Galapagos Islands Message Board

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Strategies & Market Trends : Galapagos Islands

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To: zonder who wrote (49842)	1/6/2004 12:26:09 PM
From: LaFayette555	Read Replies (2) of 57110

I belive Greenspan is absolutely terrified by the prospect of the housing bubble bursting.. at the very least before business spending picks up and takes over from the consumer wich is the senario behind the latest push in the markets IMhO. We've just witnessed a self reenforcing frenzy of consumer spending dollars making their way to China where in turn a portion of the huge surpluses generated are reinvested in US treasury's thereby pushing down mortgage rates and setting off waves of mortgage refinancings that in turn are used to finance further consumer spending ... I follow my local housing market very very closely - there does not appear to be a break in prices yet but some developpements - some households are now listing their propreties to take advantage of the very high prices thereby we now have an inventory of units for sale that has made a low and is now inching back up.(ie. my studies indicate a very high inverse correlation of home prices vs units for sale) Second, the demand for mid to high priced rental units is now getting quite low - individuals now convinced the bubble will last forever prefer to buy than rent - i.e. they are leaving their rental units in droves to purchase often newly built units. This developpement is having multiple effects and carries the seeds of a reversal - it is starting to impact rents negatively - it is now making renting a far better economic choice over buying at inflated prices - all this is making the purchase of rental units a dubious investment where renters are hard to find - it will eventually lead to an over supply of newly built units for sale and this is what burst our local bubble last time around.

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