November 25, 2005

US Housing Bubble - The Leak Is Growing Bigger

Good article, brings it all together... Highlights:

I ran into an old neighbor a few days ago. This fellow owns 250 units in San Diego. His oldest son manages 1,500 units. I asked him what was going on in real estate. He told me that we're past the peak, that prices are softening, and that it's taking longer to sell property in La Jolla and throughout San Diego. He added that all his real estate friends agree with that appraisal.


As the CA housing mania ends and the concept of risk returns to its rightful place, there is going to be a rush for the exit doors. Speculators are going to find out -- and many for the first time ever -- that as demand continues to soften, liquidity in real estate investments is far lower than they envisioned when they went in."


Tom said...

Interesting Article in China how the US "Bubble" Will effect everyone globally, including Japan, China, and Korea.

Tom said...

skytrekker said...

The exploding inventories in the southwest, Florida, the DC area are harbinger that has largely been pooh poohed by the mainstream media. The news blurbs say there is a slowdown, or balancing of real estate. What the fail to see, if this growing mega sized inventory does not fall, or even stays the same the bubble has burst- and it will deliterious economic consequences for the US. The spring buying season begins in a mere 2-3 months- lets see what this growing inventory does- and when housing continues not to sell- lets see if the mainstream media has some visions of reality.

41cadillac said...


"Not to worry" regarding:

"US "Bubble" Will effect everyone globally".

Ben, new Fed Chief, will simply reduce interests rates.

The "Real Estate Bubble Burst" will clean out that ugly "froth" (which is all over the world, not just USA) and real wages in the USA and USA realistic property values will prevail.

Those that bash the USA do not understand that at times foolishness reigns but there is steel in the core of most US citizens and this Burn and Crash in real estate will purify that steel. So. Be. It.

000000000000000000000000000000000000 said...

Thanks Tom, killer article.

Tom said...

Cadillac I disagree with you.

What the person is saying is that the central banks of China, Japan, and Kroea are buying US Treasury Bonds. There will be a tipping point because Japan and China will not lend us money forever. Once they start dropping US Treasury Bonds and they sit out there the only way the Fed will get people to buy them is when they price in Risk. This will cause inflation and the FED will have no choice but to raise rates causing turmoil among anyone in Interest Only Mortgages and ARMS. This will also slow the economy and cause housing prices to slump. Throw on top of that all the jobs that are tied to real estate and the US economy goes into a recession and can't collect enough tax money to pay debts. Ben Bernarke WILL NOT have the ability to lower interest rates when inflation is going to jump as much as it does. They just can't drop rates and Greenspan dropping rates was just putting "off" having to pay on the foreign notes. This is how the FED is able to "print" more money by having foreign currencies buy the notes.

So when they stop buying our notes at the low rates will Bernarke just lower rates? Nope because if he does then that makes it even more shaky to buy the US notes because they aren't collecting enough money to pay them off hence Interest rates.

Shows what you know. Everything is not as simple as just lowering rates. And the rates they do control are the short term rates and the longterm rates which a lot of Mortgages are tied into will also go up as well.

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