Housing.com News, Analysis & Opinion: Housing News: Random Detritus

The U.K.'s Guardian Unlimited takes a look at the U.S. housing bubble and, unsurprisingly, sees gloom in the future:

A key difference to the British market is that supply in the US is much more flexible because land is more plentiful. Americans build houses by the million each year. So when demand drops off suddenly, the country's housing market can be clobbered by a glut of empty newly built property.

That sums it up right there. Homebuilders and developers just won't stop. They're like the Terminator or the Borg or something. They just keep piling up these crappy constructs and running away with the cash, then wondering why no one is buying the units.

There're some good signs of increased retail confidence thanks to lower gas prices and cooling temperatures, but I note with interest that Wal-Mart--that bastion of the working-class consumer--still missed its mark. It tells me that people on the margins--many of whom bought in with toxic mortgages--are still so stretched out that even a fall of roughly $.60 to $1 in gas prices isn't making much of a dent in their bottom line. And how much of that so-called "windfall" is getting eaten up by mortgage costs?

I am willing to be less bearish than some and say that we may yet weather this storm, but it's still very much up in the air (so to speak) as to how bad things will get before they bottom out. At least we've moved on to the "Acceptance" phase...

But, if future profits are projected to be higher because of lower wages or lower corporate taxes (e.g. a higher tax burden on workers or fewer public services), why should the mass of the population, who own little or no stock celebrate?

When a family of four can buy a home in D.C. or New York in the mid-six figures that isn't in a crime zone or powered with a "creative" mortgage, THEN we can start breaking out the bubbly. Will those days ever return? I don't know.

P.S. Hey Robert Cote'! You left a comment here a little while ago and it got swept up in my spam filter. Just didn't want you to think we forgot about you.

Trackback Pings

TrackBack URL for this entry:
http://weblog.housing.com/cgi-bin/mt/mt-tb.cgi/255

Some unrelated bits of interesting news to close out the week with: The U.K.'s Guardian Unlimited takes a look at the U.S. housing bubble and, unsurprisingly, sees gloom in the future: A key difference to the British market is that supply in the US is much more flexible because land is more plentiful. Americans build houses by the million each year. So when demand drops off suddenly, the country's housing market can be clobbered by a glut of empty newly built property. That sums it up right there. Homebuilders and developers just won't stop. They're like the Terminator or the Borg or something. They just keep piling up these crappy constructs and running away with the cash, then wondering why no one is buying the units. There're some good signs of increased retail confidence thanks to lower gas prices and cooling temperatures, but I note with interest that Wal-Mart--that bastion of the working-class consumer--still missed its mark. It tells me that people on the margins--many of whom bought in with toxic mortgages--are still so stretched out that even a fall of roughly $.60 to $1 in gas prices isn't making much of a dent in their bottom line. And how much of that so-called "windfall" is getting eaten up by mortgage costs? I am willing to be less bearish than some and say that we may yet weather this storm, but it's still very much up in the air (so to speak) as to how bad things will get before they bottom out. At least we've moved on to the "Acceptance" phase... Gothamist eloquently explores the disconnect between flat rental prices and an insane market. Property Grunt echoes some thoughts that I had last year--that specuvestors will come flocking back to the stock market as housing continues to tank, witnessed by the Dow's stellar performance yesterday. Speaking of that, Dean Baker punches a hole in the irrational exuberance as only he can. Money quote: But, if future profits are projected to be higher because of lower wages or lower corporate taxes (e.g. a higher tax burden on workers or fewer public services), why should the mass of the population, who own little or no stock celebrate? When a family of four can buy a home in D.C. or New York in the mid-six figures that isn't in a crime zone or powered with a "creative" mortgage, THEN we can start breaking out the bubbly. Will those days ever return? I don't know. P.S. Hey Robert Cote'! You left a comment here a little while ago and it got swept up in my spam filter. Just didn't want you to think we forgot about you.