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

To: Horgad who wrote (88620)	11/7/2007 12:10:20 PM
From: John Vosilla	Respond to of 110194

'So when do you predict the housing market will turn around? With inflation this high it shouldn't be long now...' Housing markets are local but availability of credit and inflationary pressures are national.. Oversupply needs to be absorbed plus prices reach fair value relative to incomes and construction costs to replace at marked down land values in local markets first. Some of the worst hit overbuilt markets probably bottom much sooner than the slowly declining land constrained markets like a Boston or NYC.. All these talking heads painting a broad brush on housing are clueless. So many dynamics when you compare diverse examples such as the oversupply of brand new high rise condos in Miami without end users to a suburban tract home on land constrained Long Island tied to the Wall Street economy or a modest very affordable house in Danville, IL tied more to agriculture than anything else..

To: Horgad who wrote (88620)	11/7/2007 1:53:49 PM
From: GST	Respond to of 110194

<Don't houses typically rise in an inflationary environment?> You raise an extremely important point -- what is the future of housing if we are in an inflation? Housing became a piggy bank for many Americans -- a place to put your money and they withdraw it to pay bills. And it was like magic -- the money in the house bank would grow faster than you could spend it -- even if just barely. Hell, the house would go up so fast it would even pay for itself! Now you have people waking up and realizing that they own a liability, not an asset. The hard part for most people to grasp is that the average American is going to see prices for things he/she buys go up, why assets owned that are used to fund purchases go down. The best strategy is to abandon US assets as their purchasing power plummets -- and that is how Americans have treated their houses, as assets that have purchasing power -- well, those days are gone along with the equity of many American home owners -- time to move on to the next bubble -- commodities and gold.