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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01 -- Ignore unavailable to you. Want to Upgrade?

To: Bucky Katt who wrote (12495)	6/23/2003 4:06:41 PM
From: James Strauss	Read Replies (2) \| Respond to of 13094

The one thing that I find interesting is we are in the early stage of the Prez election cycle, so stimulus should continue, but we may have already caught Japaneosis William: Does that mean we'll all run around snapping pictures of everything? : > While higher interest rates are not as bullish for the housing market, the employment stability environment should have the greatest impact... People with steady jobs, even low paying one's, can at least project what they can afford on a mortgage... People without jobs cannot get mortgages no matter how low the rates are... While a 10% mortgage rate seems very high by the past decade's standards, people paid 10% to 13% mortgage rates during parts of the 80's with housing demand on the rise... The housing bubble of the late 80's was built upon the greater fool theory of pricing... This housing boom has seen a lesser degree of the greater fool theory... Today houses are being bought primarily for primary residences... In the 80's there was a lot of speculating and house flipping... We don't see that extreme now... Bottom line, I don't see a crash in the housing market... A leveling off? Yes... But not a crash... Jim

To: Bucky Katt who wrote (12495)	6/23/2003 5:46:00 PM
From: SilasSan	Read Replies (1) \| Respond to of 13094

I'm not sure with whom I'm agreeing or dissenting here. I don't think that low interest rates have as great an impact on the housing market as real demand. Previously I referred to the (California) housing market as a Ponzi scheme and I still believe that in the long run $CREDs have got to come back into line with $USDs. However, my short term (2 years) fears were assuaged somewhat this weekend while channel surfing. I came across some talking heads that were addressing these very issues. One cited a "just-released Harvard study" (I’d love to get that citation) that says that the market is in fact being driven by first-time home buyers drawn from recent immigrants and F1 generations from previous migrations. They said that the demand is really there and that, while low interest rates are enticing by reducing the monthly payment on mortgages, the amount saved there is not as important as the down payment. By and large, if you've had a job and saved some money and you've got a job now, you're going to buy a house as soon as it is practical. Low interest rates have definitely fueled a re-fi boom and certainly have an effect on buying decisions. Also, cheap and easy credit is good for the builders as well. But the current housing market is most likely being driven mostly by real demand. I think that higher and higher down payments (commensurate with price increases) are a larger barrier than monthly payments as long as you've got a job. Lose your job and the dream vaporizes rather quickly though. My wife and I bought in during the Carter credit debacle (interesting story). I remember sweating out the ARM (which was re-invented for the masses then) over cheap macaroni and cheese….