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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Housing's Disconnect
http://www.millionairenowbook.blogspot.com/
Look at the incredible rise in Housing values as a percentage of GDP since about 1997. Of course, it was back in May of that year when Clinton's tax laws on favoring the treatment of capital gains on one's primary residence took hold. Then, the stock market bubble of 2000 took another 7 trillion dollars of value out of an economy that had dipped into a short recession, all the while real estate values continued their historic climb. As I have said, the housing cycle peaked in late 2005 (many say July 2005) and now you are faced with four choices: Sell, don't buy (more), buy (please wait), or rent and make your landlord a bundle of:
R.L. Brown, who tracks the local housing market for homebuilders and real estate clients, said data through July show Valley housing starts are down 20 percent from last year, new home closings are down nearly 10 percent and sales of existing homes have fallen 28 percent.
I didnt think it would get this low, and it is, he said of new home permits. Frankly I dont think theres much expectation of dramatic improvement now through the rest of the year. It would be wishful thinking to think things are going to change in the next three months.
Until the pricing drops, inventory will continue to grow and buyers will continue to stay away. In a sense, that drives the new home market, Brown said. If they can’t sell their present house, wherever it is, then they cant buy their new house.
Were sort of at a drift right now, Butler said. The only good thing is interest rates are somewhat lower. They seem to be on downward track, but lenders have tightened their underwriting guidelines.
WHAT THIS SAYS IS THAT FEWER HOMES BEING BUILT WILL HELP US GET THROUGH THE HUGE INVENTORY. ALL NORMAL IN THE 7 YEAR CYCLE OF REAL ESTATE.
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NOTE: Please click on the charts below to enlarge them if [read more]
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