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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (15810)	6/24/2004 6:33:08 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

Maybe wages are rising faster than they appear? i don't think so. we've had this housing bubble for years now in the face of the poorest real wage growth in any recovery in US history. i think the easier way to understand the continued housing "strength" is that "ownership" has been defined downward. now people can buy houses costing a half million or more with zero down, financed by interest-only ARMs, backed by "undocumented" income. this kind of thing would have been extremely uncommon even five years ago, and unthinkable even in the early 90s. so the increasing laxness of standards has provided a greater degree of flexibility to withstand rising long-term rates for "homeowners". of course, at some point the buck will have to stop, but i guess we must have some respect for how long the bubble has gone on, and the innovative genius of housing pimps to extend the bubble by "any means necessary". i guess in the most extreme form, the bubble could be extended until it is essentially required that the vast majority of buyers rely on interest-only loans financed by ARMs. note that this is even more extreme than the Japanese housing bubble, when they relied on multi-generation mortgages--at least then, they were still making payments to principal! basically, it seems the goal of credit pimps in the environment of incredibly irresponsible Federal "oversight" is to give consumers maximum rope with which to hang themselves, financially speaking.

To: Steve Lokness who wrote (15810)	6/24/2004 6:33:45 PM
From: austrieconomist	Read Replies (1) \| Respond to of 110194

Steve, I guess we'll speculate alone together. My comment on the robust sales and "catching a falling knife" suggested my belief that catching peaks in trends was much more difficult (and potentially costly, if one bets against the trend) than identifying with hindsight when it was that the trend peaked. It could also be a common thread among bubble (hate to use that term -- but there it is) peaks that action is accentuated into that peak. I doubt that wages are rising faster than they appear... those numbers are pretty well known. Who knows but my guess is that the Fed is locked into a quarter point now and will not move (not politically astute) until after the election, when many more "facts" will be known.

To: Steve Lokness who wrote (15810)	6/24/2004 6:37:44 PM
From: CalculatedRisk	Respond to of 110194

I've still been thinking about today's number. I was surprised. I've been posting on Mish's thread that I thought the peak for this housing cycle had occurred in March (Now I'm guessing May<g>). There are numerous signs that we are near the top. I've spoken with a number of agents / builders and they all think the market is softening. The inventories of existing homes appears to be growing significantly too. Oh well, just shows that you can't guess the top.

To: Steve Lokness who wrote (15810)	6/25/2004 10:28:14 AM
From: CalculatedRisk	Read Replies (1) \| Respond to of 110194

Existing-Home Sales Hit Record in May realtor.org WASHINGTON (June 25, 2004) – Existing single-family home sales rose in May to the highest monthly pace on record, according to the National Association of Realtors®. Existing-home sales increased 2.6 percent to a seasonally adjusted annual rate* of 6.80 million units in May from a level of 6.63 million units in April. Last month's sales activity was 15.8 percent above the 5.87-million unit pace in May 2003; the previous record was 6.68 million in September 2003. <MORE IN ARTICLE>