Pop Goes the Bubble! (Housing Bubble)

http://www.counterpunch.com/whitney12272005.html


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As Paul Van Eeden says in 'the End of the Real Estate Boom",

'this is not a trivial matter As the real estate market goes, so goes the economy and the stock market. The only thing that could keep the US on life-support a little longer is another round of interest rate reductions, but this time it could hurt the dollar, and that would mean higher gasoline prices again, so it's a double-edged sword."

Van Eeden provides a good description of the mess that Greenspan has created; a blind alley from which there is no foreseeable escape. The Federal Reserve has managed to keep the economy running on fumes by dropping rates 12 times to a rock bottom 1% after the fall of the stock market (another Greenspan fiasco which cost the American people $7 trillion) It was basically "free money" loaned out to keep the country limping along (and to facilitate Bush's tax cuts) while millions of Americans tried to recoup from their losses. Regrettably, the cheap money and shaky loans simply created an even bigger and more lethal bubble that is following the same trajectory as the Hindenburg.

Ka-booom!

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Still think you"ll be able to sell your house at a profit?

Jittery Americans don't need a crystal ball to spot the shipwreck looming just on the horizon. The last remaining droplets of prosperity are trickling from the ailing economy and Greenspan's 18 year quest to flatten the American middle class will soon be realized. 'the Economist" summarized it best when they said, 'the worldwide rise in housing prices is the biggest bubble in history. Prepare for the economic pain when it pops".
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prepare as if for a cat. 5 hurricane

When peak oil occurs, people will begin migrating back to the cities. That's where my house is. It should regain its value and then some.

While transportation is vital to people, food is even more vital. And since the vast majority of our food depends on oil in one form or another, food is going to skyrocket. Out here in the country, I can grow my own food. However most people can't do that in a city, and at any given time a city has only enough food to last for three days.

I can stay out on my modest acreage, with my food and my wood furnace and my wind turbine, and while life will be tough, one will be able to manage to squeak by. Not so in a city. In fact it has been a truism since the Great Depression that it is easier to be poor out in the country rather han poor in the city.

I sold my home at a 75K profit (in 3 years), then used the profit to buy a condo - free & clear - while I wait (with my down-payment ready) for the bubble to burst. Hopefully we'll be out of the condo soon (which I can lease out) and into a home.

It's not too late to sell off and wait it out.

Which came as a shock to the so-called "experts" Average lenth of time a house is now on the market, five months. And housing prices are starting to drop out of low earth orbit. It's going to get ugly real quick. Eight out of the last ten recessions was precipitated by a drop in the housing market, and with the huge inflation that the housing market recieved over the past decade, it isn't going to be a drop, it's going to be a free fall. And that reccession could turn into a depression if we're not real careful.

This is going to have major consequences in our economy and our society. It's going to ripple through the US like a boulder dumped in a cow pond.

what it's worth.

The "bubble" is spotty at best. Some areas of the country have experienced 20-30% annual value increases, many areas are flat or at the traditional 5% growth rate. It looks to me like the landing will be relatively soft with value growth slowing or even flattening but no dramatic de-valuation. Key word here is "dramatic".

In the areas with modest growth I see no real change in the market. For those in the hot spots who have speculated heavily there may be some unpleasant surprises, but hopefully nobody will be jumping from windows.

is seeing depressed markets while others are stable or growing. it depends on how far one lives from the metro chicago area

housing have diverted loads of money from investment in businesses and other endeavors. I realize there are lots of collateral jobs in the building part of real estate-- but that is not the whole picture. Tulipmania--you're not just in the garden.