Is it that difficult to figure out why we are at a 15 year low? In the last 5 years how many foreclosures have there been? How restrictive have all the recent credit guidelines been?
I get calls every day from folks that want to get pre-qualified to purchase a home, but for one reason or another, they can’t qualify right now. I share with them, what they need to do or how much time needs to go by before they can qualify for a home purchase.
In every situation I will let them know what is possible and what they have to do to get themselves prepared to become homeowners. Over the next few years, you will see levels exceed the previous highs.
The U.S. home ownership rate stands at a 15-year low with the latest figures showing 65.6 percent of Americans living in owner-occupied homes. At peak in 2004 the ownership rate was a hair shy of 70 percent. Over the next two years it may fall further, possibly to 64 percent before stabilizing. But the falling homeownership rate will not mean fewer home sales. The dynamics is such that both the rental and ownership households will rise, though the proportion will be such that the home ownership rate will fall.
Though ownership and rental demand at first appear to be a trade-off in most years, the net number of homeowners and renters also rises simultaneously in most years. It is a natural outgrowth of about 3 million additional people living in the country each year, which generally leads to about 1.1 to 1.3 million net new household formations each year. From the 1960s on, the number of home-owning households rose on average by about one million each year while the number of rental households rose by 300,000 to 400,000. In some years, there are distinct tradeoffs between owning and renting with one rising while the other falls. The starkest example of this are the years since the housing bubble crashed. The number of homeowners fell from 2005 to today while the number of renters rose quite significantly. The key reason for this prolonged multiyear trade-off development arose because of a sharp slowdown in household formation. Household formation in the past 5 years has been only the half the normal rate. It is understandable, given the difficult economic conditions of the past several years, for many young adults to move into their parents’ home or find extra roommates to share the living costs. But a return to normal household formation will finally mean a rise in the net new numbers of homeowners and renters, as has been historically the case. In a more optimistic scenario, if the household formation burst out in order to compensate for the prolonged suppression, to say something like 1.5 million annually over the next few years, then the increase in net new homeowners and net new renters could both be higher than their historic average gains.
I would be curious to hear when you thnk the Real Estate market will turn around? I also would be curious to know how we avoid the next real estate market bubble. R
The federal government flooded the real estate market with funds and now the bubble is bursting. Now, the Federal Reserve is flooding the market with currency (with TARP, QE 1, 2, & soon 3 and bond purchases) to try and suppress the crash, but it can't work forever, and then the housing market will go spiral down significantly more making today's problems look like the good 'ole days.
“[Romney’s] economic plan is more about re-arranging the deck chairs on the Titanic,” says Schiff with a shrug, packing away his pinstriped suit to change into some plane-ready jeans. “Romney, I don’t believe, understands the severity of the problem. Just like in 2008. He didn’t understand. Romney was campaigning on the eve of the financial crisis and he had no idea what was going on.” Well so much for the Republicans saving the day! http://www.slate.com/articles/news_and_politics/politics/2012/08/peter_schiff_crash_proof_new_predictions_of_doom_from_tea_party_favorite_.2.html
Kaptainsteve and Andrew do not realize the bubble is not large enough yet to burst, but give them another 5 to 10 years. A bubble can only burst when the vast majority of the populace is into the game. The dot com bubble burst when granny wanted into the dot com stocks. Prior to that it was the greater fool theory hard at work. The real estate market collapsed simply because there was no money available to continue moving prices higher and also the greater fool theory was at work. Remember credit availability drives real estate more than anything else. A depression is a period of descending prices brought on by multiple factors, however there is usually over allotment of credit into the markets. I use the analogy of a recession being a cold, and a depression being the flu. We do not have the flu, we have a bad cough. A depression can only occur when pricing of all things has gotten totally out of control and the ost people will be negatively affected. It will also occur very fast, and it will hurt EVERYONE including those with money in the bank. Peter has been saying the same things for years, and I do not question his insight, I just think he is wrong for the next 5 years. Hey I predicted the real estate crash in 1987 that started a year earlier, the dot com bust of 200 in mid 1999, and the real estate crash of 2006. I did not see it taking down big financial institutions or the bailouts.
You make a lot of sense and you may be right about things, but then again, who knows??? Peter Schiff was right (http://youtu.be/2I0QN-FYkpw) about the real estate bubble/crash and that crash is still crashing and will continue to get worse. The thing about Peter is that he is always right in the long run, and that's where I'd like to be right. Progress or crashes never follow in a perfectly straight line, there will be mini-rallies, but in the long term, we're all done. But, about the financial bubble, where I think you may have overlooked is just how big this bubble is. It's world wide. It's 700 or so TRILLION dollars in a big tangled up derivatives debt mess run by computerized algorithmic trading (over 85% of Wall Street trades are done this way now). This just needs a trigger and that trigger can be anywhere and anytime. Max Keiser predicts Japan will crash (http://swamp-ass.forumotion.net/t1977-total-financial-collapse-by-april-a-99-certainty-max-kaiser#2297) taking us with it and that this will happen within a year . Keiser and Schiff aren't the only experts pushing the panic button either. Jim Rogers, Gerald Celente, Webster Tarpely and others "in the know" also agree. And countries like India and China and George Soros suddenly hoarding gold isn't a good sign either. The U.S. is on life support and this doctor gives it less than 12 months to live before it all crashes and burns. If you have money in the bank, you will lose it all.
The thing about it is, I PRAY THAT I AM WRONG AND DON'T KNOW WHAT I'M TALKING ABOUT! Another thing about housing, demographics. The older people are downsizing and the baby boomer generation has traded it's way up the ladder already. There are no more houses to be sold! In other words, there are the financial indicators, which are terrible, and then the demographics as well. We tend to forget the demographics in all this because of the overshadowing monster that is insane debt and banking fraud to the tune of 700T. Another thing, just focusing on U.S. government debt, it's never getting paid back ever without a debt jubilee or monetizing it, either way, this will be a gigantic, nasty crash. Think about it, we are 16T in debt and that coincides with the GNP. Where's this money coming from if not for debasing the dollar? Plus the future promises in Soc. Security, Medicare/caid and all the entitlements. "The domestic U.S. debt ain't getting paid, ever. Again, I hope I don't know what I'm talking about and R is right and we still have a few more years, but I think we only have a few more weeks, maybe months... The worst thing is that we all agree, and all we disagree is on whether the U.S. crashes in just a few days, a few months or a few years. In other words, it really doesn't look good at all. In other words, stock up on canned beans.
I look at things differently. We are beginning to come out of this mess, I predicted 2012 was the bottom, and I may be off a year. Time will tell.
Here ya go; http://youtu.be/NQMAf5jTFc8 and another great/recent one here; http://youtu.be/tMY_tvXoevk Listen to what Max says about high frequency trading and all fraud on Wall Street with big companies like Groupon, Facebook's pump and dump scam (Obama's arm around Zuckerberg) and Zynga and how they identify losses as revenue and how Zynga uses Farmville "virtual money" as REAL ASSETS for the books! The books are cooked. Losses equal revenue. Pretend money equals real money. There are no accepted accounting principals, regulators/accounting firms like Ernst and Young are completely crooked and in on the scam. John Corzine/MFGlobal steal millions and NO PENALTY, no investigation. The GIANT BANKS, Jamie Dimon, JP Morgan/Chase, and HBSC launder money for terrorists and drug cartels and get slaps on the wrists that amount to tribute fees to the government like mafia kick ups to the boss, and on and on... The house of cards will collapse very soon. Recent Schiff Analogy Here and how Paul Ryan is advocating 27 years of spending INCREASES and Washington calls it "a spending cut!" ; http://youtu.be/zekaPHiQ31E
Economic cycles collapse when EVERYONE is drinking the kool-aid. What I mean is that in 1998-99 everyone said .coms we a great place to invest. The internet would be huge. Companies fell over each other to install fiber and infrastructure, and everyone wanted a .com stock. A collapse can not occur when there are still greedy people with money or available credit that could be invested or used to buy assets. It is when and ONLY when there is no easily available capital or credit left, then the prices crash. Why? Because there is no one left to support the prices. When it starts it is like dominoes falling hitting the next down the hill we go. In the Stock Market this occurs very quickly, because the market is liquid at A price, but in real estate it is like Chinese water torture because real estate in NOT liquid. You can't sell it and be cashed out in a few seconds, think a few months if your lucky. I listened to the Schiff piece and snippets of the others. I agree with some of Peter's comments. On the others: I will say Japan has been on a downward spiral for over 20 years because of basic demographics. We are potentially heading the same way for the same reason, demographics, and China is heading full speed ahead to the same issue demographics. I will disagree with some of the other assertions. We can not have a collapse until the majority of a people can be negatively affected. That is the behavior of a collapse.
In fact, this is exactly what Keiser says is ready to happen. And, as far as the masses being negatively affected, 50% of the people receive some kind of gubbie bennies, 1 in 7 is on food stamps. People are losing their homes and whole cities have been boarded up. People are being negatively affected. I have no problem with anything you said and only disagree with one detail, degree or how far down the road we have already traveled. We both agree that we are no longer on paved highway. But you say we are on a dirt road. I say we are in the weeds and the bushes at night, the headlights are busted and we are ready to hit a tree, a boulder or go over a cliff. R, good luck and buy silver.