Reading news on msnbc came across greenspans prediction of a housing bottom in 2009.
Is this against the rules now? I guess I will find out although I feel that economic issues that affect the “business” of homebuilding ought to be a legitimate subject for a business forum in fine “homebuilding”.
here is the link, http://www.msnbc.msn.com/id/26185570/
Now here is where it gets really interesting, Greenspans novel idea of admitting more skilled immigrants to buy unsold homes thus reducing the backlog, stabilizing home prices and the world economy all in one fell swoop.
Replies
Greenspan isn't the first person I've heard say that.
My father works for a company that is involved in high rise and/or high density residential. he's had reports and opinion pieces that said that BEFORE the current melt down.
I think it's the wrong answer and will lead to a "GM" type self fulfilling downward spiral in the end.
Our problems stem not from a lack of buyers (well, they do now) but rather an irresponsibel drive for and dependence on continual growth.
everyone demands unreasonable growth. growth beyond what can be sustained.
In the 80's, at the tail end of the boom we had Neg-Am's and ARM's that suddenly appeared in order to keep the market churning.
And when they weren't enough and the market crashed? It took several years and a lot of bankrupt builders and developers before it was sorted out.
this time we got all kinds of cool stuff like zero interest's and Arms and 80-20's and 110% financing to keep thing chugging along.
And when they could no longer sustain the growth? well look where we are now.
So, if we allow a bunch of skilled workers in to jump start our economy, how long before we need to let in even more and more each year in order to make sure we sell what we build? Homes build in blatent disregard for actual demand.
we need to find our responsible sustainable growth rate. Not more ways to sell whatever we can build.
As a younger, more idealistic guy i once told my father that companies like Toll Brothers and Pulte would be the undoing of the business. lots of people laughed. I'll stand by that today and I bet not many laugh this time.
Well the illegals can head over to Detroit and start picking up houses for a dollar. An American dollar.Am I allowed to say American? Bob's next test date: 12/10/07
Quote of the day: "...can't be done, it will take too long, not enough pipeline capacity, yada yada but yet they don't apply the same skepticism to their own "solutions" such as wind and biofuels"
You mentioned a number of elements of the "sustained" growth over the past decade or so. All of those points are good ones -- ways in which the housing market was artificially propped up.There is another -- I believe more important -- element. Its the false economy that we have fostered as a nation.False, because for a couple of decades, the bottom layer of the economy has gotten lower. I'm not very good at explaining this......How much would a house cost if it were built using traditional labor -- carpenters instead of a "framing crew", roofers instead of a "roofing crew" -- that is, trained and experienced tradesman instead of quickly-trained kids.And how much would that house cost if it was built by a local general contractor, supporting his family as well as his workers' -- instead of a project manager for a multinational firm.And since we're talking about it, how much cost difference would there be if that general contractor was paying for lawn service at his own home -- at a rate that could actually support someone. And pool maintenance. And groceries grown with labor that could afford a place to live. And products made in factories where the workers can afford the products they make.The "false" economy that I speak of is based on huge volumes of labor and services for which we are all paying peanuts. It has not only kept many prices artificially low, it has done so at the expense of the working class.And, methinks, its all coming home to roost. At about the same time that our worst inflation in decades is also hitting.
Vast projects should not be founded on half vast ideas.
I think you have said it very well, and I agree with you 100%.
Something I don't understand. In my area, the median home price is currently in the $450,000 range.
The average household income is $60,000, which translates to the ability to purchase a $180,000 house.
Yet foreclosures don't stay on the market very long. We average 60-100 foreclosures on any given month. It stays within this range.
I am guessing that people with cash are stepping in and purchasing these homes, and then renting them out. I mean otherwise the price would drop to be more in-line with what the average income could afford to pay.
The monthly inventory of homes for sale appears to be dropping. It peaked in March of 2008 with an 11 month supply and is currently at a 10 month supply and dropping. On average the supply is usually at 4 months.
http://www.census.gov/const/fsalmon.pdf
I feel that the monthly number of homes available for sale has dropped only because new construction has come to a grinding halt. There are still so many homes that still have to work their way through the "foreclosure system".
However, the bigger picture to me is not the housing market, but the actual economic health of this country. We need to create high paying jobs, but that does not seem to be the trend. If anything, we are losing high paying jobs, and they are being replaced with much lower paying jobs.
I feel bad for Greenspan, it has to be hard to have been a wizard for so long, and to have the curtain pulled back and for everyone to see that you did not have a clue.
I am curious to know what region of the country you are in? So Cal is a guess.
I agree with the economic health of the country being a bigger issue, but it is tied to the housing market and all the jobs that housing market provides. Real estate kept the economy afloat when it otherwise didn't look that good, now without it....
As you say how can people afford to buy those houses? If all they have is wages they can't.
Home prices need to reset at reasonable levels, the longer its propped up the longer it will be before we can recover.
I live in the wine region north of San Francisco.
There are certain rules or basics of economics that almost always do good things for an economy. One is that investment in roads and transportation infrastructure pays off.
Another is that sound money is healthy.
Another is that an expanding population results in an expanding economy. That has been discussed in some echelons relative to china twenty years from now when their population is in decline due to the one child per family rules
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
It will be 2012 before the list 3 homes and sell 2 a month stops in almost every neighborhood. There is 5 years of inventory in my neck of the woods.