Here's the playbook (they call it the 'anti-bubble Q&A) these evil spinmeisters sent out to their minions to refute any sucker, I mean potential buyer, or media enquiry who questioned the minion as to whether there was a bubble, or if house prices could decline. Here's some low-lights:
Since 1968, the national median existing-home price has increased an average of 6.4 percent per year
Most metropolitan areas, especially in the Midwest and South, have not experienced price declines in the era of modern recordkeeping
Should we be concerned that home prices are rising faster than family income?No. There are three components to housing affordability: home prices, income, and financing costs – the latter are historically low.
Overall housing affordability remains favorable in historic terms.
There is virtually no risk of a national housing price bubble
It is possible for local bubbles to surface under the right circumstances, but that also is unlikely in the current environment
The strong underlying demand for homes results from the simple fact that the population is growing faster than the supply of homes
Baby boomers remain in their peak earning years. Echo boomers – the children of the baby boom generation – are just entering the period of life in which people typically buy their first home.
If conditions become unfavorable, home buying may be postponed, but a general price decline remains highly unlikely.
May 13, 2006
The National Association for Realtors "there is no housing bubble" talking points uncovered
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14 comments:
Kieth you are coming much closer to nailing the problem on the head.
The baby boomer are what scares the living day light out of the NAR. It is the baby boomer's money that will shake the world up.
THey say stay in "prime earnings". The day is changing though and changing fast.
The first baby boomers are 60 years old. Many have sucessfully saved their money. Realize that $1 million house in Fairfax Virgina will be worth $700,000 in 5 years. Now if in the next five year that person can only make $500,000. Des it make sense to retire now? Sell the house and mve 2 hours away from DC and buy a house with a dock and wide open spaces where the Potomac ties into the Chesapeak?
The current building craze is 2 hours outside DC. Some are retired people others are preparing for retirement by selling now and putting up with the commute for 1 year maybe 2. Last year 90% of all residential jobs I bid on were the DC suburbs of Prince Georges county. This year 90% of the work is on Maryland's eastern shore, West Virgina, Delaware, and the Souther tip of Maryland - NONE OF THESE PLACES HAVE JOBS TO SUPPORT THE HOUSE PRICES.
Real Estate price tied and associated to work locations are crashing. Rural land is still rising in value and will continue to rise in value.
These times are not necasarly a bad tome to be a realator. It is just most are trying to do business where the buyers won't be.
To the rest of us that need to work. I suggest you do what I did. Move into the inner city. There ae no baby boomers here to pack up and move to creat the selling void. Here in inner city Baltimore I am still seeing double digit gains on my house. EVEN IN INNER CITY WASHINGTON. A CITY THIS BLOG LOVES TO ATTACK. HOME PRICES ARE INCREASING. The inner city is the shelter from the storm.
This is sick. Somebody better goto jail.
That’s funny. I can’t remember a time when real estate and the economy did not deflate and go into recession after a bull run. Just look at the early 1970's, 1980's, and 1990’s. This looks to me like the longest cycle that will cause the most pain. We have gone 15 years without a REAL consumer crunch. Sure the dollar is shrinking, but 90% of America has NO CASH SAVINGS. I see a cash is king scenario reemerging on the horizon. I also see competition emerging in every area of my income and my wage getting more competitive and not going up with inflation. I have seen very little increase in income in the past 10 years but my expenses have doubled and tripled.
About the baby boomers article. I lived in a retirement area in the early 90's and found this group of people to be the tightest fisted penny pinchers I had ever seen. Figure it out, no income, no job, no spending, and fear of financial insecurity. FEAR OF MEDICAL EXPENSE. This group is not going to be good to real estate.
To Close, there are simply too many realtors and not enough closing listings. Realty office expenses are at a all time high. What a posh group, with designer bags, Lexus cars, and fat paychecks. I have a feeling that many are about to realize they have lived beyond their means. Just go ask a veteran realtor with 40 or so years in the business!
I am a boomer raised by a depression baby. I have no plans for spending. I need my shrinking dollar for health care, housing and provisions. I am sticking where I am to be close to friends, hospitals, and California Property taxes. I think the government relizes what a drain boomers will be on the economy and try to bankrupt them. It is in their interest to keep them working.
I took a $100,000. loss on a vacation home in 1992. Thats just not very much money anymore.
I'm so glad that the Boomers have been fully-funding their 401Ks. They would never borrow from that to speculate in RE, would they?
A bunch of people are still working after their retirement savings were lost in the dot bomb decline. I see way too many old people still working after 65. This may be extended / excaberated by the RE crash.
The boomers will have additional problems:
1. Their kids are gonna be broke because of the coming employment decline.
2. Health care costs skyrocketing. Nobody is talking about the effects of drugs (meth is a real problem), aids, even a semi-mild bird flu breakout. Obesity is a real problem that will kick in higher costs. Maybe a lot of drinking because of the bad economy.
3. Medicare / social security going broke and the kids are not making the same money to keep the ponzi scheme rolling.
It isn't looking very good from where I sit. And that helicopter Ben isn't helping much. I am getting reamed in my gov't 401K (the thrift savings plan that was touted by Bush as the model for privitization of social security). There is no safe haven in that plan. Even the international fund is getting whacked (down 3% last week). Gov't bonds at 3%, bonds sinking like a rock, US stocks getting creamed.
Ouch.
Foobeca, Assisted living communities may not be a bad investment.
I woould no more trust my money to an assited living investment scheme than I would trust it to casino owner. At some point you have to look past the cash flow and look t the character of the hands the money flows through.
My 'Boomer' mother told me this weekend, the high dollar properties are still being bought in Richmond by old, old folks (by my standards). I want badly to believe based on that and the fact my grandmother had to be abducted from her house to give it up at 80.
But I agree with you guys. Boomers weaken, the young take the houses.
I wonder what the regional affect is?
Boomers move South.. then?
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