Housing Crash

[Stephen Joseph 0]

http://business.timesonline.co.uk/article/...1752866,00.html

 

WALL STREET shuddered yesterday after Alan Greenspan, the United States’ central banker, warned American homebuyers that they risk a crash if they continue to drive property prices higher.

He said that the US house-price spiral had become an economic imbalance, threatening stability like the country’s trade gap or its budget deficit.

 

In a pre-retirement speech to fellow central bankers at Jackson Hole, Wyoming, Mr Greenspan said that people were investing in houses as if they were a one-way bet, not allowing for the risk of price falls. He said “history had not dealt kindly” with investors who kept ignoring risks.

 

The Federal Reserve Chairman’s warning, his strongest yet, sent share prices falling on Wall Street, at one point knocking 66 points off the Dow Jones industrial average. By the close the Dow had recovered to 10,397.30, down 53.30 points.

 

Traders said that Mr Greenspan’s comments were reminiscent of his 1996 inveighing against “irrational exuberance” on the stock market, for fear that a crash there would hit consumers and push the economy into recession. When the share price bubble finally burst, Mr Greenspan cut Federal interest rates to 1 per cent, triggering the flood of cheap loans for housing. He fears that rate increases set in train as the economy recovered could throw the housing market into reverse and suggested that the twin deficits would now restrict his room to manoeuvre if a house price downturn hit spending. Asset prices were, he complained, driving monetary policy more than ever before.

 

Share traders were also worried by an unexpectedly sharp fall in the University of Michigan consumer confidence index, a small but influential barometer, which fell for the first time in three months. The expectations index slid from 88.5 to 76.9.

 

Rob Carnell, of ING Bank in London, said that Mr Greenspan’s warning was an eerie reminder of a successful campaign last summer by Mervyn King, Governor of the Bank of England, to “use rhetoric rather than interest rates” to cool an overheating homes market. Britain has avoided a crash thus far.

 

On traditional tests, about a third of US local homes markets are now markedly overpriced. Over the past five years, the average US house price has risen by 50 per cent, half the rate of increase in UK prices in the five years to summer 2004. However, prices have risen more sharply in favoured areas, such as New York, and more than doubled in a few cities, such as San Diego.

[Special K 0]

Fuck, I could've told you that. Housing prices are UNREAL. Even when you factor in that tradesmen are getting paid fucking outrageous wages nowadays (seriously, who decided fucking carpenters are worth $80/hour?) housing prices are unreal. I live in Seattle, and this little POS 750 square feet house across the streetwith an unfurnished basement sold for 375,000 fucking dollars. Unfuckingreal. That's unsustainable. It's getting to the point that renting an apartment your entire life is the sweeter deal. That's crazy.

[SuperJerk 0]

It doesn't help when you can get a house with a 5.5% interest rate, like I just did 4 months ago.

 

So, basically, this is all my fault.

[Jobber of the Week 0]

As I said elsewhere, this is exciting for me, since we're currently between homes (renting) and just sold a house back in Northern CA right when prices peaked a little while ago, and now we need to get something here. So, housing prices going through the floor would be nice, as I'd like to live in a better part of town or a bigger place or something for this money if I could. =b

 

C'mon, market collapse.

[Dangerous A 0]

You ain't kidding JotW. I live in the disgustingly high cost of living Bay Area. My wife and I look at houses and we cry tears of blood because a mediocre house is going for half a million or more.

[NoCalMike 0]

The housing market is so ridiculous right now, I mean the Bay Area is expensive, but you can kind of justify it, but a place like Sacramento has 4 Bedroom Houses going for $450,000+ I mean, wtf? At least the Bay Area is desirable.

[Dangerous A 0]

Mike, a 4 bedroom house in the Bay Area is going for at least $600,000 or more, and that's in a bad neighboorhood like West Oakland. My friend just got a house similar to what you described and while it's still high, it was at least in a decent neighborhood and the house was actually very spacious.

 

The weather is the only thing keeping me happy here in the East Bay.

[NoCalMike 0]

Mike, a 4 bedroom house in the Bay Area is going for at least $600,000 or more, and that's in a bad neighboorhood like West Oakland. My friend just got a house similar to what you described and while it's still high, it was at least in a decent neighborhood and the house was actually very spacious.

 

The weather is the only thing keeping me happy here in the East Bay.

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Yeah I understand, but here is the thing, considering where you live, it is still a short drive to parts of Oakland/San Francisco that have jobs to support that kind of a house, now that doesn't mean EVERYONE can afford it, because yer right it is still outrageous, but a city like Sacramento doesn't even have the jobs to support this ridiculous housing bubble, which is why some many people are moving to cornfields an hour and a half east and north of here. The commute a lot of people here take to work is f'n ridiculous, all I was saying was that at least the Bay Area is a desirable city, and kind of worldly accepted as a "happening"place to be (well San Francisco at least), with a good amount of jobs to support ridiculous housing. It's not strictly what area is the most expensive, but how those prices relate to the local economy and employment oppurtunities.

[Dangerous A 0]

I work in SF Mike.

 

It's so-so happening. Not 2 bedroom, 1 1/2 bath= 1 million dollar home happening though. (not an exageration on the housing prices in SF either BTW)

[Dr. Zaius 0]

Mike, a 4 bedroom house in the Bay Area is going for at least $600,000 or more, and that's in a bad neighboorhood like West Oakland.

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I wonder what the rental property goes for if it is still considered a bad neighborhood.

[NoCalMike 0]

I work in SF Mike.

 

It's so-so happening. Not 2 bedroom, 1 1/2 bath= 1 million dollar home happening though. (not an exageration on the housing prices in SF either BTW)

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I know you do, but what about a person with a Master's Degree in the Technology field. Much better chance of getting a high paying job in the Bay then Sacramento.

[Stephen Joseph 0]

Actually, no out in Cali, where theyre still suffering that dot com bubble burst effects

[Dangerous A 0]

I work in SF Mike.

 

It's so-so happening. Not 2 bedroom, 1 1/2 bath= 1 million dollar home happening though. (not an exageration on the housing prices in SF either BTW)

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I know you do, but what about a person with a Master's Degree in the Technology field. Much better chance of getting a high paying job in the Bay then Sacramento.

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Most of those people are smart and commute to work. They live in more reasonably priced areas. Hell, there are three people in my building alone who commute to and from Sacramento. I think those people are the exception and not the rule, but a lot of people come from outside the Bay Area and commute. My thing is the Bay Area has some decent places to live in. Some parts of SF, San Rafael, parts of the East Bay like Fremont, Dublin/Pleasanton, Union City, even some more far out parts like Walnut Creek are decent. However, there are shitholes that are as expensive, if not more to live in than what I mentioned like Berkley, almost all of Oakland, over half of SF, San Leandro (where I currently reside) Emeryville, and most importantly, Richmond.

[Danville_Wrestling 0]

If the housing bubble in the United States crashes that would be terrible news for the economy. We're looking @ losing at least 8% of GDP growth over the next three years if it happens (as has been quoted by various economists) + a terrible recession. What we're seeing is something like Japan experienced where they had a massive bubble and property prices have plunged some 40% in the last fourteen years.

 

Over the last thirty years economists say that there have been over twenty housing bubbles worldwide and all but one of them ended in a recession. The United States hasn't experienced one yet so I guess this is our turn.

 

With that said, though, if this bubble bursts before 2006 or 2008 it could have HUGE political ramifications due to the economy.

[NoCalMike 0]

I work in SF Mike.

 

It's so-so happening. Not 2 bedroom, 1 1/2 bath= 1 million dollar home happening though. (not an exageration on the housing prices in SF either BTW)

<{POST_SNAPBACK}>

 

I know you do, but what about a person with a Master's Degree in the Technology field. Much better chance of getting a high paying job in the Bay then Sacramento.

<{POST_SNAPBACK}>

 

 

Most of those people are smart and commute to work. They live in more reasonably priced areas. Hell, there are three people in my building alone who commute to and from Sacramento. I think those people are the exception and not the rule, but a lot of people come from outside the Bay Area and commute. My thing is the Bay Area has some decent places to live in. Some parts of SF, San Rafael, parts of the East Bay like Fremont, Dublin/Pleasanton, Union City, even some more far out parts like Walnut Creek are decent. However, there are shitholes that are as expensive, if not more to live in than what I mentioned like Berkley, almost all of Oakland, over half of SF, San Leandro (where I currently reside) Emeryville, and most importantly, Richmond.

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Commuting is smart, but commuting 90 miles(Sac) one-way to work? It better be one hell of a good paying job that also understands the term "sorry I am late, traffic sucked"

[Art Sandusky 0]

It'll be a relief here in Charleston, where development is rampant and living in the lower downtown area is reserved for people in dorms and those who can afford an arm and a leg.