Close Topic Options

The Housing Bubble

There has been quite a lot of chatter in recent months about the housing bubble in the USA -- and particularly about when it will burst and sink the American economy into (depending on who you read) depression, recession, stagflation, etc.

Perhaps the best summation for this scenario is Business Week: "Today's housing prices are predicated on an impossible combination: the strong growth in income and asset values of a strong economy, plus the ultra-low rates of a weak economy. Either the economy's long-term prospects will get worse or rates will rise. In either scenario, housing will weaken. Caveat emptor."

House price crashes are actually worse than stock crashes. Most people have most of their money in their house, and that money is highly leveraged.

More of the story.

Bubble Housing The

This is to be expected, but not yet. The economy we live in is much like a pendulum. It swings bad, then swings good. The bigger the good, the bigger the bad. The depression can be traced to the excess of the roaring twenties. There will be a housing crash, and it may effect a lot of people negatively, especially home owners. But allot of this is because of the excess and the ease of getting second mortgages. It is so easy in America to refinance that its almost a yearly thing with people. No one seems to want to pay off their house anymore, its about refinancing to get more money to use. That is part of this housing bubble problem, people aren't reducing debt, they are increasing it.

The Housing Bubble History & Civil Business Politics

Yes, that's definitely one of the reasons -- and the banks and mortgage companies are pushing people to do it. Some of the pitches I've seen say, "Is your home equity going to waste?" Huh? "Waste"? Are they out of their minds? When you continue to leverage your home for toys and clothes and manicures, perishable things that don't have the same value as your home, that's wasting your home equity.

Perhaps not. But soon.

Bubble Housing The

I think you actually put my point into better words than me. People keep feeling they NEED to use the equity in their houses. I think that its ingnorance about what equity really is and how much building it up can help. But the mortgage companies aren't going to stop pushing people to get second mortgages and they aren't going to help educate either. They want to strike while the iron is hot.

Bubble Housing The

Housing Slowdown Could Spell Trouble

AP - The nation's red-hot housing market may finally be nearing its peak, meaning the end of double-digit annual percentage price gains for homeowners and potential trouble for more recent purchasers who stretched to buy.
Ref. https://story.news.yahoo.com/news?tmpl=stor...using_boom_bust

The Housing Bubble

U.S. Sept. homebuilders index falls to 2-year low By Rex Nutting
WASHINGTON (MarketWatch) -- U.S. homebuilders remained optimistic in September, but their confidence fell to a two-year low, the National Association of Home Builders said Monday. The NAHB-Wells Fargo housing market index fell to 65 in September from 67 in August, the third decline in a row and the lowest since July 2003. Readings over 50 in the index show optimism about future building activity. Higher interest rates, "some buyer resistance" to high prices, and high gas prices are contributing to the decline, said David Seiders, chief economist for the builders' group. "The housing market is showing signs of cooling, and builders are reacting to that," he said.

This is actually the full text of the news item found here:
Market Watch

Perhaps it will be a slow deflation rather than a "burst" of the housing bubble ...

The Housing Bubble

THE 'HOUSE PARTY' IS ABOUT TO COME TO AN END SAY ECONOMISTS

Much of the nation has had a lovely real estate boom for the past five years, but the house party is almost over and the cleanup won't be pretty.
Ref. https://deseretnews.com/dn/view/1%2C3949%2C%2C00.html

The Housing Bubble Politics Business Civil & History

Once again, we have warning that the "boom" is slowing down.

New Home Sales Fall More Than Expected
https://news.yahoo.com/s/ap/20051223/ap_on_...o_ec_fi/economy

By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON - Sales of new homes plunged in November by the largest amount in nearly 12 years, providing the most dramatic evidence yet that the red hot housing market over the last five years is starting to cool down.


Some economists are worried that housing prices in some areas have been driven higher by a speculative frenzy that could see prices plunging as sales slow in the hottest markets. That scenario would evoke memories of the sharp declines that occurred when the stock market bubble burst in early 2000.

But other economists contend that housing is unlikely to exhibit the same collapse that the stock market did although they believe that the declines in sales expected next year will act as a drag on the overall economy.

By area of the country, sales were actually up by 13.4 percent in the Northeast, the biggest percentage increase in this region since January 1994.

However, sales fell in all other areas, led by a 22.1 percent drop in the West, the biggest decline in this region since February 1995. Sales were down 18.3 percent in the Midwest and fell 5.5 percent in the South.