Global housing values skyrocketed $20 Trillion (with a T) or more (someone source the exact peak number please) during the bubble. How much will we now give back? What's the opposite of "the wealth effect"?
This month's figures prove that the so-called "housing bubble" is not only real, but that its cratering faster than anyone had realized. As the UK Guardian reported a couple of days ago, “the orderly housing slowdown predicted by the Federal Reserve will (soon) become a full-blown crash.”
All the indicators are now pointing in the wrong direction. Consumer confidence is down, inventory is at a 10-year high, and the number of homes sold in July was 22% lower than last year. As Paul Ashworth, chief economist at Capital Economics said, “Things do seem to be getting worse very quickly. Freefall is a strong word, but I think it's the right one to use here.” (The Guardian, August 27, 2006)
The housing bubble is a $10 trillion equity balloon that will explode sometime in 2007 when more than $1 trillion in no-interest, no down payment, adjustable-rate mortgages (ARMs) reset, setting the stage for massive home devaluation, foreclosures and unemployment. (“By some estimates all this housing activity has accounted for more than 40 per cent of all the jobs created in the US since 2001.” Times Online, August 29, 2006) July's plunging sales are just the first sign of a major slowdown. The worst is yet to come.
The blame for this rapidly approaching meltdown lies entirely with the Federal Reserve, the privately owned collection of 10 central banks who cooked up a way to shift wealth from one class to another through low interest rates.
September 05, 2006
The Great Housing Crash of '07 - the $10,000,000,000,000 equity balloon
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20 comments:
The slowdown is definitely here. But I think helicopter Bernanke is going to print money like crazy in 2007, buying up the US treasury bonds, and drive down the interest rates to save the ass of these mortgage resetters.
I definitely hope that is not the case. But I have a feeling, maybe that's in the plan of Fed hiding M3 figures.
utah, austin and many other places will not lose value. What do ya'll think.
What's the opposite of "the wealth effect"?
A deflationary depression.
Y'know - it probably should crash, all signs point to it. But in the aftermath of the stock crash in 2000, one could have argued that that event was the first in the row of dominoes. But.... Now I think somehow the PTB will engineer an orderly mass refi and avoid the day of reckoning once again. But someday, we'll wake up and water will be lapping at the foundations - the Greenland ice shelf will have slid into the ocean overnight, having reached the now proverbial tipping point - or something like that. However, after the news cycle absorbs it all (say 72 hours) the residual reaction will be something like the old Moody Blues line "Somebody exploded an H-bomb today, but it wasn't anyone I know".
You can only hold the on comming tide with a broom for so
long!
A band-aid will only stop so much bleeding!
Eventually you have to face the executioner!
Hi Guys,
I got to thinking about this the other day. When people know they have to sell because of the loan they got into a couple years ago. First they'll get with a realtor. Once they see what their house is worth intodays market, and see the fees, They might try to sale it themselves.
Thinking this might be the case, I went onto one of those ( for sale by owner web sites ) I decided to look in Co, because it was leading the nation in defaults. Boy, what an eye opener!!!!!!!!
Here's the site I logged into. Check this out for your selves. Scary!!!!!
http://www.forsalebyowner.com/
David Koresh, the leader of the Branch Davidians in Waco, Texas.
This place is just like Waco all over again!
Yes, world is ending in 2007!
foreclose_me said...
I don't know why, but starting 2+ weeks ago this site's main page would not update unless Refresh was selected in the browser. I use Firefox.
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Same here. I use Firefox as well.
I work for a large bank in Socal and just financed a deal for a broker buying 1st time for himself and he got the builder to agree to pay him a 15% commission for the down payment with other incentives as well to keep the sales comp up so the early buyers wouldn't kill the builder. This is going on all over the place and is becoming the norm. Do not trust the sale comp data!!!
This is going to blow up like nothing any of you have ever seen. When even the government regulated institutions are lending like this, you know things will unwind very badly : (
I use IE and had problems accessing several times : (
I just assumed everyone in the USA except Realtors were now visiting this site and the heavy traffic was causng a logjam : )
Waco Yes. The FBI needs to surround the Fannie Mae compound and set the entire place on fire.
Thanks to anon 2:29:13, I checked out the "For Sale By Owner"
site in my zip and a few surrounding. God, That Is Scary!
Just when I imagine I have a grasp on how bad its going to get, some more new evidence shows me that I dont have the slightest grasp about how far down "DOWN" can get.
Thanks to the 2 anon's who wasted my time with the forsalebyowner.com. site. What a terrible I mean terrible site. The web site stinks, terrible to get around it, the homes are totally overpriced and you have to deal with some stupid homeowner.
Realtors should hack that site!
anon: Utah is going to get KILLED!! Prices in Lehi, Alpine, SLC, Draper, South Jordan, etc.... will be priced the same as (or very close to)Southern California very soon. Prices in Utah are way over what can be sustained in Utah. I love Utah and I will move back after the crash.
Look at the prices of Ivory Homes, it is crazy what they can sell a very average home for. Folks in Utahns are banking on RE to make them rich....it will devistate the state.
firefow + refresh. Same here.
I asked Keith if he was dead once and then discovered that I must refresh every time I come here to read.
firefox=refresh rather
How much will we now give back? What's the opposite of "the wealth effect"?
the slave effect of living
"Waco Yes. The FBI needs to surround the Fannie Mae compound and set the entire place on fire."
They won't bother. There aren't 25 children under five years of age in there.
Check it ou homes siding manufacturers if your building homes go to Http://siding11.com/side.pl?y=helper. butt if you want to learn to install siding then..... What are you waiting for..
The money changers have a plan in place....
www.bearstearns.com/conferences/mortgage2006/nees_mortgage_conf_2006.pdf
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