Three Key Reasons Housing Not Coming Back: Demographics, Student Debt, No Jobs
http://globaleconomicanalysis.blogspot.com/2012/06/three-key-reasons-housing-not-coming.html
Mish
Three Key Reasons Housing Not Coming Back
By Mish Follow Sat, 23 Jun 2012, 11:48am 9,099 views 100 comments
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Kids should just start hedge funds like Romney. Or flip real estate and become billionaires. Why do they hate prosperity? And China! Zillions of jobs there! If they had any ambition at all, they'd swim there and get a job! ANd come back and buy million dollar 3/2s in BA like the prosperity-loving Chinese!
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“get a job! ANd come back and buy million dollar 3/2s in BA like the prosperity-loving Chinese!” APOCOLYPSEFUCK I used to think you were crazy but I see now you are ON THE MONEY BOOMBA! I can see you will soon be a landLORD like myself, buy houses + rent them out = RICH TYCOON! Simple really, these doomers are missing the boat.
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Corning, NY
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duckhead says
A+ or GTFO!
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Los Angeles, CA
no way! the illegal aliens are job creators
if she had not come here to have a baby - the doctor/hospital/nurses would be out 50k of income that they used to buy million dollar 3/2's (to flip to other doctors back and forth each time adding 200k in price).
thats how CA works.
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Prices here are extreme. Now that I am in the process of moving back here-wow-sticker shock again. I have been going around as a consultant, mostly different parts of the midwest and the south. The climate is better here, but the salaries-not that much of a difference. In fact I was once offered a contract gig in S.F, for less than what I was being paid in Missouri. I mean, come on!
But the housing is still double, triple or worse and I really don't know how to justify it. perhaps all the oldies who got their houses way back then and are paying miniscule amounts in taxes and their descendants-who I beleive the tax rate rolls over to- refuse to sell no matter what and so the rest of us are stuck buying/selling to each other?
Prices need to come down to reflect reality. I think they will. I am very tempted to stay in other places-same pay and 1/3rd the price for housing and not much of a commute-but all my friends and most of family in CA and I do miss it. A man's got to have a home. Let's see-prices haven't shot up, despite the lowest mortgage rates in recent history-so a little climb in the rate, might just shake things up.
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Los Angeles, CA
if you are wating for prices to go down you might never ever buy here (which is ok).
i predict lower rates FOREVER. its TEOTWAKI if they raise rates....so they wont. its very simple. look at federal deficit - impossible to repay, they will let it sit super higher - ever higher - but with ever lower rates forever. (forever means longer than a working life 30+ years)
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APOCALYPSEFUCK is Shostakovich says
Couldn't have said it better myself! GREEDY ASS BOOMERS!
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"Prospects for family formation are fundamentally very weak and overall economic fundamentals are very weak as well."
Dear Mish, in regards to family formation, you are incorrect, people have sex, have babies, that you can be certain of, especially during hardships.
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Bellingham, WA
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"The 35-44 population has shrunk by 4.5 million over the past 12 years."
Actually the age 25-35 demographic is growing.
Not counting immigrants, 2002-2008 was a demographic trough of this age group, at ~33M.
We're now at 36M and this will continuously rise to 43M by 2050.
And if we count immigrants -- and we certainly should -- these numbers would show more growth.
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Bellingham, WA
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LOL, the one thing Mish misses is the need for higher taxes.
I think that's going to kill housing valuations more than anything, but Mish does not want higher taxes so that eventuality does not exist in his ideology-bounded thoughtspace.
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pazuzu says
Take a bite outta crime, abstinence is for you!
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Too bad for you
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The point is, maybe new households are slowed momentarily, but that's temporary. I mean give me a break and use your noggin.
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Bellingham, WA
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clambo says
to the extent business are leaving the state they are going to lower-wage environs, yes, destroying your entire argument.
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Population 2010 us census 308,745,538
http://2010.census.gov/news/releases/operations/cb10-cn93.html
2000 population projection for 2010 was 308,935,581
http://www.census.gov/population/www/projections/files/SummaryTabA1.pdf
So the projection was off by what?less than 200,000 nothing to freak out about. People need to live in these houses at some point. Some places were overbuilt, now population growth has a box to expand in.
2000 census us population 281,421,906
Population history chart
http://www.u-s-history.com/pages/h980.html
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Scottsdale, AZ
robertoaribas's website
And yet, it is coming back In Arizona... Strongly so far...
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Scottsdale, AZ
robertoaribas's website
Case - shiller just came out with more data showing Phoenix prices increasing.
Now, if you aren't in Phoenix, what can we learn from this? When inventory drops relative to demand, and homes start seeing bidding wars, prices will increase. PERIOD. the rest of the nonsense saying why they won't is flat out wrong, they are called the LAWS of SUPPLY AND DEMAND, not the general notions of supply and demand.
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47 male
Lafayette, CA
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Three key reasons housing is going to begin a new bull market cycle:
1. Record low affordability. With current interest rates on 30-year money, buying a house has never been cheaper as long as records have been kept.
2. Pent up demand. The housing crash and resulting fear from ownership has delayed millions of home buying decisions.
3. A near total shutdown of new home construction since 2008.
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da Bulls
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Well record affordability in some places but not in Los Angeles. 500,000 for house with 7000 in taxes is not affordable at any interest rate. You can't rent it out for 1% purchase price. The total 30 year payoff is outrageous.
Now where the market has overcorrected in AZ NV FL GA and Similiar it is very good.
People want to buy in the LA area still and banks will lend if you get the FHA on board. But it is overpriced old ugly small houses.
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iwog says
You are back in the business of quacking!
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duckhead says
Sure! Me, a TYCOON! Why not? Everybody! We've got it all wrong! Everyone should be buying up every shack possible and stuffing it full of Section 8 grotesques!
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How will you pay your rent with your overvalued fiat currency?
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Laguna Beach, CA
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iwog says
In Concord maybe. In Santa Monica, not so much.
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iwog: "buying a house has never been cheaper as long as records have been kept."
Now its getting confusing, who is more full of duckshit, "iwog" or "duckhead"?
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iwog says
iwog says
Coming straight out of NAR's bible. Dude,the reality is completely opposite unless you are assuming home prices will appreciate heftily over the next few years. Not so possible.
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Corning, NY
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pazuzu says
It depends on the market. Some areas are cheap relative to rents, other areas are expensive.
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Madison, WI
Housing is back, it's an investors/bankers/government policy/inflate only monopolistic, drag the economy down, down, down eventually with cheap interest rates. When you can't afford it people will get into sharing living expenses like so many do already.
We don't need population growth, foreign investment is coming, along with larger pools of investors riding high on shit piles of money, the recovery is coming along nicely for them.
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iwog says
Any chance their existing underwater mortgage will throw a little curve ball in their new house purchase???
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Santa Cruz, CA
There will never be a "bull market" for housing in our lifetimes.
The previous bubble was caused by an aberration noticed by some people before the bubble burst.
Rise in house prices will happen when there are rising wages. Not before.
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Scottsdale, AZ
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clambo says
And yet Phoenix prices are up nearly 30% from the bottom... I guess never is here already!
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47 male
Lafayette, CA
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pazuzu says
The affordability index isn't some mystical number that the NAR cranks out of a black box. The formula is public, easily checked, and based on data that can be found independently.
You want to cry "duckshit" without the slightest effort to actually contradict anything I've said. Why so scared?
http://www.mortgagenewsdaily.com/05152012_home_prices_affordability.asp
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BABOOMBA PRICES GOING UP UP UP! But it really doesn't matter up or down BUY A HOUSE NAO. Simple formula: Pay Realtor(tm) full commission when buying house and live HAPPILY EVERY AFTER. Silly Doomers will never have super bowl parties keeping this up.
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robertoaribas says
Would that be the median sales price ?
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Please explain this Roberto.
http://www.zillow.com/local-info/AZ-Phoenix-home-value/r_40326/
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Looks like the classic catastrophic freefall, followed by dead kitty rebound
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iwog says
As you already know IWOG, over the long run..int% rates have little impact on prices... we seen interest rates decline along with prices.
We seen it in the early 90s and more recently.
You need to get off the suger joy ride .. you call "housing cycle" there is no "housing cycle" nor should one be encouraged.
Did you learn anything over the past 30 years.. It doesnt work.
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robertoaribas says
http://web.archive.org/web/20110722134217/http://www.housingbubblebust.com/OFHEO/Major/SouthWest.html
Just going back to the norm!
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robertoaribas says
And still down 43.2% from the peak... it's all relative...
Many other areas of the country haven't even reached 43% down yet from the peak.... but they're trying...
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Tarzana, CA
"In economics, a dead cat bounce is a small, brief recovery in the price of a declining stock.[1] Derived from the idea that "even a dead cat will bounce if it falls from a great height", the phrase, which originated on Wall Street, is also popularly applied to any case where a subject experiences a brief resurgence during or following a severe decline."