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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Doughboy who wrote (14953)	11/10/2003 2:14:19 AM
From: Elroy Jetson	Read Replies (3) \| Respond to of 306849

Why did home builders take a tumble on Friday? It was due to downgrades based on price by a brokerage firm. I was just talking with a friend who works for one of the largest home builder in the Los Angeles area. Their marketing department has developed a profile of their typical buyer. These homes are $1,000,000 and 1.5 hours drive (each way)to downtown Los Angeles. The typical buyer is a two-income couple who work in Los Angeles and own two new-model leased cars. It is very unusual if they can come up with more than 3% for the down-payment. Just picture that, a couple with net assets of say $50,000 buying a million dollar home that will require a 3 hour daily commute, as long as they are employed. It will be interesting to see how long the home owners in that development can retain ownership of their houses.

To: Doughboy who wrote (14953)	11/10/2003 11:01:07 AM
From: GraceZ	Respond to of 306849

Rising interest rates are in the future, to not acknowledge this borders on delusion. Meanwhile, it might take more than a few interest rate points to put a stake in the heart of housing so there is a little time, but rising rates will signal the beginning of the end of the cycle. The Fed doesn't have to do a thing, long rates will rise on rising inflation expectations, the market will take them up and the Fed will follow because they have to, since it doesn't look like they are willing to be proactive here.