Housing Market: Table Scraps

Here's a hilarious story about suing to break out of home contracts that completely symbolizes the housing boom--and the post-boom era as well. Appreciation happened so fast that contracts were busted just so the developers could renegotiate. You can expect to see a lot of these (ahem) "frivolous" lawsuits in the coming months, and one of the interviewees even says as much:

In the next couple of years, McCabe, the real estate analyst, anticipates a "tremendous amount of litigation" -- speculators suing brokers and lenders, developers suing speculators to get them to close and homebuyers suing developers. "It's been a rose garden the last four to five years," he said. "Everyone's been happy because everyone's making money."

Nothing says love like an NAHB temper tantrum. "It's the homeowners' fault! WAAAAA!!!!"

Speaking of rose gardens and other manure-fueled concepts, here we have the latest swill from David Lereah, courtesy of a paper that should know better. Money quotes:

Lereah says it would take a "perfect storm" to swamp the real estate industry. There would have to be a slumping economy, job losses, a large inventory and a significant increase in interest rates to create that storm.

"The only way to build wealth, for 80 percent of Americans, is real estate. If the balloon bursts, then 80 percent of Americans will have trouble with retirement."

There're so many things wrong with that last half that I couldn't begin to correct them all. But Lereah IS correct in that there is no national bubble, but there're a LOT of regional bubbles that are contributing to a sort of Greenspan-esque froth. Some bubble markets will prosper better than others. It depends on a number of factors--job growth, wage stability, employment, available land, etc.

If the big bubble markets go, then the drive to the Midwest will accelerate, which will cause the very "perfect storm" Lereah was trying to duck.

Posted at March 14, 2006 01:39 PM

digg this story

Trackback Pings

TrackBack URL for this entry:
http://weblog.housing.com/cgi-bin/mt/mt-tb.cgi/137

Here's a hilarious story about suing to break out of home contracts that completely symbolizes the housing boom--and the post-boom era as well. Appreciation happened so fast that contracts were busted just so the developers could renegotiate. You can expect to see a lot of these (ahem) "frivolous" lawsuits in the coming months, and one of the interviewees even says as much: In the next couple of years, McCabe, the real estate analyst, anticipates a "tremendous amount of litigation" -- speculators suing brokers and lenders, developers suing speculators to get them to close and homebuyers suing developers. "It's been a rose garden the last four to five years," he said. "Everyone's been happy because everyone's making money." Nothing says love like an NAHB temper tantrum. "It's the homeowners' fault! WAAAAA!!!!" Speaking of rose gardens and other manure-fueled concepts, here we have the latest swill from David Lereah, courtesy of a paper that should know better. Money quotes: Lereah says it would take a "perfect storm" to swamp the real estate industry. There would have to be a slumping economy, job losses, a large inventory and a significant increase in interest rates to create that storm. "The only way to build wealth, for 80 percent of Americans, is real estate. If the balloon bursts, then 80 percent of Americans will have trouble with retirement." There're so many things wrong with that last half that I couldn't begin to correct them all. But Lereah IS correct in that there is no national bubble, but there're a LOT of regional bubbles that are contributing to a sort of Greenspan-esque froth. Some bubble markets will prosper better than others. It depends on a number of factors--job growth, wage stability, employment, available land, etc. If the big bubble markets go, then the drive to the Midwest will accelerate, which will cause the very "perfect storm" Lereah was trying to duck.