Could the economy be fixing itself?

[w¡n9Nµ7 §£@¥€r 123]

PORT WASHINGTON, N.Y. (MarketWatch) -- And now for some good news: The mother of all housing corrections appears to be nearing an end.

Nationwide, prices of new and existing homes are now only about 7% away from being as affordable as they were during the 1980s -- when the housing market was booming. At that time, median home prices equaled 2.9 times median household incomes.

To put this in perspective, at the apex of the bubble back in 2006, median home prices sold for about 4.5 times median incomes. In some markets they were actually twice as high -- clearly an unstable level that required creative lending and a bubble mentality among buyers and bankers alike.

For this key ratio to fall this far this fast required a combination of rising incomes -- and sharply falling housing prices. During the past three years personal incomes rose a total of 10% while home prices dropped by some 23%, on average.

This implies that by the time home prices bottom out, they will have fallen a total of 30% from their 2006 highs. In those markets where housing really got overheated, prices are already down by as much as 50%!

When combined with today's ultra-low mortgage rates, homes in many parts of the country may already be as affordable as they were in the halcyon days of the 1980s. Don't forget, in some areas home prices never bubbled up in the first place, so they have been priced right all along.

All that is needed now is a good dose of buyer confidence -- and a willingness on the part of the banks to resume lending to those who qualify for a mortgage.

Needless to say, unlike their counterparts of the bubble era, today's home buyers will be required to have some skin in the game. In other words, they will have to put down 20% or more. They will be required to document their incomes and be sure that the home they wish to buy is appraised at a realistic price.

From a seller's perspective, homes that are priced realistically (say, 30% off their peaks, or in some cases not more than three times local incomes) will sell the quickest. Keep in mind that even at these seemingly depressed levels, most houses will still fetch prices well above what they were in 2000.

Another piece of good news is that once housing prices touch bottom, it follows that the value of mortgage-backed securities will materialize as well. This is the sine qua non for thawing out the financial markets, for it will make the banks confident enough to resume lending -- first to each other, then to business and finally to consumers.

And once money begins circulating throughout the economy, many businesses will revive; they will stop firing and start hiring. For their part, consumers will resume spending -- which, in case you did not notice, now accounts for 70% of our gross domestic product.

So the Obama administration may not have to devise another plan to fix the economy. It could well be on the way to mending itself.

http://www.marketwatch.com/news/story/Hous...printMidSection

[SAT 9,609]

PORT WASHINGTON, N.Y. (MarketWatch) -- And now for some good news: The mother of all housing corrections appears to be nearing an end.

Nationwide, prices of new and existing homes are now only about 7% away from being as affordable as they were during the 1980s -- when the housing market was booming. At that time, median home prices equaled 2.9 times median household incomes.

To put this in perspective, at the apex of the bubble back in 2006, median home prices sold for about 4.5 times median incomes. In some markets they were actually twice as high -- clearly an unstable level that required creative lending and a bubble mentality among buyers and bankers alike.

For this key ratio to fall this far this fast required a combination of rising incomes -- and sharply falling housing prices. During the past three years personal incomes rose a total of 10% while home prices dropped by some 23%, on average.

This implies that by the time home prices bottom out, they will have fallen a total of 30% from their 2006 highs. In those markets where housing really got overheated, prices are already down by as much as 50%!

When combined with today's ultra-low mortgage rates, homes in many parts of the country may already be as affordable as they were in the halcyon days of the 1980s. Don't forget, in some areas home prices never bubbled up in the first place, so they have been priced right all along.

All that is needed now is a good dose of buyer confidence -- and a willingness on the part of the banks to resume lending to those who qualify for a mortgage.

Needless to say, unlike their counterparts of the bubble era, today's home buyers will be required to have some skin in the game. In other words, they will have to put down 20% or more. They will be required to document their incomes and be sure that the home they wish to buy is appraised at a realistic price.

From a seller's perspective, homes that are priced realistically (say, 30% off their peaks, or in some cases not more than three times local incomes) will sell the quickest. Keep in mind that even at these seemingly depressed levels, most houses will still fetch prices well above what they were in 2000.

Another piece of good news is that once housing prices touch bottom, it follows that the value of mortgage-backed securities will materialize as well. This is the sine qua non for thawing out the financial markets, for it will make the banks confident enough to resume lending -- first to each other, then to business and finally to consumers.

And once money begins circulating throughout the economy, many businesses will revive; they will stop firing and start hiring. For their part, consumers will resume spending -- which, in case you did not notice, now accounts for 70% of our gross domestic product.

So the Obama administration may not have to devise another plan to fix the economy. It could well be on the way to mending itself.

http://www.marketwatch.com/news/story/Hous...printMidSection

AJ does this mean we're all gonna be rich?

[w¡n9Nµ7 §£@¥€r 123]

AJ does this mean we're all gonna be rich?

Only if you were stoned when you read it.

[SAT 9,609]

AJ does this mean we're all gonna be rich?

Only if you were stoned when you read it.

Ah crapola............

[Ban Hammer 14,572]

what, good news from aj for a change?

[Jasman0717 9]

I can only hope the housing market will return over the next six years, I can't imagine working any longer than that

[Nagishkaw 510]

Surely you jest.

[SAT 9,609]

PORT WASHINGTON, N.Y. (MarketWatch) -- And now for some good news: The mother of all housing corrections appears to be nearing an end.

Nationwide, prices of new and existing homes are now only about 7% away from being as affordable as they were during the 1980s -- when the housing market was booming. At that time, median home prices equaled 2.9 times median household incomes.

To put this in perspective, at the apex of the bubble back in 2006, median home prices sold for about 4.5 times median incomes. In some markets they were actually twice as high -- clearly an unstable level that required creative lending and a bubble mentality among buyers and bankers alike.

For this key ratio to fall this far this fast required a combination of rising incomes -- and sharply falling housing prices. During the past three years personal incomes rose a total of 10% while home prices dropped by some 23%, on average.

This implies that by the time home prices bottom out, they will have fallen a total of 30% from their 2006 highs. In those markets where housing really got overheated, prices are already down by as much as 50%!

When combined with today's ultra-low mortgage rates, homes in many parts of the country may already be as affordable as they were in the halcyon days of the 1980s. Don't forget, in some areas home prices never bubbled up in the first place, so they have been priced right all along.

All that is needed now is a good dose of buyer confidence -- and a willingness on the part of the banks to resume lending to those who qualify for a mortgage.

Needless to say, unlike their counterparts of the bubble era, today's home buyers will be required to have some skin in the game. In other words, they will have to put down 20% or more. They will be required to document their incomes and be sure that the home they wish to buy is appraised at a realistic price.

From a seller's perspective, homes that are priced realistically (say, 30% off their peaks, or in some cases not more than three times local incomes) will sell the quickest. Keep in mind that even at these seemingly depressed levels, most houses will still fetch prices well above what they were in 2000.

Another piece of good news is that once housing prices touch bottom, it follows that the value of mortgage-backed securities will materialize as well. This is the sine qua non for thawing out the financial markets, for it will make the banks confident enough to resume lending -- first to each other, then to business and finally to consumers.

And once money begins circulating throughout the economy, many businesses will revive; they will stop firing and start hiring. For their part, consumers will resume spending -- which, in case you did not notice, now accounts for 70% of our gross domestic product.

So the Obama administration may not have to devise another plan to fix the economy. It could well be on the way to mending itself.

http://www.marketwatch.com/news/story/Hous...printMidSection

On the more serious side, I think home-ownership in the US is at around 74%.

My question is,

1. of the remaining 26%, how many are looking for homes, and qualify to by them with these new standards,

2. How many existing home owners are looking to buy another property

3. The homes that were sold in the past 5 years yielded fantastic prices. most of that $ for those properties sold came from bank, and are in someone's pockets. Whos got it? and are they spending it?

4. When are the banks going to ease up on lending?

5. How long is it gonna take before we see any of this translate into consumer spending?

6. I lost myself............

[w¡n9Nµ7 §£@¥€r 123]

On the more serious side, I think home-ownership in the US is at around 74%.

My question is,

1. of the remaining 26%, how many are looking for homes, and qualify to by them with these new standards,

2. How many existing home owners are looking to buy another property

You forget new household formation.

[SAT 9,609]

On the more serious side, I think home-ownership in the US is at around 74%.

My question is,

1. of the remaining 26%, how many are looking for homes, and qualify to by them with these new standards,

2. How many existing home owners are looking to buy another property

You forget new household formation.

Yes, but me dunno those #s............

I think a good pointer/warning for any of us to give to our friends here, is the fact that the credit card issuers will do what they can to squeeze every penny outta ya for the next year and a half........

[w¡n9Nµ7 §£@¥€r 123]

Steve,

Along the lines of your concerns, here's what worries me.

Will we have enough new household formation now that the boomers are going to start retiring? Gen Y is decidedly smaller in numbers than their boomer parents were. The housing stock that exists, built primarily for the boomers, may be too many for Gen Y.

Here in NJ all the new subd's are more than half immigrant. Around here, it seems they're the only ones creating new households anymore. Will we allow in enough immigrants to hold up the housing market?

[SAT 9,609]

Steve,

Along the lines of your concerns, here's what worries me.

Will we have enough new household formation now that the boomers are going to start retiring? Gen Y is decidedly smaller in numbers than their boomer parents were. The housing stock that exists, built primarily for the boomers, may be too many for Gen Y.

Here in NJ all the new subd's are more than half immigrant. Around here, it seems they're the only ones creating new households anymore. Will we allow in enough immigrants to hold up the housing market?

That's excellent point. I think we can use Canada as a reference......the mass immigration from all areas there in the last decade drove that housing industry to new highs. Primarily from Hong Kong I believe. But I think they have an excessive inventory of housing now. In fact I think home ownership in Canada is higher than the US. (I don't have the figures, and I'm not sure how their housing market is, but it's not good).

With Obama as pres, I think we will let more people in. But that's still years away from generating any part of a solution.

Also, I think for most our new immigrant friends here, they should be aware of the vulture credit card practices they will face before the enactment of (what's the name of that new credit card law) in 2010.

Steve,

Along the lines of your concerns, here's what worries me.

Will we have enough new household formation now that the boomers are going to start retiring? Gen Y is decidedly smaller in numbers than their boomer parents were. The housing stock that exists, built primarily for the boomers, may be too many for Gen Y.

Here in NJ all the new subd's are more than half immigrant. Around here, it seems they're the only ones creating new households anymore. Will we allow in enough immigrants to hold up the housing market?

That's excellent point. I think we can use Canada as a reference......the mass immigration from all areas there in the last decade drove that housing industry to new highs. Primarily from Hong Kong I believe. But I think they have an excessive inventory of housing now. In fact I think home ownership in Canada is higher than the US. (I don't have the figures, and I'm not sure how their housing market is, but it's not good).

With Obama as pres, I think we will let more people in. But that's still years away from generating any part of a solution.

Also, I think for most our new immigrant friends here, they should be aware of the vulture credit card practices they will face before the enactment of (what's the name of that new credit card law) in 2010.

Ah #######....that took some of my brain power, and I no like using my brain........ok..back to work.

[w¡n9Nµ7 §£@¥€r 123]

US home prices may drop into 2010 or longer-Shiller

Fri, Jan 23 2009, 00:04 GMT

By Julie Haviv

NEW YORK, Jan 22 (Reuters) - The U.S. housing market slump is nowhere near over and home prices will probably keep falling well into next year, according to one of the property market's most well known economists.

Robert Shiller, professor of economics at Yale University and co-developer of Standard and Poor's S&P/Case-Shiller Home Price Indices, told Reuters that while he does not give quantitative forecasts, the futures market indicates the downward trend in home prices is far from over.

"The futures market, based on the indices at the Chicago Mercantile Exchange, predicts that home prices will continue to decline well into 2010 and could go down another 10 to 15 percent," he said.

...

The market is only midway through the crisis if the forecast is right, he said.