
http://lists.ibiblio.org/mailman/options/homestead/billymegab%40yahoo.com
View the archives at:
https://lists.ibiblio.org/sympa/arc/homestead





---------------------------------
All-new Yahoo! Mail - Fire up a more powerful email and get things done
faster.
>From billj AT harborside.com Tue Sep 12 17:52:58 2006
Return-Path: <billj AT harborside.com>
X-Original-To: homestead AT lists.ibiblio.org
Delivered-To: homestead AT lists.ibiblio.org
Received: from mail.harborside.com (mail.harborside.com [12.45.56.18])
by lists.ibiblio.org (Postfix) with SMTP id C01DD4C008
for <homestead AT lists.ibiblio.org>; Tue, 12 Sep 2006 17:52:57 -0400
(EDT)
Received: (qmail 2512 invoked from network); 12 Sep 2006 21:52:56 -0000
Received: from unknown (HELO ?64.28.53.3?) (64.28.53.3)
by mail.harborside.com with SMTP; 12 Sep 2006 21:52:56 -0000
Message-ID: <45072C36.2070306 AT harborside.com>
Date: Tue, 12 Sep 2006 14:52:54 -0700
From: Bill Jones <billj AT harborside.com>
User-Agent: Mozilla/5.0 (Windows; U; Windows NT 5.1; en-US;
rv:1.7.2) Gecko/20040804 Netscape/7.2 (ax)
X-Accept-Language: en-us, en
MIME-Version: 1.0
To: homestead AT lists.ibiblio.org
References: <7.0.1.0.2.20060910140125.047f9ad0 AT ruralize.com>
<6.1.2.0.2.20060911100718.01cb07d8 AT earthlink.net>
<4505CA7B.6040904 AT harborside.com>
<6.1.2.0.2.20060911204444.01c9f948 AT earthlink.net>
<18c9df6e0609112127t4a66c271vda19e0d6e0582252 AT mail.gmail.com>
<6.1.2.0.2.20060911213353.01dd7e30 AT earthlink.net>
In-Reply-To: <6.1.2.0.2.20060911213353.01dd7e30 AT earthlink.net>
Content-Type: text/plain; charset=ISO-8859-1; format=flowed
Content-Transfer-Encoding: 7bit
Subject: Re: [Homestead] Don't feed your bees on rhodies, laurels or azaleas
X-BeenThere: homestead AT lists.ibiblio.org
X-Mailman-Version: 2.1.8
Precedence: list
Reply-To: homestead AT lists.ibiblio.org
List-Id: <homestead.lists.ibiblio.org>
List-Unsubscribe: <http://lists.ibiblio.org/mailman/listinfo/homestead>,
<mailto:homestead-request AT lists.ibiblio.org?subject=unsubscribe>
List-Archive: <https://lists.ibiblio.org/sympa/arc/homestead>
List-Post: <mailto:homestead AT lists.ibiblio.org>
List-Help: <mailto:sympa AT lists.ibiblio.org?subject=HELP>
List-Subscribe: <http://lists.ibiblio.org/mailman/listinfo/homestead>,
<mailto:homestead-request AT lists.ibiblio.org?subject=subscribe>
X-List-Received-Date: Tue, 12 Sep 2006 21:52:58 -0000

Don Bowen wrote:

>At 9/11/2006, you wrote:
>
>
>> It was originally used as a hedge but spread
>>into places where it was hard to kill -- swamp, for example -- where
>>it made an impenetrable barrier to most moving creatrues bigger than a
>>possum.
>>
>>
>
>In the mid fifties it was given free to farmers to plant as wind
>breaks. Now it is a weed. There are many examples, it is not just granola
>eating hippies who fight this, it is real scientists who know the down sides.
>
>
Absolutely, Don, that's part of the problem. I've been on many
botanical field trips, and it's much like birdwatching. The goal is to
see as many "natives" as possible and as few starlings. Most people
wouldn't know the difference as long as the environment is healthy as a
whole.

It's much like anthropologists or linguists who lament the loss of
language and culture, only with a loose screw, so that they start
imagining that they can dictate to everyone what must be, so that they
can have a rewarding botany walk. It's not possible to make up for the
sins of the European imperialists by social engineering (or is it?...),
but with the dawning of more and more specific weed killers, and the
dumbing down of a populace that now accepts any emotion-based lie that's
promoted to them, there's a chance that in the botanical realm, at
least, they could prevail, especially with agribusiness on their side.
A whole new world cleansed of imperfection may finally be within their
grasp, paid for by me at gunpoint, as I'm told to "clean-up" my
"non-native" grasses or lose my home.

Bill
S. Oregon coast




Archive powered by MHonArc 2.6.24.

Top of Page