[highlander]

If TPTB go forward with their proposal to eliminate the mortgage interest deduction, it will hasten the pop.

[BabyPeanut]

$this->bbcode_second_pass_quote('highlander', 'I')f TPTB go forward with their proposal to eliminate the mortgage interest deduction, it will hasten the pop.

[emersonbiggins]

$this->bbcode_second_pass_quote('BabyPeanut', '')$this->bbcode_second_pass_quote('highlander', 'I')f TPTB go forward with their proposal to eliminate the mortgage interest deduction, it will hasten the pop.

[BabyPeanut]

$this->bbcode_second_pass_quote('emersonbiggins', 'I')f they had any balls, they would eliminate the mortgage interest deduction for second homes, a $20 billion/year entitlement program.

[erb]

when the real estate (& oil) market goes so does everything else??


http://news.yahoo.com/s/ap/20060119/ap_ ... economy_38

Dec. Slump Shows Housing May Be Cooling

WASHINGTON - Construction of new single-family homes surged to an all-time high in 2005 but construction activity fell sharply in December, sending a signal that the nation's long housing boom could be cooling off.


The Commerce Department reported that construction of new homes and apartments fell by 8.9 percent last month, the biggest decline in nine months.

Even with the December weakness, construction was started on 2.064 million single-family homes and apartments last year, the second-highest level on record, exceeded only by 2.356 million units built in 1972. Construction of just single-family homes set a record last year of 1.714 million units, up 6.4 percent from the previous record set in 2004.

In another report, the Labor Department said that the number of Americans filing for unemployment benefits fell to 271,000 last week, the lowest level in nearly six years.

The unexpectedly sharp drop of 36,000 claims provided further evidence that the labor market continues to show strength, but economists cautioned that the claims figures are hard to read at this time of year because the government finds it difficult to account for holiday closings of claims offices.

Analysts said that the big drop in housing construction in December was a signal that activity will slow in the coming year.

"We had expected to see a slowdown and this confirms it," said Michael Carliner, senior economist at the National Association of Home Builders.

He said he was looking for construction of new homes and apartments to drop by about 6.5 percent in 2006 with sales of new homes falling by a similar amount.

He said home prices, which have been rising at double-digit rates, will slow to increases of around 5 percent in 2006.

Housing construction has boomed in recent years as builders have rushed to meet soaring demand triggered by the lowest mortgage rates in a generation. Sales of both new and existing homes have been at record levels for five straight years.

However, economists are forecasting that construction and sales activity will slow this year under the weight of rising mortgage rates. The big question is whether the slowdown will be gradual or something more severe.

The 8.9 percent drop in construction activity in December was more than double the decline that analysts had been forecasting. It was blamed in part on wet and cold weather in December, which followed an unseasonably warm November when builder activity had risen by 3.4 percent.

For December, builders began construction on single-family homes at a seasonally adjusted annual rate of 1.577 million units, a sharp drop of 12.3 percent from November. Construction was started on multi-family units at a seasonally adjusted annual rate of 356,000 units in December, which represented an increase of 10.2 percent from the November pace.

Applications for building permits, considered a good indicator of future activity, fell by 4.4 percent in December to an annual rate of 2.068 million units.

Construction activity fell in every part of the country except the South where building rose by 5.2 percent, a gain that may have reflected the start of rebuilding following last fall's devastating hurricanes.

Construction activity fell by 23.6 percent in the Midwest and was down 21.7 percent in the West and 14 percent in the Northeast.

heres the graph is someone wants to post it

[url=

[FireJack]

If the situation with iran goes bad expect one hell of a housing market crash.

[hoplite]

$this->bbcode_second_pass_quote('FireJack', 'I')f the situation with iran goes bad expect one hell of a housing market crash.

[FireJack]

I was thinking more of the fact that housing prices are already cooling and skyrocketing energy prices would make people not want to buy a house where you have to drive everywhere. Plus millions of people going bankrupt.

I didn't do any fact finding on this it just seemed a likely chain of events. I could be wrong though.

[DesertBear2]

The housing boom will go sour all on it's own regardless of the Iraqi tar-baby. Such bubbles become unstable when the weakest participants ie those with huge debts on over-priced house realize that they are dangerously stuck in a market that will not rise any more. Fear then replaces greed as buyers evaporate and the weaker hands run for the door.....

[strider3700]

I live in a pretty small town. Housing starts dec 2004 58 housing starts dec 2005 11. The reason listed is there aren't enough buyers now that prices are so high. I wouldn't say the bubble here has popped yet but it may be close. The most expensive neighbourhood in town has about 70% of the places for sale now that people realize maybe that $600,000 mortgage wasn't such a good idea.

[kevincarter]

In my opinion this is happening in several countries at the same time. One global world one global crash. The bad part is that everyone thinks “if it goes bad I’ll sell it”. But it doesn’t work that way. If it goes bad for you it means it goes bad for everyone, so no one will buy it. Is that such a complex equation?

[FoxV]

$this->bbcode_second_pass_quote('strider3700', ' ')I wouldn't say the bubble here has popped yet but it may be close. The most expensive neighbourhood in town has about 70% of the places for sale now that people realize maybe that $600,000 mortgage wasn't such a good idea.

[strider3700]

My take on it is a lot of regular ($100-125k/year) people sold their houses for way more then they originally paid for them and decided they wanted to live in a really nice house for once. And the place to live is in this one neighbourhood on the ocean. So for awhile that area was on fire with people selling and others moving in to oceanfront homes that where going in the $600,000 to $800,000 area.

This was mostly fired by the realestate people constantly screaming that everything here is undervalued by almost 50%. Of course they are compairing us to vancouver which is not even close to a reasonable comparison.

Anyways I know 2 couples living there One is a carpenter with a nurse for a wife the other are a pair of teachers. Both of them are probably making combined in the low $100,000/year range but are carrying $620,000 and $540,000 mortgages. at the old variable rate they'd be paying over $2500/month but when the rates reset the current variable rate is about 4.4% so that would be about $3,200/month. So they are trying to get out.

No joke, When you drive down the road Every third or fourth house isn't for sale. It's just a row of signs. The sad part is if they do manage to sell it will only feed the market as they move back into lower end houses driving the prices up there. There is a reason that for 3 years straight I've had 20% increases in my property taxes.

[lotrfan55345]

I believe my town is going to dissolve, as I know plenty of normal families netting $150k of yearly income or so living in $600 to $800 thousand dollar houses. When the bubble collapses...

[Leanan]

Cancelled home orders: Latest bubble prick?

$this->bbcode_second_pass_quote('', '[')b]Experts say jump in cancelled orders for new homes is latest sign of how investors inflated the real estate market recently, and how the market is due for a downturn.
NEW YORK (CNNMoney.com) - Home builders are growing concerned about an increasing number of cancelled new home orders, which experts say could be a sign of an underlying weakness in the recent run in home prices.
Specifically, the cancelled orders could be the latest warning sign that buyers who were turning to real estate as an investment, rather than for their own housing needs, are shifting out of real estate. And that could mean that in many hot markets, the air is about to come out of over-inflated real home prices overall.

[Colorado-Valley]

If you want to watch the bubble as it deflates in real time, go to:

http://thehousingbubbleblog.com/

(It's almost as fun as peakoil.com)

And happening faster!

[joewp]

This is excellent news! I live in a town in central New Jersey that's under extreme development pressure that we're trying to stop. There's a farm behind my house that Troll Brothers is trying to get approvals to build on. Maybe this will make them think twice, especially combined with the $80/bbl oil we'll certainly get this summer! We have a mayor that's in the pocket of the developers (even though he ran on stopping development), so a few of us got together to start a recall petition drive. One thing I've learned is that people need to be shaken and startled into believing that you can actually stop growth, that it's not inevitable. Amazing the brainwashing that the growth machine has shoved into people's minds that they'll support the very thing they'll later complain about, increased population/development.

I'll post some more on our quest to fight the growth machine when the story starts jelling more.

[gg3]

I'll wade right into this by saying in no uncertain terms that home-flippers, defined as those who earn all or a substantial part of their income or profits by buying & selling houses to make money on short-term speculative increases in value (not including developers, builders, and real estate agents acting at the behest of ordinary buyers and sellers, all of which are separate cases), are scum.

For emphasis, home-flippers as defined above, are scum.

If anyone wants to raise a controversy over this I'll be more than glad to expand on the point later tonight.

[evilgenius]

So, is this the result of higher interest rates or of the lack of any real appreciation of wages at the working level during the last two decades? Introductory wages today, adjusted for inflation, are less than the minimum wage of a decade ago. When people thought there was something to be gained from it they could lie about the actual percentage, saying it was 33% (a third) of their wages that they were putting towards their house while actually throwing more like 67% (two thirds) at their mortgages. I used to be a payroll clerk, doing income verification, I know how people scam. Credit costs are hammering these poor unfortunates. The smart ones will get out of their untenable situations now, but most people in those positions aren't all that smart. They will keep it together until they can't keep it together. Their incentive to keep it together is all of the shopping cart dwellers they are seeing on their city's streets.

It is beginning to look like the touters of American style capitalism, you know the ones that never have enough bad things to say about Europe and its 'socialist' policies, are going to conveniently go away for awhile. They are all going to the same place as Abbey Joseph Cohen, the limbo of all uni-dimensional intellects.

[Leanan]

I think most home-flippers don't do it full-time. Like the e-traders of the dot-com boom, most of them have day jobs, and use flipping homes as a side investment.

One of my friends bought two condos as an investment last year. She works full-time as a corrections officer (which should be pretty steady work), and is not planning to quit any time soon. Nor is she planning to live in the condos; she has a house, and doesn't want to live in the neighborhood where her condos are.

But you can see why this kind of investor would bail out quickly if the market starts softening. They aren't dependent on real estate, so when things start looking squishy, they cut and run. Even if they lose money, it's generally money they can afford to lose, because they have day jobs.