Bargain Hunters May Toss A Lifeline To Housing Market

Reuters:

The distressed housing market should get a lift this spring as bargain prices lure prospective buyers out of hibernation, but tighter lending means no one should expect the boom days to return any time soon.

Spring is a pivotal season in the housing market. Potential buyers typically emerge from a winter hiatus and shop in earnest for a new home or an investment. The strength of the market in March, April and May usually sets the tone for the entire year.

This year, spring has assumed even greater importance as it coincides with a sharp U.S. economic slowdown, triggered largely by a dysfunctional real-estate market. After sales of existing homes sank almost 13 percent last year, a housing revival could put the economy back on solid ground.

Read the whole story: Reuters

Comments

[outnow]

We don't have a mortgage because my wife is German and pay cash for our home. Only in America does someone put zero down and then say he "owns" a house. Liar's loans and bundled securities, no income, no credit (NINC) loans underly much of the bubble.

The nature of the fatally flawed risk models used by Wall Street, by Moody and by the securities Monoline insurers and by the economists of the US Government and by the Federal Reserve was such that they all assumed recession was no longer possible and that risk could be spread across the globe.

Carl Friedrich Gauss offered us an economic model based on the Law of Large Numbers. Theories of derivative risk pricing were incapable of predicting bubbles in 1987; 1994; 2002; and in 2007.

Since 1999, no regulations or legislation separated securities dealing banks from commercial lending banks - the repeal of the Glass-Steagall Act of 1933. Except for the bank holding companies, there has been no federal regulation. Traditional lending prudence was "old-fashi­oned." Actual market behavior is different in panics as in 1987 and 1998. Markets do not follow Gaussian Bell shaped curves. The risk is under-reserved and has been diffused throughout the global economy.

We have created artificial wealth used to create assets with which to speculate and to feed into a global pyramid scheme with lowering of lending standards.

Over-the-counter credit default swaps are the next problem with 45 trillion at stake. Fraud and non-transparency will make this the financial and economic meltdown in American history. Financial securitization is the Last Tango for America.

Karl Marx predicted that the seeds of capitalism would be planted by greed, not by military force from the outside. In 1999, but for the genius of Larry, Bob and Alan, and now Paulsen, we could have saved the countries financial system. Thank the Clintons and the Bush dolt.

[outnow]

Should have been "seeds of destructio­n."

I wouldn't jump into the real estate market at the beginning of a systemic crisis in our financial system. Sure, there are some deals out there right now. If you want a nice home to live in then buy one. But flipping homes is risky because there are other assets that have been overvalued. These securities are derivatives and are overvalued. The crisis is of debt and solvency. No candidate can even mention the debt of the problem in international banking.

Again, I will state that no war will rescue the economy as did WW II. The New Deal was to prevent another banking failure and stock market crash by placing Chines firewalls between commercial and investment banking activities. Thee off the books risk is what the problem is. Lack of transparency and delays in disclosures. 14 financial institutions are under investigation by the FBI.

There are not enough jobs to pay mortgages right now.

[BigBagel]

Homes are still overpriced. We are still far from the end of this. That "bargain" may go down 10 or 20 percent more and the bargain hunter will be the new bag holder.

[EinChicago]

It's a shame reality doesn't agree. The 10-20% drops are localized in CA, FL, MI and, to a lesser extent AZ and NV. Acorss the rest of the nation, you're seeing nowhere near that large of an issue because there wasn't that large of a bubble.

[Sundialsvc4]

Buy? Not this little red hen. Not anytime soon. "The time to buy is when the blood is running in the streets," and that time of hunger and desperation is not quite here. But, it will be here very soon.

I know that soon you will be demolishing neighborhoods that were never lived-in, and turn them back into the swampland and pasture they used to be. I know that you will give-up your dream of turning factory buildings into glitzy high-rise condominiums, and start turning them back into factories so that people can actually start making the things that the Chinese won't export to you anymore (because they won't take your money).

I know that if I wait, I'll get my pick of houses for about one-fifth of what you are charging for them now. I'll wait.

[EinChicago]

And if you're waiting for that, you'll be waiting basically until hell freezes over.

Maybe you shouldn't wait so long to introduce yourself to reality sometime? :)

[mrcontinental]

Unless you are paying cash don't even think about it. When the economy tanks and the banks call in ALL LOANS you will have wasted all those months of mortgage and insurance.

[MilwaukeeDan]

mrc, I'm not an economist, but I do have common sense. Can you have a debt based economy and society and how long can it last? I listen to David Walker and he says this will all end, badly. Are the Chinese and the oil cartel going to keep borrowing us money? What will we have to offer then in trade? Our manufacturing base has been depleted and that's what the world needed us for. Will the United States be relavent in 50 years or will we join other empires on the scrap heap?

[mrcontinental]

MD the lustre has faded on the USA. After Nixon pulled us out of Bretton Woods we had the world on a string. We could print a piece of paper costing us a few cents and purchase the fruits of others labor with it, and the world allowed us to get away with it. This could have easily lasted our lifetime but the greed and avarice of the mutants, as always, got in the way.

There has been an orgy of pillaging and plunder of countless countries around the world with the CIA, State Dept, IMF and World Bank leading the charge. We have overthrown democratically elected governments, installed tyrants, instigated wars, and on and on and at the end of the day you just have to ask yourself why. Was it really worth it?

The mutants sold out this country long ago. They will take their ill gotten gains and flew the country while the former Joe Sixpack (he can only afford a 40 oz now) suffers hardship, along with his family, unseen since the Great Depression.

Part of me wants to feel sorry for him, but I cannot. Ya see Joe allowed this to happen to himself. He not only voted for it but DEMANDED it. Even though the meltdown is headed for him like a runaway train he still doesn't listen to reason and still prefers the snakeoil salesmen, still refuses to think for himself. Sad.

[EinChicago]

You can always be counted on for a good laugh. Seriously Exactly how out of touch with reality are you?
Of course your doomsday scenario will happen. Look at how it happened in 1991. And in 1987. And in the 1970s. And in the prolonged recession from 1961-192.

The economic picture is not good, in fact it is terrible. But it's not quite mad max.

[Dendroica]

Dude, they can't do that if you've got a contract. Your mortgage is legally binding- you've got a schedule, and they can't tell you after the contract is signed, that they've got to accelerate your payments.

If anything, if the bank goes bust, who will collect your monthly nut?

[mrcontinental]

Have you read one lately my friend? There are tons of people who signed statements to that effect in their contracts. I took a look at some of these ARM's, scary stuff man.