I love these "everyone remain calm" stories in the MSM. And David Lereah stupid quotes. If everything was A-OK, why the need for calming stories? Enjoy...
The biggest global housing boom in three decades may end not with a bang, but with an extended whimper that will keep the economy growing.
Markets for dwellings in the United States, France, Spain, New Zealand and parts of China are slowing down as home-price inflation slows in response to higher interest rates. So far, the rise in borrowing costs has been modest, giving builders and buyers time to adjust.
"We're seeing a cooling-off of the housing market," said Raghuram Rajan, chief economist at the International Monetary Fund in Washington. "We haven't seen a bust."
"We're right on course for a soft landing in the housing sector," said David Lereah, chief economist at the National Association of Realtors in Washington.
Historically, just 17 percent of local housing booms in the United States go bust, according to the Federal Deposit Insurance, a government agency that regulates banks. And that typically occurs only when local regions are under severe economic stress, like Texas in the mid-1980s after oil prices plunged.
July 03, 2006
"World housing boom cooling, not crashing" - yeah, right
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7 comments:
Reminds me of Kevin Bacon at the end of Animal House. Got a bag of marbles Kieth?
on the other hand, we don't yet have any real evidence that a crash will happen, and a long sideways move might be the scenario. We don't know yet: but the example of the UK and Australia shows that the dreaded (on this blog at least) "Soft landing" scenario is a real possibility. You can accuse me of being a realtor for pointing this out, but I'm just another renter and bubble-sitter like the other schmos on this blog.
Possible, but not likely. We had a crash in 1992-1994, and the circumstances now are much different and worse, e.g., prices pushed up by the lowest rates in 40 years (artificially suppressed to stay low), excessive equity extraction, more exotic and irresponsible loan products than last time, harsher BK laws this time around, more housing inventory than last time, even after adjusted for population, Freddie Mac and FNMA are on the verge of collapse, and many other reasons other posters can cite since I'm on my way out the door to work : )
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"Anonymous said...
on the other hand, we don't yet have any real evidence that a crash will happen, and a long sideways move might be the scenario. We don't know yet: but the example of the UK and Australia shows that the dreaded (on this blog at least) "Soft landing" scenario is a real possibility. You can accuse me of being a realtor for pointing this out, but I'm just another renter and bubble-sitter like the other schmos on this blog."
With interest rates creeping up .25 each month, ARM's resetting to the stratosphere, monthly payments going up at re-set, and sheeple barely making the end of the month now, with wages stagnate, get over the "soft landing" scenario.
There is no way that prices for housing can go up this much in 5 years, wages not go up a dime, and you don't expect something to break loose!
I believe we are looking at a long, drawn out "hard landing" that simply LOOKS like a softie!
To imagine that unbelievable housing prices will just go up with inflation from now on until wages catch up is unrealistic. There is no "soft landing". I doubt there ever was, not really,
whether it was tulips, beanies, baseball cards or housing.
I like to think of it as:
BONE CRUSHING THUD
Stuck in PA said :
"I believe we are looking at a long, drawn out "hard landing" that simply LOOKS like a softie!"
This is increasingly my view also. The NASDAQ bubble took 3 years to burst, and people today are STILL in denial (especially if they own Lucent like a cousin who is waiting for her portfolio to go back up). . .I think this will be a 5 year or more slow train wreck.
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