Housing Optimists Are “Not Paying Attention” to the Facts, Says Dean Baker
Posted May 12, 2010 10:02am EDT by Heesun Wee in Investing, Banking, Housing
Among the crowded ranks of economists and market watchers, Dean Baker stands out. Baker presciently called the housing bubble when he published “The Run-up in Home Prices: Is It Real or Is It Another Bubble?†in 2002.
So does our guest Baker see the so-called housing recovery now? “No. I mean I think people that are saying that just aren’t paying attention to what’s in front of their eyes,” says Baker, an American economist and co-director of the Center for Economic and Policy Research.
“I think we’re going to see a big fall-off in purchases for the rest of 2010 and even into 2011,†Baker says. “So the idea that somehow the market is stable, that housing prices will rise anytime soon – it’s really hard to make a case for that.”
Baker lays out several reasons for his bearish case:
Programs that lifted the market, including the tax credit for first-time buyers, have expired.
The Federal Reserve is exiting the mortgage market, which will likely push rates to 5.5% to 6% by the end of the year.
There’s still an inventory glut and rental rates are falling in many markets, notes Baker, author of “False Profits: Recovering from the Bubble Economy.” He says the rental market doesn’t lie. [10x rent roll don’t lie!!!]
Naturally the housing bulls disagree. Hedge-fund manager John Paulson, for example, said housing prices in hard-hit California will begin to rise this year, setting the stage for a wider recovery, as the FT reports.
So what are the chances of, say, another tax credit or purchase of mortgage-backed securities? “I think they’d be reluctant to do that because of the signal it would send,” Baker says in the accompanying clip. “I mean it would send this unambiguous signal things really are bad, worse than had been advertised.”
Click on the player to learn about Baker’s idea to let struggling homeowners stay in their homes, and prevent home inventory from climbing even higher.
I’m a Crate & Barrel fan for sofas (& most things). Just bought a new one, which I love, from there a couple of months ago. Only around $1000.
My previous sofa was from there as well. Had it for 10+ years of hard wear (incl being slept on regularly).
Thanks pete. You just saved me a lot of work…. funny how the furloughs (i.e., forced non-work) has caused a lot of additional work.
BHO, Baker’s already discredited…
He wrote “The Run-up in Home Prices: Is It Real or Is It Another Bubble?†in 2002.
He was 6 YEARS TOO EARLY. Ask DeadCatBounce, too early is just as bad as wrong!!!!!!!!!!!
What if someone had followed his advice in 2002???
g’night Gracie.
too long
quote:
Is it just me or has the OT turned into a men’s club?
perhaps the highly anticipiated, but-never-could-get-their-shi+-together-clambake is going on right this minute?!
*rob*
cool legion – that definitely looks like an option.
Fun with cut/paste!
Housing Optimists Are “Not Paying Attention” to the Facts, Says Dean Baker
Posted May 12, 2010 10:02am EDT by Heesun Wee in Investing, Banking, Housing
Among the crowded ranks of economists and market watchers, Dean Baker stands out. Baker presciently called the housing bubble when he published “The Run-up in Home Prices: Is It Real or Is It Another Bubble?†in 2002.
So does our guest Baker see the so-called housing recovery now? “No. I mean I think people that are saying that just aren’t paying attention to what’s in front of their eyes,” says Baker, an American economist and co-director of the Center for Economic and Policy Research.
“I think we’re going to see a big fall-off in purchases for the rest of 2010 and even into 2011,†Baker says. “So the idea that somehow the market is stable, that housing prices will rise anytime soon – it’s really hard to make a case for that.”
Baker lays out several reasons for his bearish case:
Programs that lifted the market, including the tax credit for first-time buyers, have expired.
The Federal Reserve is exiting the mortgage market, which will likely push rates to 5.5% to 6% by the end of the year.
There’s still an inventory glut and rental rates are falling in many markets, notes Baker, author of “False Profits: Recovering from the Bubble Economy.” He says the rental market doesn’t lie. [10x rent roll don’t lie!!!]
Naturally the housing bulls disagree. Hedge-fund manager John Paulson, for example, said housing prices in hard-hit California will begin to rise this year, setting the stage for a wider recovery, as the FT reports.
So what are the chances of, say, another tax credit or purchase of mortgage-backed securities? “I think they’d be reluctant to do that because of the signal it would send,” Baker says in the accompanying clip. “I mean it would send this unambiguous signal things really are bad, worse than had been advertised.”
Click on the player to learn about Baker’s idea to let struggling homeowners stay in their homes, and prevent home inventory from climbing even higher.
***Bid half off peak comps***
By Biff Champion on May 12, 2010 4:47 PM
Is it just me or has the OT turned into a men’s club?
…well let’s see
-risque banter check
-threats of beat downs check
-sound systems check
-sausage check
-booze ???
ok, who’s going to the liquor store?
I’m a Crate & Barrel fan for sofas (& most things). Just bought a new one, which I love, from there a couple of months ago. Only around $1000.
My previous sofa was from there as well. Had it for 10+ years of hard wear (incl being slept on regularly).