"After The Housing Boom"; Baloney Alert
Sometimes I wonder why editorials like the Business Week bit in the title are done. That the story was published at all is proof the big media are being forced to admit there is a bubble, but this fluff piece jumps past that recognition into how swell things look going forward.
Rather than tearing apart the flimsy reasoning, lets pull a reality check out of the writers cloudy report. "The new ways that housing is financed..shift the risk of rate changes from banks to homeowners." Thats comforting, we wouldn't want the ones making the money to bear the risk. "Hiring at building sites has accounted for 16.6% of all new jobs in the past two years." So, the self-feeding frenzy will work in reverse, no?
"In a way we've outsourced building speculation," says Michael Carliner, an economist at the National Association of Home Builders. That means the individuals who bought those properties, and not companies, will bear the pain if price gains or demand don't meet expectations." Again, great news!
"Although housing wealth hit a record in the fourth quarter, the large amount of refis over the past half-decade means that equity as percent of real estate stood at just 56.1%. That's far less than the equity ratios of the 1980s and '90s. Boomers expecting to retire on the gains from their homes could face problems." Some people are sacking it away in this bubble, but in this report we can see who will be left holding the bag.