NYT,pg1: Housing Slows, Taking Big Toll on the Economy

[DeepModem Mom]

Housing Slows, Taking Big Toll on the Economy
By VIKAS BAJAJ and DAVID LEONHARDT
Published: July 29, 2006

The housing industry — which largely carried the American economy through the tribulations of the 2000 stock-market crash, a recession and climbing oil prices — has lost its vigor in recent months and now has begun to bog down the broader economy, which slowed to a modest 2.5 percent growth rate this spring.

That was a sharp comedown from the 5.6 percent growth rate of the first quarter, the Commerce Department reported yesterday, caused in part by the third consecutive quarterly decline in spending on houses and apartment buildings, after several years of rapid growth.

“It hasn’t slowed down a little bit — it has slowed down a lot,” said Doug McCraw, a developer who has scrapped his plans for a 205-unit condominium tower in a neighborhood just north of downtown Fort Lauderdale, Fla. “Anybody who did not have a shovel in the dirt has chosen to wait till the market settles.”

The housing slowdown is perhaps the clearest effect of the Federal Reserve’s two-year campaign of raising interest rates in a bid to tap the brakes on the economy and reduce inflation. That campaign has been largely successful, with the decline happening gradually while other parts of the economy, mainly the corporate sector, pick up much of the slack.

“Housing is going from being far and away the most important contributor to growth to being a measurable drag, and it’s happening gracefully so far,” said Mark Zandi, chief economist of Moody’s Economy.com, a research company. “But there’s now a growing and measurable risk that things don’t go according to plan.”...

http://www.nytimes.com/2006/07/29/business/29housing.html?hp&ex=1154232000&en=860c2effed19ae22&ei=5094&partner=homepage

[Demeter]

1. After 3 Quarters of Slump, Housing Loss Gets Attention

Glad somebody noticed.

[pokercat999]

18. I've had a house for sale in a 2004 "white hot" market.

Listed July 2005 as of July 2006 we have had 3 people look at it. I took it off the market last week and we are moving back. Our house in the "NEW" white hot market better sell. Two mortgage payments (one a 15 year fixed rate) sucks

[pokercat999]

22. Good news, yesterday we accepted an offer on the

NC house and are moving back to VA.

[Tandalayo_Scheisskopf]

2. Housing has been, perhaps, ...

The one thing that has kept us from showing recession since 2001, IMHO. A hell of a lot of the action in that market looks like it has been churn by the investor class, too.

[msongs]

3. what, exactly, is the "investor class"? nt

[VegasWolf]

7. People who live off the dividends and interest their money makes. nt

[VegasWolf]

8. I agree, the housing sector was the major sector that kept this outsourced

manufacturing economy afloat. The boom in housing had to collapse as the fundamental economic engine is broken. Outsourcing expensive labor, insourcing cheap labor, a 10 trillion dollar deficit, politic ans controlled completely by large corporations who insulate their monies overseas all lead to a major, unparalleled collapse of the US economy. The great depression will look like a sunday picnic.

[Tellurian]

4. Republican are coming in for the kill..

The mission all along has been premeditated to destroy the middle class
and return to a depression class economy of the Rich and the Poor.

The Rich employ the poor and the government does away with fed aid and welfare.
More money for the fat cats in power. Why do you think they've done away with the estate tax.
They plan on keeping things this way for generations to come.. Unless...

[Acadia Blue]

16. They are creating the conditions for making us just like Mexico.

Their greed is obscene.

[leesa]

5. Most of my neighbors are in the construction industry and they have

been using their houses as ATMs for remodeling and all sorts of toys. I've been waiting for this slowdown. They are probably in for a world of hurt.

[leftyladyfrommo]

6. I worked in mortgage lending for years and now am out

the market is terrible. And I think it will probably be years before it gets really robust like it has been the last 12 years.

I'm kind of glad. It has forced me to get out and do something different. And I really needed to do that.

[Eurobabe]

12. Yeah me too, I was selling new construction for a builder

in SW Ohio. The market really started to cool last Sept. and although I had a good Apr/May, the market is in the tank. My hubby took a new job overseas, so I am out of that biz, thankfully.

[leftyladyfrommo]

17. Now if I can just stay out of the business.

It is horrible.

After 35 years my nerves just plain blew out.

[UrbScotty]

9. But it's a single-state recession!

And that single state is Michigan!

So says Dick "Three Mansions" DeVos.

[cliss]

10. I read recently that the housing market

is responsible for about 35% of our entire economy. This includes not just real estate, but realtors & their commissions, interior designers, construction workers, stores like Home Depot, and others.

Fully 35%.

Just imagine how vulnerable that makes us. Someone wrote that "We trade houses with each other, and we're using borrowed money from China to do it with". Imagine the implications.

It's an illusion, a complete Ponzi Scheme or multi level marketing scheme where all the participants are focused on the big heist, the profits. And really, I'm amazed at how many people are involved in the secondary market, the people who are planning to get rich on bank foreclosures/fix-upper scheme. Now THERE's a moneymaker if I've ever seen one......for the instructors.

My girlfriend has sunk about $25,000 to take classes & learn all about how to make millions in this market. "They told us we would be millionaires".

Oh, uh-huh....OK......

[Tandalayo_Scheisskopf]

11. With all due respect to both of you...

Your girlfriend is just the kind of credulous dupe that these people have long fed upon.

However, looks like the feast is winding up.

[cliss]

14. I agree with you.

I've been wondering if there is anything I can say to her....

Not sure how to approach this....because she still has some money left.....(they didn't get it all...)

I have my own business, so I go to networking meetings, go to the SBA for advice, that kind of thing. I'm continually amazed at HOW MANY people say, "I'm in the foreclosure/fixer upper business". They flash a big smile....that big smile of anticipation.....

Don't they realize this field is probably saturated? An even worse story, I heard about a man who lost his job. He went to a seminar for "real estate investing secrets". I think this was for industrial land, or maybe speculation property (not sure). Anyway, THESE people were not done with him until they sucked out his last $28,000.00. He got some CD's, my neighbor told me.

That man COULD have used his last $28K for a down payment on something. Too bad it's gone.:smoke:

[Viva_La_Revolution]

20. My son came home very excited one day last month...

talking about a plan he and a friend had to "buy a house, fix it up and sell it"

I had to sit him down and gently explain that he missed that boat by a few years.

If you buy a house now, you had better intend on living in it for several years.

[edhopper]

21. If you look at the 90s RE crash

in Japan. Make that 10 to 15 years.

[tridim]

13. What does this mean for refinancing and interest rates?

I have about 16 months left on a 5/1 ARM at 4.8%. Should I refinance now, or wait the 16 months?

I have a feeling I'm going to get screwed either way, so maybe it's better to pay off as much principle as possible at the low rate even if rates go up some more.

[skids]

15. Sorry don't have a crystal ball...

...who knows what interest rates will do in 16 months. All I can say is if a depreciation of the value of your property would leave you "upside down" and thus unable to refinance, best not to try to gamble and refinance soon.

[edhopper]

19. How to be worth a million dollars

through real estate. Buy a house for 2 million dollars and just wait:-)

[pokercat999]

23. How do you make a small fortune in Real Estate?

Start with a big one.