CNN predicts "permanently higher prices" in housing market, "no slowdown"

[Bush_Eats_Beef]

NEW YORK (CNN/Money) - There is no sign of a slowdown in the housing market, thanks to an expanding economy, regulatory constraints and a limited supply of land for development, according to a report cited by the Washington Post Monday.

Home prices have been climbing for 13 years, with the rise in 2004 the largest annual jump since 1979, the paper said, quoting from the report by Harvard University's Joint Center for Housing Studies. Harvard economists cited by the paper said the market continues to be fueled by easy credit, low interest rates, affluent baby boomers buying second homes and the continued growth of immigration.

Housing prices rose last year in all metropolitan areas tracked by Freddie Mac. The downside is that as prices rise, property taxes also are rising in many cities, which the report noted "falls especially hard on elderly owners with low fixed incomes."

The price increases in the purchase market have also caused problems for would-be first-time homeowners, the paper said, particularly those living in high-priced markets such as Southern California, New York and Washington. Land constraints in many of those cities make it likely that the regions will have "permanently higher prices," the report said.

http://money.cnn.com/2005/06/13/news/economy/housing_market/index.htm?cnn=yes

[fertilizeonarbusto]

1. waaaaaaahl

if CNN sez it, it must be true :silly:

[htuttle]

2. "We've suspended the rule of gravity"

Any of this sound familiar?

We're going to party like it's 1999!

[SmokingJacket]

5. Remember: the stock market was going to hit 30,000! nt

[ClintonTyree]

7. There's no limit as to how high the Stock Market can rise,,,

I seem to remember that one from the Mavens of Wall Street in the not too distant past. We all know what happened there!

[LiberallyInclined]

3. until mortgage interest rates go back to double digits-

there ain't gonna be no real estate bubbles bursting.

[HughBeaumont]

4. You want to yell "TIMBER" or should I?

Rule of ANY investment - once CNN starts to trumpet it, avoid it like the plague because the bandwagon passed you by already.

[leesa]

6. Impossible. Wages are falling faaaar behind. It's simple math.

[Bush_Eats_Beef]

8. True, but look at this "Fortune" article from May 30th:

THIS is the root of the problem, NOT the "strong economy"..

http://www.fortune.com/fortune/investing/articles/0,15114,1061371,00.html

REAL ESTATE FRENZY
Riding the Boom
They snap up real estate, flip it, then chase the next hot market.They’re the new day traders—and they’re dancing on the edge of a volcano.
By Grainger David

Zareh Tahmassebian is on the way to look at two of his houses in Phoenix. He is lost. Most people don’t get lost driving to their own residence, but then, Tahmassebian has never actually been to these particular homes. There are a few reasons for that: (1) He has no intention of ever moving into them, (2) he lives in Las Vegas, not Phoenix, and (3) he owns six other houses—and a half share of seven more—in the greater Phoenix area. "Sometimes it’s hard to keep track," he says.

Tahmassebian, just 22, is a big, affable guy who dresses the way a budding young speculator should: black trousers, a blue-and-white-striped shirt, cuff links, a Cartier watch, black suede loafers, and rimless purple sunglasses. The son of Armenian immigrants, he has spent the past four years in Las Vegas working as a mortgage banker, a job that he says paid him $250,000 in salary and commissions last year. He has taken the day off to fly to Arizona for a "frame inspection." The houses he’s inspecting are somewhere inside the Cholla Ranch development that’s being put up by KB Home, one of the nation’s largest builders. Right now he’s in the general area—cruising southeast down Highway 10 in a white Chrysler 300M rental car—but lacking specifics. "Is that Tempe?" he asks. "I think I have some houses there."

After several uninterrupted miles of cactus, desert, and tumbleweed, it becomes clear that he’s missed the turn, and he exits the freeway while dialing his broker. "Papa John!" Tahmassebian says into his cellphone. "Where are my houses?" To get more help, he dials KB Home on another phone, and soon he has a gleaming silver clamshell at each ear. For a moment the car drifts dangerously across the exit ramp, until I reach over to grab the steering wheel. "It’s okay," Tahmassebian whispers, nodding toward the place where his trousers meet the bottom of the wheel. "This knee can drive."

When we finally arrive at the first construction site, on Paradise Lane, Tahmassebian begins his inspection. "See this wood?" he says, gesturing to the slatted frame of the unfinished house. "This wood made money for me! I don’t own it—but I own the rights. I put a 10% deposit down, I haven’t even made a mortgage payment yet, and it’s already gone up $45,000. What a country!"

[lectrobyte]

9. The bigger the bubble, the more splatter when it bursts?

From what I can see of my little corner of the bubble, and admittedly it is a warm and cozy spot housing-wise (Wake County NC -- lots of tech workers, state gov't employees, college employees etc.) it's slowed down, and houses that would have moved in a month are sitting on the market six months or more.

[spinbaby]

10. No bubble here

In western PA, housing prices are still reasonable. But I'm definitely noticing that the higher-end houses (over $250k or so) are just sitting there, whereas the lower-end houses are being snapped up almost as soon as they hit the market. Even here I'm willing to bet we'll see a collapse on the upper end of the market.

The more vehemently they deny the housing bubble, the more I'm sure it's about to burst.

[getmeouttahere]

11. I heard a commentator on AAR....

say that the reason he is sure the housing bubble is about to burst is because, just like back in the late 90's, when everyone was an expert on the stock market, from janitors to barbers, now everyone is a real estate agent. He pointed out that there are over 400,000 real estate agents in California alone. I think he makes an interesting and thought-provoking point.

[theboss]

12. I don't really see a bubble either

There is no let-up in demand and interest rates remain low.

If people stop moving to the cities at play, then there may be a bubble. DC gained 60,000 residents last year.

[freestyle]

13. When mass layoffs follow easy credit ripoffs, it's not good times

Just a whole lot of people scratching and surviving. Apologies to whoever wrote the theme song to Good Times.

[PunkPop]

14. Tell that to the people in my neighborhood

who have had their homes on the market for almost a year and have lowered the prices 1, 2, 3 times. I call bullshit on CNN (and the WaPo). This is in Dallas which I believe would be categorized as a metropolitan area.

[Jackpine Radical]

15. Jackpine Predicts permanent escalations of Dutch tulip prices,

South Sea exploration stocks to continue unprecedented growth indefinitely.

[Sgt. Baker]

16. it will slow

Home prices can go down but will never go down as quickly as they rise. So technically yes the housing prices will stay abnormally high in many areas.

I experienced the tax problem a few years ago until I refinanced and brought my payment back down. I'm paying $700 month on a house that I bought for $79,900 and is now worth about $240,000 and still rising fast. I bet it will be over $300,000 by the end of this year. When the bubble bursts I'm betting that it will stay right about where it peaked at.

[depakid]

17. CNN predicts Dow to rise to 36,000

Proof due out soon that the Earth was created in 6 days....

[Elwood P Dowd]

20. Is James Glassman now working for CNN?

:)

[AX10]

18. surely CNN would never "lie to us, right?

:eyes:

:crazy:

[guardian]

19. I makes me sick

I hope prices don't stay high. I'm paying $650/mo for a dumpy little apartment. And rents keep going up.