Housing market bubble, when will it end?

housing markets may be local but the "cost of money" is not. if rates go from 5.5% to 6.5% (say on the 30yr) the cost of carry for new homeowners go up nationally. whether that is enough to supersede demand "in your little area" is another question.

when (if) rates back up it not only creates pressures on housing prices but also creates competition pressures for return on assets. do i want that $1M home that may/may not appreciate X% when i can get X% amount from money mkts, stock, bonds, etc ? adn the added bite of that interest not being deductible.

if the economy is that bad, the middle class shrinking and lower classes expanding, who is then buying these $500k plus homes?

 

i don't know if doom and gloom are here but i do believe that better risk return exists outside this country.

-lower taxes
-less regulation
-lower employments costs
- no unions
-better education /educated workforce
-A WILLINGNESS TO WORK HARD

 

Nafta and so-called free trade is destroying this country. You can not compete with virtual slave labor (china). As distance barriers come down even more with broadband apps service sector will feel the hit from foreign shores.
T

 

Wow, its hard to believe that a decent place in that beautiful town was available for that price then. I worked in the mortgage dept of a bank in the early 80's in the NE that had a mtg lending sub in la area. As i remember the amounts were all 300k and up and we would marvel at the figures for "average" LA area houses.
T

 

i don't agree with the politics (that i assume are) behind your statement, but the point is not irrational. the problem with these "slave labor" countries is that supply and demand WORKS.

witness the rising costs of outsourcing tech stuff to places like india - those workers start demanding more and more (reasonably) as the demand and prices go up.

the problem with china is simply that they haven't gotten to an equilibrium point 'cuz the government is intervening. but all indications are that it'll happen - and with that many people, it won't happen slowly. china's going to be WAY interesting to watch the next 10-20 years. i'm really looking forward to it.

all systems tend to move towards equilibrium - this one is no different, imo. but they'll be some bumpy times getting there.

doody.

 

"Mr" Doody How are you today?
What a wonderful world it would be if all 7 billion people had a nice decent standard of living. Like a rockwell painting the world over. The only problem with that is there aren't enough resources to go around until cold fusion works.
I kept my earlier comment short and to the point but here is the problem. You are right about a few indians demanding more out of life but the problem in china is this; Super large pool of idle hands that the govt. must keep busy so that pesky things like freedom and determining one's own future don't take the place of worrying about where the next bowl of rice is coming from. I have watched many pbs and other documentarys about the current situation esp outside of the gleaming shanghais. Unemployment is now a problem in some places, the chinese govt. still runs the economy and just to get their hands on hard currency they will sell way below free world costs so that they can modernize their infratructure. While they may let gm et al build a few prototype factories they will call the shots and in the end CM (china motors will rule.

I know we have met once but how do you know my politics? Hope to see you when the sun shines again.
T

 

i've read plenty of research that claims nafta has exploited "them" not us.

YOU CANNOT control the flow of capital. it flows to wherever the greatest risk/return/safety is. businesses are in "business" to make $$$$$$ - EMPLOYMENT is a side effect.

just remember that when these politicians claim to soak the rich, impose trade regulations and "make things fair". the cats already out of the bag.

 

no offense intended, sir. i caveated my attribution when originally posted, and please accept my apologies if i made an incorrect attribution.

i argue the contrary side re: china. there are simply too many people who have gotten a taste of the apple for the government to stem the tide. the government clearly is changing course vis-a-vis private property and business and entrepreneurship and all that "horrid capitalist" stuff.

all the world's people will never be in economic equilibrium, for sure. but as long as there are gigantic pockets (like china) with non-market forces the system remains messy. once the big pockets align, things start evening out.

and i certainly am not arguing per se that capitalism is the answer or socialism is the answer - just that the individual national, state, community systems have to be generally in-line with one another for the equilibrium state to be reached or even approached.

nor does the predicated system require socialism (IMO) to be in relative equilibrium. certainly we don't have socialism here in the states, and there's great diversity in economic status among 300M people, and it's cheaper to run a support call center with 1,000 employees in Kansas than it is in Manhattan --- but there aren't gigantic disconnects from state to state and city to city like there is when you compare, for example, US and China.

doody.

 

the rich get richer and the poor get poorer becuase the very basis of socialism - government will always squander

education, social security, healthcare

assets are only used efficiently in private hands.

 

FWIW......up here in Canada....Calgary in particular (more millionaires live here than anywhere else in Canada)......property has already started to crumble....just like it did 25 years ago when I was a banker and almost overnight became a real estate property manager working in a bank managers office....heh. I remember those 18-19-20 % second mortgage rates.

Anyways....these things in my recollection seem to happen here by about a year or so before they do in the US. I am waiting another year or so before I buy my first property here because things have only started on the way down here IMHO. Our dollar is also artifically inflated so our export based economy is suffering badly.

Some of the cities top realtors who are clients of mine were off 35% last year in sales. New home starts are off accordingly. There is more property listed for sale......but stagnant. Prices were flat last year, more or less, and this year are off by about 10% on single family dwellings and 20+ % on condos and apartments. Offie real estate vacancies are up a lot.

A very upscale and large hi-rise complex downtown 2 blocks from my place has gone rental because they can't sell it. Some big time condo developers I know are not planning to do anything in the city for 2-3 years at least due to the market......last year was their cash out year.

It's time gentlemen.

 

I will say that the best system is a regulated capitalist state where everyone can fulfill his or her talents while the unfortunate are not discarded. We have never reached that but might have gotten there had TR stayed in office longer. As far as "free trade" that is apolitical. Slick willy pushed it as hard as bush 1. We are headed for a brazil like situation with elite guarded enclaves surrounded by massed poor if the current trends ciontinue.
HERE iIS THE MOST IMPORTANT Part. Remember your macro economics class - the money multiplier (sorry i forgot the actual name Dooh), is what makes the us economy so vibrant. A dolllar in our econmy becomes 2.7 towards gdp back when i learned this., as it moves around the country. Ex. joe the factory worker spends his dollar at the butcher who spends his dollar at the local dept. store. etc. which was true in the 1950's, BUT now 400 billion goes to mao the factory and ali the call center tech, that is a trillion bucks lost forever from our economy. Without plants (assets) we become traders of what? I'll buy your info widget and you can buy mine but what happens if we want to drive a ferrari and they don't need our info widget??????????????
T

 

"lost forever from our economy"

my point - it's a global economy. can't stop that money flow. you must cater to it and attract it by offering benefits/return otherwise it is lost.

 

Sure you can, its called national self interest in the form of legislation (nafta in reverse)over personal /corporate interest. Last post on this one. good discussion better than penis size threads.
T

 

Racerx.....

Using Brasil as an example is not only in very poor taste but shows your ignorance of your own situation. "Ignorance" is used for descriptive purposes.....it's not in insult.

For a long time the US has had armored private cars, guarded and walled enclaves of private residences, favelas (projects in US speak) private helicopter landing pads...etc....etc.....it's nothing new there.

The area in the city of Sao Paulo that you are referring to is called "Alphaville" and is visually not much different from what you could find in SoCal or Florida. I've been there.

My highrise apartment in Rio de Janeiro has a doorman that carries a sidearm and knows how to use it. Why.......because Brasilians are really freaked out about personal security for all the wrong reasons......paranoid would be very descriptive.......we don't need it......but the rest of the condo owners association insists on it.

Anyways...enough ranting.

 

Breaking my pledge. I will admit that i have never been to Brazil, but i based my comments on knowledge gained from documentaries and 60 minutes pieces about the large disparity in living standards and the concentrations of wealth that have led to a kidnapping trade and hired posse/vigilantes that actually kill the homeless children that live in the slums of the city. I have seen this presented to me on TV, however if i have been duped i apologize. If i have not then even one occurrence is one too many, neither of which has occurred here since lindbergh. BTW I watched a history channel show the other night of which half was dedicated to the exploits of Juan peron, the noted defender of open democracy. I have nothing against brasilians, just despots and what they leave behind.
T

 

you can try but it won't work. the only giant sucking sound you'll hear will be mass capital flight, business evacuation, dollar implosion. maybe 50 years ago in a pre-information age enviroment.

national self interest? obviously not a fan of ayn rand.

 

I mention peron because of the subject matter involved in that show which was occuring throughout south america at the time.
T

 

Thank you Brazil! XUXA one of my all time favorite brasilian exports, you can send these all day long.
T

 

Racerx.....

What you are referring to is the killings in the Centro district of Rio de Janeiro at the Candelaria Church site in 1993. Amazing how a one time occurance, with the help of the leftist media, can wreak havoc on a nation's reputation.

A bunch of street businessmen who had enough of the pivetes (street criminals/thieves) wreaking havoc on their business's paid some off duty policement to take care of the problem. The cops shot the kids on the street as you can't exactly enter a favela here on your own, they have their own armed guards as well.

Most of the offenders are in jail serving life sentences which is the correct thing, and for the kids and street crime, well......let's just say that it isn't much of a problem anymore like it used to be either.

I have walked thru most all of Rio in the day.....and almost all of the wealthy south zone at night....up to 3-4am actually....and feel very safe. It's like any large city (12 mill pop) I wouldn't walk into Soho....Watts....Harlem.....or the projects in Toronto either.

Visit it sometime.........you get about 2.80 Reais to one US dollar.

 

This is such a good thread........I'm enjoying reading all this!!

Interesting to see how over the years the democratic society (United States) trying to implement democracy in places that are/were socialist and/or communist and proactively attempt make a global democratic society has, over time, begun to rear socialist behaviors itself. The reduction in 'middle class' and diverse seperation between the higher and lower classes is becoming more evident. The rich get richer and the poor get poorer. Soon, the few rich will run the whole show and whaaala......socialist/communist environment. Only, it's moving towards a global one from a regional one.

 

If Xuxa is my guide i'll go anywhere. Sad note on cnbc just now, the last levis plant in the US closed its doors for the last time today. An american icon no longer made in america, I'm telling you its serious and bad. Textiles, shoes, etc., even once dominant boeing, its all going down the dumper thanks to the oligarch of trust fund cfl'ers. I'm bummed out, i think i'll do a search for more XUXA pictures.
T