Lower House Prices Will Cause More Housing Gridlock... not liquidation
invite response
2012 Jun 13, 6:06am 21,873 views 47 comments
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dunnross
2012 Jun 14, 5:09pm
If the banks sold all the shadow inventory to all the housing bears in waiting at 10 cents on the dollar how would this help our current situtation?
It would help the economy recover much faster, that's for sure. In fact, if the FED didn't liquidate mark-to-market, bail out all those deadbeat banks, and kept interest rates artificially low, we would be enjoying a real recovery right now. Prices would be 80% lower, but sales would be back to their normal levels. Instead, we have an 80% drop in sales and only a 20% drop in prices (so far) and Japan-style multi-decade decline. You decide which one is better.
tatupu70
2012 Jun 14, 9:18pm
CS index is only 2 month old, not 6 month old. On May 30, they released data through Mar 29. Since high season starts after Super Bowl, the C-S index showed 2 good month of high-season prices:
Subtract out the time between offer accepted and closing date (another ~6 weeks) and realize that CS is a 3 month average so you've still got sales from November in there..
I stand by my statement.
Goran_K
2012 Jun 15, 2:00am
It would help the economy recover much faster, that's for sure. In fact, if the FED didn't liquidate mark-to-market, bail out all those deadbeat banks, and kept interest rates artificially low, we would be enjoying a real recovery right now. Prices would be 80% lower, but sales would be back to their normal levels. Instead, we have an 80% drop in sales and only a 20% drop in prices (so far) and Japan-style multi-decade decline. You decide which one is better.
This.
Right now the U.S major banks are zombies that are cannibalizing the U.S economy. If we just "liquidate" the infection (bad assets), we can take the short term shock, but steadily return to normal much quicker than Japan which still has a very weak housing market over two decades later.
tatupu70
2012 Jun 15, 2:23am
Boom/Dunross-
Please don't qoute Goran_K. I have him on ignore because he pretends to be above the whole bull vs. bear debate, but really is just a permabear in disguise. And I don't want to see his drivel anymore.
thanks in advance
So, rolling back home prices will lead to less inventory because 1996-2002 buyers now won't have enough equity to sell their homes. It's a catch-22, renters want/need lower home prices, buyers can't AFFORD to sell at lower prices.
No you become the poster child of the RE bubble for many others to remind them of your mistake... therefore they wont in anyway overpay like you did. Eventually the owners will sell, take a loss to get rid of their own low savings rate.
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We are already in a gridlock situation where everyone that bought in 2004-2007 that hasn't foreclosed is basically TRAPPED in their home. The only way they can move is via short sale or walking away.
Lower home prices just equals more inventory gridlock... You can't buy a home from someone that doesn't have the cash to make up the difference to sell you the home.
So, rolling back home prices will lead to less inventory because 1996-2002 buyers now won't have enough equity to sell their homes. It's a catch-22, renters want/need lower home prices, buyers can't AFFORD to sell at lower prices.
Maybe Boomers will be forced to sell you their paid off home/ retirement fund.. But I think the majority of them will stay put.
#housing