California Mortgage News
Housing Bubble vs. Housing Market Slowdown
Housing Bubble vs. Housing Market Slowdown The central issue addressed by the April 2006 Economic Outlook issued by Freddie Mac on Monday is the conflict created between the strength of the economy and the increasing lack of housing affordability.
The report goes on to tie this lack of affordability to the growth in the popularity of adjustable rates mortgages and especially to nontraditional ARM products such as negative amortization and interest only loans. Use of these types of loans is often the only way families can qualify for a mortgage in these high cost communities. People buying homes with negative amortization loans are purely speculating in the market and they are speculating with someone else's money. This has driven the market onward and upward and pushed housing out of reach for many people in the market.
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Labels: affordability, housingaffordibility, housingbubble, housingslowdown, marketdata
Housing Bubble Conflicting Data Released
Housing Bubble Conflicting Data Released The housing market threw the world another curve on Thursday. After five straight months of declining sales of existing homes, a sixth dreary month was pretty generally expected. Instead the National Association of Realtors announced that February sales of previously-owned homes had jumped 5.2 percent from similar sales in January. This was the largest monthly increase in two years.
NAR itself said that the encouraging report was a sign that the market was "stabilizing" and should "level out" in the months ahead.
While that's NAR's position as head cheerleader, it's apparent the the 5 months of declining prices and lower interest rates had an impact on declining sales and finally some people bought.
Read the Report at Mortgage News Daily california mortgages california
Housing Bubble Good?
Ok the above article at Slate.com seems to indicate that there might be some benefits to the pop of the housing bubble, namely that the housing bubble was the only force for job creation in an incredibly anemic recovery and that without it, we would be much worse off. The examples cited in the article of the dot com boom was the excessive build out of the telecommunications market which resulted in cheaper phone rates. Ok I am not certain how the disappearance of 30 trillion in wealth is worth some 30 billion dollars of telecom build out. Let's go with the premise that the author has developed.
Due to the massive capital investment in basic infrastructure, we now have much cheaper high speed internet, phone bills etc. What does the massive investment in housing buy us? Well according to the article it created a bunch of local jobs (as construction dollars are spent locally) which range across all of the economic spectrum.
But what the author is ignoring is that many many Americans have been using their homes like an everflowing ATM and have been spending the proceeds. Nor does housing build out a huge infrastructure like telecommunications which can be the engine for further growth. Of course if the housing bubble pops, that resulting ripple effects through out the economy are more than likely going to result in yet another recession.
Housing isn't like telecom. We don't get nearly free houses from investing in it.
Labels: bubbles, housingbubble, investing, mortgagebubble, telecombubble
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