Wednesday, April 27, 2005

Residential Activity "Now Behind Us"

At least one construction publication sees an end to the housing boom. "By mid-year, the slowing trend in construction spending will reappear. The period of peak growth in construction activity in this economic expansion cycle is now behind us."

You don't hear industry types mention the 'B' word very often. "Market by market, be alert for the housing bubble to burst when home prices increases stop and speculators scramble to sell their investment homes."

Don't miss the construction spending table at the bottom of the page.

14 Comments:

At 3:28 PM, Anonymous Anonymous said...

Yeeehaaaaaa !

Let the crying begin !

I can hardly wait for people to come to the realization that house prices don't magically increase year after year. This should be good !

 
At 3:34 PM, Anonymous Anonymous said...

a bit of a surprise. the builders say no where but up, and here a trades guy says its over.

 
At 5:44 PM, Anonymous Anonymous said...

but hold, what is happening to the ten year note..still languishing, lower than the last year, at around 4.25%...to me it looks like MMs flocking to bonds as stocks- and even the real estate- looking risky. It increasingly looks like that if bubble were to pop, rates would still be very low..not a bad news for someone still waiting to buy a home..

 
At 6:21 PM, Anonymous Anonymous said...

Presently, the perfect storm is brewing for someone who has a ton of cash... just wait about 6 months and you will be massively rewarded... home prices will be significantly down and fixed rates will be around what they are today... short terms are the ones that are going to get hit... so, if you have an ARM, you are going to get squeezed whether the 10 yr. bond goes up or not...

 
At 7:32 PM, Anonymous Anonymous said...

A flat yield curve will crush creative financing, which is the last remaining weapon in the bidding wars. Buyers will have to drop out. Unreasonable expectations will be realized and corrected. Slowly but firmly.

Time and events will tell.

 
At 8:39 PM, Anonymous Anonymous said...

It's going to be a lot longer than 6 months before us market holdouts will want to buy. It will be a long slow painful process.

 
At 10:56 PM, Anonymous snowjob said...

Nothing to worry about. Treasury Secretary Show says there is no bubble. You are now free to buy more condos. Remember, they ain't making real estate no more.

 
At 11:34 PM, Blogger goleta said...

I just listened to an MIT lecture by Laurence J. Kotlikoff ,Head of Economics department, Boston University,


"The Coming Generational Storm: What You Need to Know about America’s Economic Future"
http://mitworld.mit.edu/play/200/

The way I see it, there are at least 4 grand storms coming
I. The generational storm, Kotlikoff found that there are only 3 ways to solve the social security and medicare problems
based on the data FED released: 1. double the federal income tax rate 2. cut social security benefits by 1/2 right away
3. cut government spending by 140%. As he said, all the data you need to know is there, but FED never really did anything about the problem or warn the public how serious it is.

II. The burst of housing bubble, If the bubble bursts in 3 years, before the boomers start taking money away from social security in drove,
then the boomers still have much of their money in RE and will have to rely on social security even more.
If not, they will sell their houses and trigger the RE market crash.

III. The hyper inflation after China unpeg yuan to dollar
China pretty much dominates every item you see in Walmart or any other discount or wholesale stores.
If yuan is appreciated by 20%, we instantly see 20% price jump in the items from China.


IV. The doubling of oil price by the end of the decade.

All those 4 will come in the next 10 years and they all are likely to get worse to form a perfect storm.



Kotlikoff's book can be found at
http://www.amazon.com/exec/obidos/tg/detail/-/B00081X7CE/qid=1114639808/sr=1-1/ref=sr_1_1/104-6036289-8038346?v=glance&s=books

 
At 10:07 AM, Blogger Nayrab said...

That reply is why we should all dig bomb shelters, stock up on weapons and ammo and food items like wheat, barley, etc......JK

Actually, if it gets that bad, I forsee a big war coming to fruition. Probably over something happening in the Middle East, namely Israel. I swear, if any of the psychos in the Middle East had a chance they would be lining up to deliver suitcase nukes somewhere in America.

The state of the world in general is pretty scary right now. I guess I should keep my replies centered on housing otherwise we could open up another can of worms.

 
At 10:27 AM, Anonymous Anonymous said...

nayrab,

Yikes... chill-out, dude... it's not all that bad... the world isn't going to end tomorrow... and those predictions are extreme and wrong... the boomers selling in 3 years from now isn't going to cause this bubble to pop... it's going to be this flat yield curve... it's going to squeeze a ton of speculators out of this market...

 
At 10:34 AM, Blogger goleta said...

Unfortunately all those 4 storms can not be isolated. With the boomers' population of 77 million and being the majority owners of the most expensive houses in the country, their retirement in 3-5 years will no doubt crash the market if the bubble has not burst by that time. Things might be different in California due to Prop 13 that a 60K house they bought 30 years ago might worths 1.5 million now and a downgrade to even the least expensive condo will instantly increase the property tax they need to pay.

Before the bubble bursts, most of recent home buyers' income goes to home payments and that leaves them no choice but to buy daily necessities that are least expensive, i.e. made in China. China is the single biggest factor in keeping the inflation in check.

Overall, it's really a zero sum game, If oil price goes up, it bites a bigger of your after tax income, so does consumer goods from China and home payments.

 
At 3:25 PM, Anonymous Anonymous said...

Did anyuone see the movie :Soylent Green" ?

 
At 3:26 PM, Anonymous Anonymous said...

Spelling correction

anyone

Yikes

 
At 7:21 AM, Anonymous Anonymous said...

Ok, I guess maybe not. It was made in the 70's. About the future where the population got so big that society broke down and the only food was these cookies that the "State" handed out. Turns out the cookies were made from old people. Come on someone must have seen this flick!

 

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