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Source:
Sorry, But House Prices Are Still Too High And They’re Going To Fall
Henry Blodget
Yahoo Tech Ticker, Jun 30, 2010 11:00am
http://finance.yahoo.com/tech-ticker/sorry-but-house-prices-are-still-too-high-and-they’re-going-to-fall-513154.html
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
"Overall household indebtedness is up from $7 trillion to almost $10 trillion since 2000. On this sum, we estimate, the American consumer has an annual interest bill of more than $500 billion; a sum, by the way, that vastly exceeds his current income growth." —Kurt Richebacher
Knowing that the vote over the weekend in Greece was really a referendum on Euro membership, a majority of the Greek Parliament said yes to staying. European Finance Ministers meet again on Wednesday to solidify the 2nd bailout package for Greece at the same time hopefully a deal is consummated between Greece and its creditors this week. The Greek 14.5b euro bond that matures on March 20th is up by 2 pts. The optimism that all will be completed and contained AGAIN to Greece has yields lower in Portugal, Spain and Italy. The iTraxx Financial Index is also narrower by...
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July 1st, 2010 at 9:36 am
House prices have always been “too high” in certain areas like SF,NYC, Boston & DC – and London, Tokyo, Paris etc. but yes by most meaningful measurements they’re still too high.
Whatever happened to “you never lose money on real estate” and “they aren’t making new land” LOL
July 1st, 2010 at 10:13 am
A mean reverting ratio, assuming the mean is long term and stable, must, by mathematical law, drop below the mean after a bubble. If the bubble takes the mean ten units over for one year, then the retracement must be ten units under for one year.
The housing bubble took us nationally to something like six times income for the median house price, if not higher. Consquently, we need to have a proportional weighted move under the average. I am still convinced we could see 2.5 times income without all the government support, but bearing in mind the continued patching of the holes in the bubble, I would argue for just under three times income for four or five years.
That means a drop of another twenty to twenty-five percent in the median price. It’s all about jobs, financing, and inventories. And, good God, what will happen when mortgage rates hit ten percent? Any bets on whether that is bullish or bearish for house prices?
July 1st, 2010 at 11:27 am
Local governments could go a long way toward helping to solve the house pricing and marketing problem if they would impose a moratorium on new construction permits until some of the excess inventory is absorbed. This would also be in the local government’s advantage because it would slow the erosion in property values and thus keep property tax levels near current levels.
July 1st, 2010 at 8:02 pm
“Local governments could go a long way toward helping to solve the house pricing and marketing problem if they would impose a moratorium on new construction permits until some of the excess inventory is absorbed.”
Indeed, but their policy is the opposite – they want to spur new construction by offering tax and permit discounts, land subsidies, etc.