Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (48388)	10/24/2003 2:30:04 PM
From: X Y Zebra	Read Replies (2) \| Respond to of 57110

if housing appreciation simply decelerates...considering that housing and the cash infusions extracted from the "equity" (possibly inflated) begins to result in less liquidity to drive spending? No question there will be a downturn... I cannot predict to what extent such downturn would be or how serious it would be... Housing is an important segment, therefore the possible negative effect will be at the same level... and then... if such negative effect takes place, it will dampen interest rates... I acknowledge that it puzzles me how the economy has been able not to "crash" when most manufacturing and even service jobs are going elsewhere... my personal belief is that if we are relying on minimum wage (or lower in the case of illegals) types of incomes generated by immigrants are what is going to propel the housing market further, we're in more trouble than i thought.....especially as jobs are moving out of state... I am not too sure that the "immigrant" population is all low income... there are two sides to this... there is the first generation immigrant and then there are the subsequent generations with a lot higher education levels than the first wave... in the SW USA there are a number of "waves" of these immigrations and they have a few generations within, which are getting more and more educated.... Is it possible that the "service" jobs created to take care of the needs of these populations is sufficient to create a viable economy on its own right ? (i.e. without the need of extensive manufacturing?) I do not know.... then your question about fueling liquidity based on "consumption of equity via refinancing" requires serious research to determine how is it that this economy has been able to sustain itself... now assuming they come up with the approximate $810000 downpayment, they would need minimum household income of $93,490.00 to service the mortgage debt. Part of the answer is that "combined" household income is the key.... PLUS... the figures you are quoting further ASSURES me that MORE people will be moving OUT of California.... AND making the economic picture for these inland communities better... AND that interest rates will remain relatively low... Still, like you, I would really like to know more about what sort of employment those who move to these smaller towns consists of... Now... everybody bitches about the "low" savings rates in the US.... would it be possible to consider that... buying a home and paying all that interest actually constitutes the "American way" of "savings" I mean, after all... it is said that the largest investment most families will make is that of a home ?... hence... the American Dream ? -g Then think in terms of the equity that many older couples/families have in their homes or businesses that have yet to be touched I mean the more established families that have had no need to use up their resources... (because many of these properties are free and clear)... From your URL... Even without this worry, there is reason to expect homebuilding stocks to cool down going forward. Our homebuilding model has peaked, underscoring that the phase of blowout profit estimates that this group has been posting is cresting. Fortunately, value is still good and a better job market means that housing activity will stay firm, so this group is unlikely to suffer much in relative terms. Still, only a neutral weight is recommended. Ok... so that means that yes, they are high but not too high (at least that is what I read).... it seems to support my own estimation that housing demand may stay relatively strong... or ? Now... remember that real world vs stock market world are not necessarily the same world... -gg