Nice post by UnBelievable (actually, by Carl Swernlin) on the yay-hoo FNM thread...thought I'd run it up the flagpole here, and see who salutes!<G>
messages.yahoo.com
Carl Swenlin on housing market
by: unbefrigginlievable
Long-Term Sentiment: Strong Sell 02/24/02 03:11 am
Msg: 6299 of 6337
<I began my CNBC viewing week with Marcie Rossell, economist for CNBC, giving
another upbeat report on the housing market. With her was an economist from a
housing industry trade organization, and, of course, he was not bearish -- the
worst we can expect is that sales will level off for a while later this year.
The conclusion was that the housing industry, which has done remarkably well
during the recession, is just plain invincible. The primary reasons are that:
(1) there is not an excess of supply as in other housing bubbles; and (2)
demand will continue because of increasing quality of new homes. This argument
seemed a bit weak to me.
If you have been a regular reader of this space, you know I think real estate
is over priced -- way over priced -- and it has gotten this way because people
have been able to indulge their urge to upgrade their digs, not because
"people need a place to live". Everyone has a place to live, except for the
homeless, who are not creating any demand for upscale housing. Demand for
housing has remained strong because people still have the means to with which
to pay the exorbitant prices. If the economy doesn't behave as well as some
have been expecting, it seems logical to me that demand for housing could dry
up very quickly. Perhaps it won't happen that way, but it is amazing to me
that the possibility is not even being considered.
The two things that drive every bubble: (1) a belief that prices can only go
up; and (2) an inability to conceive of any circumstance that might alter that
outcome. The current unending parade of happy housing industry executives
reminds me of the parade, not long past, of happy technology company
executives. The times are great, and the party will never end. I have been to
a lot of parties, and they always end.> |
