NYT: Housing Not Out of the Woods Yet
“Plenty of pain yet to come,” is how one economist summed it up in an article in the New York Times this morning about the country’s housing market. The article’s main point is that the improving data we’ve seen over the past three months may very well be a head-fake rather than the first leg…
“Plenty of pain yet to come,” is how one economist summed it up in an article in the New York Times this morning about the country’s housing market. The article’s main point is that the improving data we’ve seen over the past three months may very well be a head-fake rather than the first leg of a recovery:
Artificially low interest rates and a government tax credit are luring buyers, but both those inducements are scheduled to end. Defaults and distress sales are rising in the middle and upper price ranges. And millions of people have lost so much equity that they are locked into their homes for years, a modern variation of the Victorian debtor’s prison that is freezing a large swath of the market.
Closer to home, the data from Case-Shiller show that New York City is still holding up relatively well, with prices down just 10 percent over the last year, as compared to 30 percent in Las Vegas and 15 percent in Seattle.
Fears of a New Chill in Home Sales [NY Times]
Graph from the New York Times
My master plan? I love it, wasder. How ’bout the inscurity and instability of a depression risk (as pessimistic as I can get about this real notion)? Is signing a few leases and paying a few moving companies more inconvenient than losing a few hundred thousand dollars? It’s all over the news, the brownstoner forum, subway conversations and inventory calculations, the rental market is collapsing. Family size apartments or temporary homes in the suburbs will be had at cheaper rates than ever. Your type of security and stability is bankrupting people.
***Bill Thompson for Mayor (TUESDAY!!!)***
“I’m on board with the bottom coming 5 yrs from now 25% below where we are now.”
While this would be a long, slow, disconcerting decline, at the same time that would mean prices bottoming at 35% below the peak of the bubble, which is hardly a complete collapse.
>TYPICAL Goldman employee, stevieb
BHO, i am not sure about the typical goldman employee, but I read about record bonuses getting paid out this year at places like Bank of America and Citigroup who kept tax payers money. Key bank and wells fargo also received and kept tax payers money and are paying out bonuses.
How scared can you be after you receive a few million dollars of bonus at one of these tarp banks? The money is yours to keep and the rest of the country can burn.
on the bonus thing: you have to rememeber that the number of people getting those checks is way smaller, even though the checks are big, and they are mostly repeat-check-getters. There are not a lot of new millionaires being minted. So you are getting folks with 5MM in the bank moving up to 6MM. That’s going to affect the high-end market, and at the same time you still have a massive destruction of wealth crippling the trust-fund set, so who knows what the net impact is.
The 1-2MM pad has been incredibly firm in my view, but it’s because a lot of people are long time owners, and people didn’t go crazy with financing. Look at the OTHER three hundred thousand financial workers, the “banking middle class” who are still working at half their 2006 compensation, for the brooklyn story. It’s going to be an agonizingly slow drift, and it will be driven more by relocations than foreclosures — I’m on board with the bottom coming 5 yrs from now 25% below where we are now.
“China only owns 7% of our debt, and that fully two thirds of it is owned by americans themselves?”
But joe, what are the numbers on newly issued debt?
***Bill Thompson for Mayor (TUESDAY!!!)***
“How’d you extrapolate a whole decade out of my outline? I said short term deflation”
A decade was a wild guess of course, but the point is we are already a year and a half into your master plan. Had I listened to you last summer when I was weighing whether to buy and you and I used to mix it up in less jovial ways than we do now, I would definitely still be waiting. And given short term deflation plus the fact that once the price declines do start back up (if they do) it will take a while to reach your desired levels of decline, it strikes me that the “patient buyer” will be waiting quite some time. I don’t know too many people who can operate with that level of insecurity and instability for that long.
TYPICAL Goldman employee, stevieb. The one who might have any relevance to the Brooklyn market (granted you were discussing the market at large). I have a source inside.
But yes, the upper echelon worries not.
***Bill Thompson for Mayor (TUESDAY!!!)***
Or NOT, wasder. How’d you extrapolate a whole decade out of my outline? I said short term deflation.
***Bill Thompson for Mayor (TUESDAY!!!)***
bklyn14 — argentina was a bond default in a collapsing economic bubble at the end of an unsustainable currency regime.
an asset price bubble happens when people think there is no end to the upside in prices, like in dot-com stocks or housing, or tulips. Bonds can’t go much past their par value, because they’re anchored to it.
OK, I agree people were too relaxed about lending to argentina, so if you want to call that a bubble, fine, but when I think ASSET bubble I think speculative mania.
As for the US, yes, the dollar is going to be weaker in the long term. But the US is one of the only countries that borrows in the same currency it spends its money in. Argentina had to issue dollar debt to fund Peso obligations. It’s a totally different story, and we don’t have that problem.
I mean — are you worried that your swiss franc bank account is going to take a hit when you redeem your US treasury bonds and have to sell the dollars? I don’t see the reason to panic.