Word to the wise re the real estate bubble:

smoogatz

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Mon Jun-19-06 02:50 PM
Original message

Word to the wise re the real estate bubble:

the slow leak of the last six months isn't going to stop anytime soon. In fact, in what have been the hottest markets (NYC, LA, Vegas, Boston, etc.), it's starting to look more like a full-on collapse. My wife's uncle (let's call him Don) is a BIG developer in SoCal, responsible for more McMansions and gated communities than you can shake a stick at. He's a wingnut, but otherwise a very astute guy who has amassed billions in the SoCal/Vail/Aspen/Utah/Reno/Vegas markets over the past thirty-five years. He's currently moving into cash, so he'll be ready to buy aggressively when the bubble blows wide open, which he thinks it's going to do in the next 18 months or so. His advice to my wife and I, when he heard we were thinking about buying a bigger (and more expensive) place: stay put, because even here in the midwest prices have already peaked, and are very likely to decline significantly in a year or so.

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BOSSHOG

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Mon Jun-19-06 02:53 PM
Response to Original message

1. If you live on the cusp of

Hurricane Katrina damage the real estate situation has been a seller's market for quite some time. Houses don't stay for sale for long. But that's to fill an immediate need.

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pitohui

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Mon Jun-19-06 02:58 PM
Response to Reply #1

5. it's supply and demand, there is no bubble here

you can't destroy hundreds of thousands of housing units across the south and then talk abt a bubble!

prices are sky high

hell we'd love to relocate but can't afford to

and it goes all the way up north to at least jackson, a co-worker put his house on the market after katrina to get $$$ from the immediate huge demand and spike in price there -- now he can't buy another home because he didn't stop and think that every other house on the market would also sell at greatly increased cost

he cashed out a lot of money but now he is going to have to sleep on somebody's couch until he figures it out

it's a funny old world :-)

i say people should buy the house they can afford and not worry about bubbles, we've been hearing these scare stories all of my life and i'm not spring chickadee

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smoogatz

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Mon Jun-19-06 03:04 PM
Response to Reply #5

6. The real caution here is against speculative buying, or uninformed

investment. The days of making easy money by "flipping" real estate are probably pretty much over.

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Zynx

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Mon Jun-19-06 02:53 PM
Response to Original message

2. The Midwest will not see the same pain as the coasts.

Inventories are only really overdone in the condo markets. Most of the Midwest's activity is just slightly above normal and will probably stagnate rather than decline. Home prices did not advance that far outside the range of reasonable price to income ratios. As for California, Arizona, Boston, New York, DC, Florida, etc they will see large declines.

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Stand and Fight

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Mon Jun-19-06 02:54 PM
Response to Original message

3. Thanks for posting this...

I'm moving back home in a few weeks -- Las Vegas -- and was considering buying a house. In the last week I have been advised by several, apparently honest, realtors, and now yourself, to hold back from buying because theh prices of a house in Las Vegas is going to return to a more realistic level. If I understand you and everyone else correctly. It will be my first time purchasing a house, so this is all very new to me.

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Gormy Cuss

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Mon Jun-19-06 02:58 PM
Response to Original message

4. AP: Foreclosures May Jump As ARMs Reset

Foreclosures May Jump As ARMs Reset
- By J.W. ELPHINSTONE, AP Business Writer
Monday, June 19, 2006

... This year, more than $300 billion worth of hybrid ARMs will readjust for the first time. That number will jump to approximately $1 trillion in 2007, according to the MBA. Monthly payments will leap too, many beyond what homeowners can afford....

"ARMs are a ticking time bomb," said Brad Geisen, president and chief executive of property tracker Foreclosure.com. "Through 2006 and 2007, I'm pretty sure we'll see a high volume of foreclosures...."

Delinquency rates appear to be rising, as well. While delinquency rates fell for most types of loans from the fourth quarter of 2005 because of a stronger economy, delinquencies for both prime and subprime ARM loans increased year-over-year in the first quarter, according to the MBA.

The hardest hit states so far are those that have experienced the roughest times economically. Michigan, Texas and Georgia lead the pack, specifically around Detroit, Dallas and Atlanta, whose major employers have run into strikes, bankruptcies and industry downturns.

AP Business Writer Alex Veiga in Los Angeles contributed to this story.

http://sfgate.com/cgi-bin/article.cgi?file=/news/archive/2006/06/19/financial/f101242D66.DTL
©2006 Associated Press

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spag68

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Mon Jun-19-06 03:08 PM
Response to Original message

7. housing

I'm not into real estate, except for my house, but I lived in Fla for 7 years 68-75 and now on Long Island for 17, and in those markets there is a limited amount of land for housing and more people in the market wanting houses, so it's hard to see a real downturn unless there is a depression. That is possible of course, but then were are all in trouble.

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smoogatz

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Mon Jun-19-06 03:14 PM
Response to Reply #7

9. Yep, but as interest rates go up

the cost of buying a house increases, which drives down demand. It's Econ 101. Interest rates have to go up because Bush's deficit spending is triggering inflation--also Econ 101.

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Warpy

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Mon Jun-19-06 03:09 PM
Response to Original message

8. Yep, that was my advice to myself

My pop hoped I'd move out of this neighborhood when he departed and I inherited. I chose instead to pay off my mortgage.

In the meantime, I'm keeping quite a bit in cash. Either the housing market will crunch a little faster or the stock market will, so I want to be ready to go bargain hunting when the time is right.

I'd intended renovating this little 1952 house. That's what's gonna wait.

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