Some Stories To Chew On Over Your Weekend

[cieldumort]

Yahoo! Finance
Housing Bottom? No, the Mother of All Head Fakes
...Whitney Tilson of T2 Partners calls the May numbers "the mother of all head fakes." He--and the two analysts below--think house prices will resume their decline in the fall. We're in that camp, too...

Econobrowser
Been down so long it looks like upThe Commerce Department reported

Comments

Using Sense

[theheretic]

I personally think that housing prices (here in California particularly) will go to around 20-25% of their 2006 price (value would be an inappropriate word) but the price won't hit bottom until all the ARMs are done adjusting and the cheap-energy irrigated locations (LA, Phoenix, Vegas, San Francisco, San Diego) suffer the costs of engineering sustainable utilities (water, power, sewer). That means a $620K house in 2006 will sell for around $120K in 2013ish or beyond. Taxation and higher interest rates for mortgages will have a huge impact on price because home buyers have less and less to spend with wage erosion and higher mortgage premiums so market economics does its obvious thing: prices drop to meet the market. In some regions, like San Francisco (and San Jose), water supply issues will be critical to home values and depending on whether supplies are available or not will determine if a home is worth anything at all. In places like Phoenix, where fossil water and long distance pumping was required, most of the homes will have no

Re: Using Sense

[cieldumort]

And I thought I was a bear!

I just can't see home prices falling by so much (more) ... I think that we would see something like "Cash For Fixer-Uppers!," before the new administration knowingly lets home prices fall by any more than another 25%....

Although I do worry that *if* home prices were to fall more than another 25% (using the Case-Shiller index), there would almost certainly be another really nasty worsening of the financial crisis, and thus another sharp leg down in GDP - which could then become a completely out-of-control spiral.

But I think that the odds of that have now fallen, and are probably less than 33%.

Re: Using Sense

[theheretic]

So use math and you'll see my point

Re: Using Sense

[cieldumort]

Stock Picker Rabbit Sez

Re: Using Sense

[theheretic]

Know what my favorite financial question is, the one people ask me the most? "What is a good investment