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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chas. who wrote (102228)	9/20/2009 7:21:21 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 116555

Chas, i don't think the market bottoms next year. maybe 3-5 years out or longer. also, the market is stratified. the low end is where all the sale increases are right now. the upper end (say, greater than $250k or so) is still falling fast. the low end may be pretty close to a bottom now. when formerly $250k homes are selling for $60k, it is tough to see them go down much more. the upper end of the market is heading down. my thought process runs like this... i bought a home in 1998 for what i thought was fair value. it wasn't the bottom of the market, either. the bottom occurred 2-3 years earlier. comparing now to 1998, incomes are down, taxes are up, unemployment is up, under employment is up, the economy is declining, private debt is dramatically higher, houses are evil instead of an ATM, etc... everything is substantially worse than in 1998 except interest rates and the $8k subsidy from the government and whatever the states kick in. so, everything dramatically worse except interest rates correlates translates into an inflation adjusted 30% INCREASE in housing? i don't think so. and the real kicker is this - interest rates will have to go up or the dollar will collapse. if interest rates go up significantly, homes prices will not only fall, they will collapse. if they don't go up, nobody will lend us money and they will bury the dollar in the ground. i can easily see another 50% drop in some areas of socal from current levels - this assumes that interest rates will eventually rise, though. if not, a home may appreciate to $10000000, but a loaf of bread may be worth $10k. i think they tease a dollar collapse, but i don't think they hold rates up while it actually collapses. the banks know this and are doing everything they can to offload their homes onto the federal government so the tax payers can foot the bill when housing prices collapse, imho.