The Daily Capitalist: Home Prices Fall — Again

» Erik wrote on 07.01.09 @ 04:38 AM

These factors, plus the glut of unsold houses (foreclosures and over-built tracts), plus the oncoming impact of increased interest rates on both mortgages and credit cards, mean that at best sales prices will remain flat for quite a spell even after the bottom has bottomed.

» San Roque Resident wrote on 07.01.09 @ 09:45 AM

Jeff’s take is always valuable, and deserves serious consideration. But he should have gone further.

The south coast is often divided between owners and renters. That’s an obvious line.
Another is between “primary homes” and “retirement/vacation homes”.

But one too rarely discussed is the gap between “resident homes” and “investment
properties”. This latter category often pushes and corrupts home prices on the south coast out of all normal, national bounds.

Most locals who buy a south coast house are looking for a place to live, a home. But
others are just looking to diversify their portfolios with “real estate”, and buy to
create renter cash-flow, or for appreciation.

Finally, there are/were short-term outright speculators. For much of this decade
(until last year’s crash) they’d syndicate partnerships, buy properties, “fix them up”,
and sell them, all within 90-150 days, at big mark-ups, often having never even
resided in them. Realtors call these tactics “spinning”, “flipping”, “churning”. It
made mince-meat of classic housing models and ratios, as calculated in most parts
of America.

We’ve seen a similar “free market” speculation since Easter in oil and gas stocks.
Gasoline at the pumps has been rising, non-stop, for 100 days now, even though
supplies are “large” and demand is “down”. The only thing pushing prices higher is
open speculation on future values of energy company stocks and supplies. It also
makes mince-meat of classic energy forecast models.

So even though all the factors Harding analyzes are mostly correct, the failure to
focus on the role of profit-taking and short-term housing speculators in the local
market may be skewing his conclusions.

» gregory Guay wrote on 07.02.09 @ 06:50 PM

Mr. President why are the banking,and loan company not making loans as you promised they would do for the american people we are all hurting and not getting any help. Time for them to answer to you for not helping us the little people that keep them in business, maybe we should boycott their business. Check http://obamamortgage2009.blogspot.com/2009/03/obamas-mortgage-modification-do-you.html#comments

» Reading symptoms, not causes. wrote on 07.06.09 @ 11:53 AM

The above and measurements measure symptoms. The USA economy is sick: nothing has been done to stop the cancers. Anyone who reads causes, as opposed to prognosticating based on effects, can tell you what will happen this fall. Obamanomics will go for broke trying to stop the avalanche. Already yanked the safety net from beneath the old people and the lazy people are probably in the cross-hairs; but, yanking these people’s sustaining government checks will not boost housing nor the economy in general. Rather than let the system self correct and return to supply-and-demand, these socialist moves have lead to a savings implosion. The only real question is whether the American people have the fortitude to buckle down and act like Americans or will continue to be squashed under the heavy hands of govbusiness and fall into communism. Either way, neither promises any real-price value appreciation in housing. Land maybe. Not housing. For sure. The future demand has already been spent nonetheless and no new future demand is being created. Quite the opposite!

Any predicted turn around is simple posturing so the fund manager can unload his/her positions on a naive public.