Tuesday, Sep 26, 2006

You can't fail with bricks and mortar you know!!

Money Week: Will the US housing market achieve a soft landing?

Its official - US house prices are now falling.

Posted by kpjcomp @ 01:54 PM (712 views)
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1. little professor said...

From the same site:
http://www.moneyweek.com/file/18903/could-the-us-housing-market-crash.html

A doomsday analysis of the US housing market's fate

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Will there be a hard landing? No! Will there be a crash landing? Absolutely!
Heres what Robert Toll, CEO of Toll Brothers, said at the Credit Suisse conference. He said the market got ahead of itself in recent years, citing greed on the part of buyers and sellers, and that 'current speculative inventory is probably at its largest.

Who will the housing crash affect? Everyone. Real estate agents will be first. [Hurrah! - Prof] As a group, theyve made a ton of money during the housing boom, and theyve spent millions on new cars, vacations, restaurants, clothes, and everything else that comes with excessive discretionary income. Thats over now.

Many flippers bought multiple properties. We had bidding wars. And just like the tech boom, the buyers were not making decisions based on fundamentals. And just like we saw a tech crash with everyone rushing to sell, were now just starting to see flippers dump properties for 200-400% losses on their deposits. Add to the woes the fact that interest rates are up and most flippers bought using creative financing and low-rate ARMs.

Loss of hundreds of thousands of jobs created from housing will act like a virus and spread throughout our economy. As real estate agents, attorneys, and mortgage brokers rein in their spending, it will affect restaurants, car dealers, advertising companies, jewelers, remodeling contractors, furniture manufacturers, bank profits, electronic retailers, clothing -- and the list goes on and on and on.

As the primary players are affected and they cut back on spending, so will the secondary players in this market. These companies will be forced to lay off employees. With the loss of jobs growing, there are fewer buyers that can afford to buy houses and many existing homeowners that can no longer afford to make their monthly mortgage payments. So now we have a three groups of sellers scrambling for the ever-dwindling buyers market. Youve got the flippers desperate to sell. Youve got the builders stuck with inventory of unsold homes, and now you have the group of sellers that are being foreclosed or simply decide to sell because they can no longer swing the monthly mortgage payments after losing their jobs.

And so the cycle will grow like a virus.
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Tuesday, September 26, 2006 02:31PM Report Comment
 

2. rich said...

Duck and cover!

Tuesday, September 26, 2006 03:12PM Report Comment
 

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