Barron's: Real estate poised for the giddy days again?

Wrong....

You must have your head in the sand; like most idiots.

1. The injections into the economy are nearing $1 trillion over just the last 6 months. More are coming!
2. The Fed is printing record amounts of cash; to try and paper over this mess. World is reporting average of 12% inflation - central banks are ALL tied together... How are we at 4%? We are lying.
3. Foreclosures are set to reset for the next 2 years; putting record amount of homes on the market - pushing inventories to prolonged highs for the next 5-6 years minimum.

Now, lets say they stabilize the economy (although this is not realistic - I am calling Nov 09 as the low) - the dollar will drop another 20% from current levels (IRAQ costs 241 million per day, 12-14% inflation world wide).

So houses may not drop further - but our currency IS dropping - which is the same but worse. Because we are ALL paying for the mistakes of others AND now all commodities are priced higher (not a bubble everyone).

Our dollar has dropped 48% since 2000. What does this mean for most? Gas is really $2.00 per gallon NOT $4.00. And MORE pain is coming.

I am in Dave's corner. Optimistic reports are usually from someone who has something to gain. I really don't think that we will have to wait until Nov. 09 either

"Finally, the real estate bust has made housing much more affordable (if you take into account per capita income)."
Youve gotta be kidding? !!
The price of homes may be dropping...but that does NOT make them more affordable. Remember, when the prices were high, people were getting a 2 or 3% interest starter rate loan. Now the mortgage companies are not offering those loans...so buyers are paying 6 or 7% interest. SO...even with the lowering of the price of the home, the payment is HIGHER. How does making higher monthly payments on a house make it more affordable? Duh...

Absolute nonsense, and irresponsible to put into print. Real estate will not move up until landers wish to - and are able to - extend credit to the high levels they previously operated on. Otherwise, there will be a shortfall in total dollar amounts available to support real estate. The constraints that lenders face will not be relieved during this year. Home prices will go down further.

Wow, interesting analysis. I believe you just have to watch the long term trend for the U.S housing markets. Housing stocks spiked from 04-05, and now we’re reverting back to the home price mean where we would’ve left off at 2002-03. Land will always keep it’s value, even if illiquid in the short term, keeping pace with inflation. The housing market just got ahead of itself and now the banks who were responsible for the easy lending will see the repercussions, and unfortunately, the credit markets have caught a cold and will trickle down into the economy as we’ve seen with low dollar/high oil, failing car makers, gov spons mortgage organizations, and lost jobs. The dow will see 10,800 in a little bit but I do believe in a real estate support level on a chart soon.

D. Volatility

Blog: http://distressedvolatility.blogspot.com

Ave House used to cost $250k in our commmunity, now down to $200k. -$20k down = $180 Mort. x 6% Interest = $11k yr. Ave Medican Income is $48k/yr Here. Yes, Houses are selling again and Are More Afforable.. It's all those Big Barn Homes that were built that are going to sit for awhile Longer.. And Mortgage Co.'s also have to pay the RE taxes on them ..So, Not just being stuck with the Mort. That is the "Other Shoe" that will hit Financials..

It's a Buying Opportunity.. Those who Make less than $40k/yr , are just SOL as they should be.
And if your Home has dropped in Value, but your Not Going to sell it or Borrow against it? This is a Good Thing! YES..Your Real Estate Taxes Will also Go down..! Ours has already been Cut by 15%!

File a Complaint to have your RE Taxes Changed!

Ive been reading Barrons since I was 12 ( im 44 now). They are usually on the pessimistic side, so this is out of character for them! LOL

Being in Connecticut, I say that locally our real estate market dropped 20-30% over the last few years from the frothy high. We headed down before Florida and California. We seemed to level off in the spring, then started down again.

There are a lot of cross-trends going on. For example, low priced starter homes, mobile homes or condos are selling well as people need a place to live. Their prices are not dropping and in some cases making a stand to move up a little.

Prices at the high end for the super rich owned houses are also not moving down much. It is the houses in the middle in the 250-750k range that are getting clobbered and the true meeting of buyer and seller is below recent market estimates.

That said , as a CPA with my own accounting firm the small business credit crunch appeared to reverse when the fed reduced rates. Lots of damage was done and lots of problems abound.

I am curious about this article because right before it came out a stock I was watching had 10x the average volume and it seems to me some of the smart (or maybe early , or REALLY early money) is wading back in.

The economy is a complicated mess and I agree with the inflation figures someone mentioned above.

I think its the inflation without wage inflation which is killing everyone. In the past when we had inflation your house went up in value as did your wages and social security, now you fall behind and your asset values drop. Its a mess for the middle to upper middle class.

Lets hope for some better times!

Marty