patrick.net

smaulgld- Don't you also find it intriguing that after having to endure over a year and a half of housing cheerleading articles lauding the phenomenal, extraordinary housing market recovery, now, after 6 years, very quietly and gently it is suggested a few things are broken.

Without QE Real Estate "Worldwide" will now CRASH!

Puhum:"To be fair there was never a recovery just a transition from Recession to GREAT DEPRESSION!"
True but there has been a recovery in the price of the relatively few homes that have been sold in the last year.
That is the "recovery" that is at risk.

David"Don't you also find it intriguing that after having to endure over a year and a half of housing cheerleading articles lauding the phenomenal, extraordinary housing market recovery, now, after 6 years, very quietly and gently it is suggested a few things are broken."

there isnt a problem when it suits them and there is a problem when then can be the hero and fix it or look like they are fixing it or if they need to blame someone

robertoaribas "see you on here, a year from now, when home prices are even higher, and you are even more shrill and disconnected from reality."

home prices will be higher next year if the employment market picks up tremendously or if the Fed backpedals and doubles down on QE
otherwise there isn't enough demand in the system.

California job growth accelerates-but in the service sector-and how many of these jobs are part time.

http://www.centralvalleybusinesstimes.com/stories/001/?ID=23955

If we see growth of full time jobs across all sectors, home prices could increase- we aren't see that yet

Unfortunately too much of the economy and housing market depends on the Fed.
But having said that I'll go with home prices on the national level flat to slightly down YOY in August 2014.

To me what is more important is not home prices but increased sales of homes and higher home ownership rates-that would reflect a true recovery

" I'd postulate that with so many homes financed with ultra low rates, as rates rise, lots of owners like me will say, "screw it, my mortgage is 4%. I'm keeping this home forever."

Great point. And that is what will happen.
The low interest rates were a gift to the wealthy creating a greater wealth disparity.

The Fed's policies favor the propertied and those with access to credit.

Had the fed done nothing, home prices would have fallen and we would have the "affordable housing" the Fed government claims to favor

smaulgld says

Great point. And that is what will happen.

The low interest rates were a gift to the wealthy creating a greater wealth disparity.

Huh? How do you figure that?

Low interest rates favor borrowers and penalize savers. Wealthy are savers. Poor are borrowers.

tatupu70 "Low interest rates favor borrowers and penalize savers. Wealthy are savers. Poor are borrowers."

Agree 100% with your statement- here is how.
the "poor" savers can't save because there is no place to earn a decent return. With no real savings and perhaps poor to ok credit they can't buy homes.

The wealthy already have assets saved and credit good enough to take advantage of the record low interest rates so they were able to buy homes cheaply the past few years and lock in 30 year long term rates thus locking in low shelter costs and perhaps asset appreciation.

The wealthy also own the greatest amount of stocks as they have the most disposable income and extra cash to invest.
The stock market has done extremely well these past few years.

So the wealthy don't mind parking some of their cash in a no interest bank account while they invest the rest in stocks and borrow money at low rates to buy homes.

smaulgld says

Agree 100% with your statement- here is how.

the "poor" savers can't save because there is no place to earn a decent return. With no real savings and perhaps poor to ok credit they can't buy homes.

Come on now. You don't really think this. The poor can't save because they spend all their money just on necessities.

smaulgld says

on another board someone noted that all cash buyers don't need jobs-this is true but how many all cash buyers are there?

I'm an all cash buyer, but I will only buy close to where I live and work, where the jobs are.

tatupu70 "Come on now. You don't really think this. The poor can't save because they spend all their money just on necessities."

that's true and my point - low interest rates don't help them participate on the upside -ie buying houses on credit and buying stocks.
And if they managed to have a little left over-they can't save because the interest rates offered by banks pay less than the rate of inflation.

So the point remains the same-the wealthy benefit from this low interest rate environment and the poor don't

Dan8267"I'm an all cash buyer, but I will only buy close to where I live and work, where the jobs are."

Makes total sense. The number of people in your good circumstance, however, are not enough to sustain higher prices

The real estate "recovery" ended with the Fed's massive intervention.. they made sure of that.. they next "recovery" phase will start when all the easy money has been made again after this interruption.. not too far in the future IMO.. it won't be a cliff like the last one as the factors are different this time.. a slow bleed .. similar to Japan..

Everyone I talk to says bubble, bubble, bubble, and they're right, but yet prices keep going up and homes sell before they're listed.

Throw away all of your economic textbooks. Normal has just been normalized.

exfatguy says

Everyone I talk to says bubble, bubble, bubble, and they're right, but yet prices keep going up and homes sell before they're listed.

Throw away all of your economic textbooks. Normal has just been normalized.

that happened in 2006 as well.. I'm not following any one market, but all the national news I've read lately points to a slowdown in sales.. the culprit, according to the RE industry, of course, is higher interest rates and not the cost of the product itself, which can only and forever go up.. or maybe not..

kmo722 "the culprit, according to the RE industry, of course, is higher interest rates and not the cost of the product itself, which can only and forever go up.. or maybe not..

What if its all three-rising interest rates,rising prices and no jobs that will bring down the market?

It will last until tomorrow morning, then it will be over.

you could be right! the jobs report is tomorrow

BS on the BS. The price increases are due to speculation, again. People and organizations who dont live in the houses in question. All cash buyers will be the first to dump their properties regardless of increasing interest rates, simply because they aren't making enough per year on the investment. There will be better places to put the money. 10 percent will look lame. To hell with mortgage rates. The money could go anywhere overnight. Forget the length of a mortgage.

There is also the Bastille Factor. You are assuming the McDonald's manager will be content forever to live in smaller and smaller and more increasingly filthy living conditions for the same or rising rents. Sorry, the weather isn't that nice anywhere. Screw California entirely.

Oh, and do not EVER, I repeat EVER, come asking the Feds to bail out the California disaster areas. All of the QE has already been your bail-out money.
You're welcome. Kiss my ring. Never ask again

smaulgld says

you could be right! the jobs report is tomorrow

What jobs? Oh, the minimum wage part-time ones. That'll drive up the bay area home prices! ;)

Fewer people not losing jobs is not the same as people getting jobs

David9 says

I'm glad he is reaching out for information.

Not so sure he's reaching out - his typical MO is to TELL everyone why they are wrong and he is right. Not sure it will be any different in this dog-and-pony show.

I hope job report is good so Fed doesn't print $2 trillions per year.

I only have 2 trees left in my backyard.
Not enough to make paper.

less reason to think the "recovery" can last with interest rates soaring and the fundamentals of the economy not improving-and even conceding the economy is improving, its not improving at the same 80% rate that interest rates since May!

and the ten year is up to 2.89% up from 1.6% in May
up around 80%!!!
do you really think the Re market can sustain that as cash investors exit the market?
Remember many cash investor borrowed the money at low rates and will stop doing so as rates go higher.
Do you think all the millenials with out jobs or with part time jobs and student loan debt are going to fill the void?
The data says other wise as they are buying homes at a lower rate than before.

Welcome to the recovery as Tim Geithner wrote in the summer of 2009

smaulgld says

do you really think

Did anyone think Princess Diana's death was a complete accident?

I see similiarities between the two subjects.

David9 says

smaulgld says

do you really think

Did anyone think Princess Diana's death was a complete accident?

I see similiarities between the two subjects.

Rates were higher at the time of Diana's death
today the 30 year is heading higher though and now stands at 4.75% non FHA 4.62 FHA

Has housing improved from where we were a few years ago, maybe? A round of chemotherapy can also temporarily improve your condition, doesn't mean the cancer has been cured.

robertoaribas says

see you on here, a year from now, when home prices are even higher, and you are even more shrill and disconnected from reality.

What if they're lower?

Goran_K says

robertoaribas says

see you on here, a year from now, when home prices are even higher, and you are even more shrill and disconnected from reality.

What if they're lower?

EGAD!

Repeat from August 2013
Unfortunately too much of the economy and housing market depends on the Fed.
But having said that I'll go with home prices on the national level flat to slightly down YOY in August 2014.
To me what is more important is not home prices but increased sales of homes and higher home ownership rates-that would reflect a true recovery

If you read any of my writings there is a consistent theme:
regarding Housing, the stock market and gold and silver/

Housing-macro economics make it easier to track the direction of prices because even if the Fed's monetary policy is geared towards boosting home prices there is a limit to what people can pay and how many people can pay higher prices.

With a weak job market and tepid wage growth, rising home prices are difficult to sustain in all but a few markets

My prediction last year, that year over year come this year, prices will stop rising was a prediction that I could make with confidence because you can't get water out of a stone.

Stock Market- my writings make clear that with companies buying back their own shares and sovereign funds buying you have the largest participants in the market and they can keep the market afloat even if the fundamentals don't support higher prices.

I have written that it's much easier to pump up (and keep up) a stock market bubble than a real estate bubble. Once people accept sky high valuations in stocks they can continue to rise. Rising stock prices attracts more buyers, but rising home prices repels many.

At some point stock market prices will collapse if they continue to rise with out revenue and earnings growth to justify them.

Gold and Silver-these markets are small and the silver market expecially so and they can be subject to monetary policy, geo political events, large players in the market, such that predicting price moves in the gold and silver markets is harder and indeed the moves in these markets are often counter intuitive.

Any national home price predictions for August 2015?

The fake recovery, like any market distortion that defies all reason, can last far longer than you can stay solvent while shorting it.

HydroCabron says

The fake recovery, like any market distortion that defies all reason, can last far longer than you can stay solvent while shorting it.

The internet bubble lasted five years

smaulgld says

Any national home price predictions for August 2015?

Hard to say. I think it will be more of a 'cooling' than any large scale drop at this stage. Although that could change if institutional investors decide to start listing their inventory. Although in the area that I live in now (Florida), prices hit a peak around August of last year and are now starting to drop.

Diomedes777 says

smaulgld says

Any national home price predictions for August 2015?

Hard to say. I think it will be more of a 'cooling' than any large scale drop at this stage. Although that could change if institutional investors decide to start listing their inventory. Although in the area that I live in now (Florida), prices hit a peak around August of last year and are now starting to drop.

I agree because unlike the last housing price bubble-there have been far fewer homes sold this time around and many are still underwater from the last bubble so inventory will remain relatively tight and any price rise will be met with selling which will push prices back down again.

http://smaulgld.com/real-estates-underwaterdown-side-sticky-catch-22/

Prices would collapse if there was an over all deterioration of the entire economy