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Higher prices and rising interest rates will slow housing market appreciation


By golfplan18   Follow   Wed, 19 Dec 2012, 11:09pm PST   2,116 views   23 comments
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http://ochousingnews.com/news/rising-prices-and-rising-interest-rates-will-slow-housing-market-appreciation?source=Patrick.net

The restricted inventory condition we are dealing with here in the Southwest has caused prices to go up. However, for buying to keep pushing prices higher, interest rates must keep falling to sustain affordability at higher price levels. In a market like ours where demand is less than robust (most increased demand this year came from all-cash investors and hedge funds), any decrease in affordability is going to hurt sales. At first it will show up in decreased sales volumes. If affordability continues to crumble, prices will begin falling again.

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RentingForHalfTheCost   Wed, 19 Dec 2012, 11:14pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 1

But but but, decreased sales means appreciation (no supply) ? Wait, it could also mean depreciation (no demand). Dammit, this supply-demand economics is tricky. Who is calling the shots here, the buyer or seller. ;)

Oil Can   Wed, 19 Dec 2012, 11:15pm PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 2

Do we get a Fed implosion next year? Or QE 5, this time it's personal!

lostand confused   Wed, 19 Dec 2012, 11:28pm PST   Share   Quote   Permalink   Like   Dislike     Comment 3

Well, the Bank of Japan has been in perpetual QE for decades now. It didn't stop their slide. Though their currency appreciation may have put a dent in prices-comparitively.

now that bernake has adopted QE till all of eternity -lets wait and see how this goes.

RentingForHalfTheCost   Thu, 20 Dec 2012, 9:11am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 4

robertoaribas says

RentingForHalfTheCost says

But but but, decreased sales means appreciation (no supply) ? Wait, it could also mean depreciation (no demand). Dammit, this supply-demand economics is tricky. Who is calling the shots here, the buyer or seller. ;)

Not tricky if you learn how to read: Inventory (supply) hit a low since sometime in 2005... thus, it is reduced supply.

http://money.cnn.com/2012/12/20/real_estate/existing-home-sales/index.html?iid=HP_Highlight

I tend to agree in part, however like someone said earlier, every home in the country is for sale if the price is right. We don't have an inventory problem, we have a price problem. You said yourself, that for the right price you would sell. Supply-Demand economics mentions nothing of an MLS system. We have tonnes of inventory, just low sales. Could be because sellers are asking too much, or that buyers are offering too little. The gap in these prices is the problem with sales.

Kevin   Thu, 20 Dec 2012, 12:27pm PST   Share   Quote   Permalink   Like   Dislike     Comment 5

"Higher prices will slow appreciation."

WHAT?

Either things are appreciating, or the price isn't higher.

Bubbabear   Fri, 21 Dec 2012, 4:17am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 6

lostand confused says

-lets wait and see how this goes.

"Hyperinflation in America isn't here yet, but we're edging dangerously close to the point of no return."
can we experience hyperinflation in the US? Yes, it’s possible… But! Hyperinflation is usually caused by the collapse of a country’s government or as a result of war. And if that happens, well then I think we will have other problems to worry about!

Bubbabear   Sat, 22 Dec 2012, 3:54am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 7

Oil Can says

Do we get a Fed implosion next year? Or QE 5, this time it's personal!

The U.S. economy has never been less-solvent in its entire history, meaning that U.S. Treasuries have never been less valuable. The new supply of U.S. Treasuries grossly exceeds any level of paper the U.S. has ever pumped into global markets before, meaning that Treasuries have never been less valuable. And yet we see (alleged) buyers being permanently willing to pay (by far) the highest prices in history for these mountainous stacks of paper.
http://blog.ml-implode.com/2012/05/the-mythical-land-of-us/

Oil Can   Sat, 22 Dec 2012, 2:53pm PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 8

E-man says

Here we go again with Mr. one liner on OCHN's post.

I'm weekend guy on this site. Just don't have much time to be on Patrick.net (any other expect OCHN) too long, so I drop my bomb and leave. I wrote this...

http://ochousingnews.com/news/the-final-bailout-of-the-housing-will-be-the-federal-reserve-of-the-all-the-housing-programs

Oil Can   Sat, 22 Dec 2012, 7:00pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 9

robertoaribas says

hat link has a minimum of 30 grammatical errors, some serious misstatements of fact, and sophomoric writing style...

7 versus 3. And you are in the most trusted profession of all.

Raw   Sun, 23 Dec 2012, 2:05am PST   Share   Quote   Permalink   Like (1)   Dislike (1)     Comment 10

RentingForHalfTheCost says

But but but, decreased sales means appreciation (no supply) ? Wait, it could also mean depreciation (no demand). Dammit, this supply-demand economics is tricky. Who is calling the shots here, the buyer or seller. ;)

Decreased sales could mean low demand, but then with low demand we would also have falling prices, and we all know prices are skyrocketing. Low sales + higher prices = no supply.
The facts are out there....We have the greatest buying opportunity in a life time. Don't screw up.

Kevin   Sun, 23 Dec 2012, 3:43am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 11

The greatest buying opportunity was last year. There isn't any inventory now, so its a total sellers market.

Raw   Sun, 23 Dec 2012, 3:57am PST   Share   Quote   Permalink   Like   Dislike     Comment 12

Kevin says

The greatest buying opportunity was last year. There isn't any inventory now, so its a total sellers market.

I'll go with that. The greatest ever buying opportunity is over. But the second greatest buying opportunity is in 2013. It's never a wrong time to do the right thing, so what are you waiting for?

Bubbabear   Sun, 23 Dec 2012, 6:52am PST   Share   Quote   Permalink   Like   Dislike     Comment 13

Oil Can says

robertoaribas says

hat link has a minimum of 30 grammatical errors, some serious misstatements of fact, and sophomoric writing style...

7 versus 3. And you are in the most trusted profession of all.

Hey Oil Can , I've arrived at the conclusion where Dumbtexan went after OCR went with Facebook

everything   Sun, 23 Dec 2012, 7:29am PST   Share   Quote   Permalink   Like   Dislike     Comment 14

Interest rates are not going up for years, and the fed keeps pushing that forward. Now, the fed feeding investors money to buy excess inventory has done more for price appreciation than anything. But, we've known for quite sometime who owns the government.

The headline does not really make any sense when it says higher prices will slow market appreciation?

With how cheap money has become (for certain entities), and for others yet they've got piles of it with nowhere else to go, it's no wonder we have such drastic appreciation.

In a renters society it won't matter how high property taxes, upkeep, or energy prices go either, or interest costs, as it will just be passed on.

Oil Can   Sun, 23 Dec 2012, 9:33am PST   Share   Quote   Permalink   Like   Dislike     Comment 15

Billybigrig LOL!

swebb   Sun, 23 Dec 2012, 11:58am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 16

robertoaribas says

that link has a minimum of 30 grammatical errors, some serious misstatements of fact, and sophomoric writing style...

I thought you were probably being too harsh...then I read the first paragraph. You are being generous.

Oil Can   Sun, 23 Dec 2012, 6:30pm PST   Share   Quote   Permalink   Like   Dislike     Comment 17

swebb says

I thought you were probably being too harsh...then I read the first paragraph. You are being generous.

How is that 410(K) plan going for you?

iwog   Tue, 1 Jan 2013, 2:14am PST   Share   Quote   Permalink   Like   Dislike     Comment 18

Kevin says

The greatest buying opportunity was last year. There isn't any inventory now, so its a total sellers market.

I disagree and I bought two homes last year. The greatest buying opportunity was in late 2008 and 2009. There's absolutely no comparison.

Imagine nearly limitless homes at a foreclosure auction being sold for 30% of their 2006 value with fresh 6-figure remodels and no other bidders. I didn't know how good I had it until years later.

Kevin   Tue, 1 Jan 2013, 1:17pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 19

iwog says

Kevin says

The greatest buying opportunity was last year. There isn't any inventory now, so its a total sellers market.

I disagree and I bought two homes last year. The greatest buying opportunity was in late 2008 and 2009. There's absolutely no comparison.

Imagine nearly limitless homes at a foreclosure auction being sold for 30% of their 2006 value with fresh 6-figure remodels and no other bidders. I didn't know how good I had it until years later.

This would be highly dependent on the market. We had a mini bump here in 2009. My home went from being worth $540 to $600 back down to $525 in the spring of 2011. It wasn't until last January that the price recovered.

robertoaribas says

iwog says

The greatest buying opportunity was in late 2008 and 2009.

Not in Phoenix, the best opportunity was from 2 years ago, to 1 year ago...

There's no such thing as a good buying opportunity in Phoenix, unless you're a fan of living in desert hellscapes full of old people and seas of stucco.

iwog   Tue, 1 Jan 2013, 3:43pm PST   Share   Quote   Permalink   Like   Dislike     Comment 20

Kevin says

This would be highly dependent on the market. We had a mini bump here in 2009. My home went from being worth $540 to $600 back down to $525 in the spring of 2011. It wasn't until last January that the price recovered.

Well if you went strictly by the charts, the low was in late 2011 however the homes that were selling were of lower quality and in worse neighborhoods. In 2008-2009, many of the homes were flipping failures and had fresh remodels in prime locations. There were no buyers.

HEY YOU   Tue, 1 Jan 2013, 4:12pm PST   Share   Quote   Permalink   Like   Dislike     Comment 21

RentingForHalfTheCost says

But but but, decreased sales means appreciation (no supply) ? Wait, it could also mean depreciation (no demand). Dammit, this supply-demand economics is tricky. Who is calling the shots here, the buyer or seller. ;)

The buyer has absolute control of the housing market. No buyer-No sale-No overpriced houses. Damn! I forgot about the ignorant(stupid) buyers that are forfeiting their power.

iwog   Wed, 2 Jan 2013, 1:45am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 22

HEY YOU says

The buyer has absolute control of the housing market. No buyer-No sale-No overpriced houses. Damn! I forgot about the ignorant(stupid) buyers that are forfeiting their power.

Don't you think this is a bit silly? Technically you are correct. People can simply agree not to consume housing and live on the streets occasionally freezing to death.

Where a housing investor is concerned, he cares not if a person buys or rents. Either way the money is pushing up home values.

CaptainShuddup   Wed, 2 Jan 2013, 2:47am PST   Share   Quote   Permalink   Like   Dislike     Comment 23

House prices, are a like a teen slut on Jenny Jones, they will do what ever they want, that's just how they are.

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