"The easy confidence with which I know another man's religion is folly teaches me to suspect that my own is also." ~ Mark Twain.I saw that the State was half-witted, that it was timid as a lone woman with her silver spoons, and that it did not know its friends from its foes, and I lost all remaining respect for it, and pitied it."
--Henry David Thoreau
Any sign of recovery is entirely based around governmental intervention which is based entirely on debt.
It's all a facade that will crumble back to earth if it ever manages to leave orbit.
Real wealth and real prices haven't gone anywhere but down since 2000, if you aren't investing in silver and gold (with more focus on silver since there's much greater gains to be made) you are setting yourself up for disaster.
We may have some short term paper gains but commodities are the real wave of the future...
Last edited by NoOneButPaul; 11-20-2012 at 05:47 PM.
Proud member of the Silver Liberation Army
As long as wages stagnate home prices will languish along with them. Sure, population growth leads to a natural demand for housing, but it also injects competition for wages. With an overall stagnating economy, the trend for housing prices continues to be a correction to historical norms.
Under the cover of artificially low rates, this appears to make housing affordable. The counter point again being, the price to income ratio is still 10% above historical norms. So we either need to see incomes rise or prices fall.
The bump in the last 3 years is a cyclical bump (even tho it isn't really a bump). This is investment money looking for a home. Sure people are levering up on the shadow inventories, but there is no easy way for someone without cash to do this.
And of course the best REO is going to catch a competitive bid from the relatively few investors with non debt based capital.
For every REO that catches a 50% bid, there is 3 that catch no bid. So while we may see REO bid 50% of ask from 100k to 150k, we see 3 more REO bid 0% of ask from 100k to 0. So for every REO that sells pushing the price up, you have 2 that hold neighborhood values flat, and 1 that drops the value.
Cyclical bump. Historical revision to the mean. Prices are too high vs income. Affordability is STILL artificially low. Thus 90% government backed purchases which do absolutely nothing to move the market and arguably shrink it. vs a measly 10% cash buyers setting true value based on the hope that the other 90% will find income to live up to their end of the bargain.
My guess, silver saw its last low around $26 , Dow, saw its last high @ 14 k. Housing cannot and will not recover because unemployment will rise next year , people with jobs have houses, people without cannot buy . Just my guess.
I will go as far as to say that, in real (inflation-adjusted) terms, there will be no bottom at all until a generation after the education finance Ponzi is resolved.
Basically there's a whole generation of borrowers that simply won't be buying homes at all because the money they would have had to do so went to acquiring basic certification to work (AKA a 'college degree') instead. The consequences of taking those buyers out of the pipeline completely will last until that generation is dead.
The only way I see this market going up is if millions of homes are deliberately destroyed by the government. With a generation of demand eliminated, the only way to support prices is to eliminate a corresponding amount of supply. I am also cynical enough to believe a government desperate enough would find a way to rationalize and execute exactly such an operation.
“If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen.”
- SAMUEL ADAMS
I have considered that ,no real reason not to just destroy the junk shit , lots will be worth more without them , maybe , some day , and it eliminates the cheap housing , bargains, older stuff , not desireable to the "green" nutjobs, who , now , basically run the Senate and White House administration, own , The Vampire , EPA....
Valued against the dollar (and the subsequent mortgage), houses are just about at a bottom, if not already there.
Valued against other real assets (gold, farming property, energy, food) it is no where near a bottom.
"Like an army falling, one by one by one" - Linkin Park