Housing Bubble To Burst 50% Says Templeton
 

Whew! The link to that story went to a sales pitch but Templeton is on the bean.

This is fucking scary. Sir John is rarely, RARELY wrong. Worth a read if you're a real estate investor.

Good news to me cause when it drops I clean up.

hmmm where IS the link?

.........

So a million dollar house will be worth $500,000? I'd find that very hard to believe and would probably cause a severe depresion. So many people have everything invested in their home for it to drop 50% would crush them. You'd have so many people stuck in a home, interest rates would go up, those with ARMs would be fucked - unable to sell and unable to make their payments. If that does happen America will be a very sore sight for the eyes.

Market corrections have happened in the past, and will happen again. Dont find it too hard to believe :2 cents:

good point.. this is certainly a possibility.

It's part of a world-wide bubble so hold on when it comes...

is there really a bubble when the land supply is exhausted, and demand is growing?
Prices may stagnate for a few years, I doubt they'll go down, if anything I think the rise will continue to a point where growth rates stable out again - I'd say we are maybe 18-24 months from that point. I've spoken to many real estate buddies of mine who all say the same thing. Relative to Europe, USA is just catching up.

The mass majority of people today would probably say there will be a bubble burst, and usually the mass majority is wrong.

I don't think it'll drop that far, close but not that far. 30% is more like it.

Problem is taxes. I've spent the past 3 months talking to friends around the world who make their fortunes in real estate. I was surprised that there were awesome bargains still out there and I helped create a new secondary market. What my pals told me are some great deals and horror stories. Bottom line is you have to trust yourself and invest in yourself. The BEST thing to put into a property is a responsible and creative person or persons.

Rising oil and gas prices are what's going to doom the real estate market. Winter is coming up in 4 months but it'll be gettin' cold in almost 2 months. Southern real estate goes up when it gets cold in the north :) With high energy costs it's a given the southern markets will be alive.

Problem again are energy costs and taxes. friend had a $500k home. It ended up selling for $150k because the taxes on it annually were $13k. Fucking outrageous!

Soon, with interest rates rising the straw will break. Incomes just aren't catching up.

Also, the big scams are about to fall apart. Primarily the oil crisis. Back when I was a kid, President Kennedy gave a goal of less than 10 years we would put a man on the moon. We went from a chimpanzee in a rocket to a man on the moon in less than 10 years flat. Yet we've had an oil/energy crisis for 30 fucking years? What kind of bullshit is that?

People aren't stupid. They're lazy as fuck but not stupid. Soon after the shit overseas comes to another boil prices energy wise will go through the roof again and kiss real estate goodbye. People will only be able to rent in cheap areas like out in the woods. Either that or families will have to team up together.

Anyone who got an ARM in the past few years is a fucking idiot anyways. When you could get a 30 year fixed in the 5% range why the fuck would you get an ARM?
NOBODY anywhere thought that rates could or would get any lower, and anyone with an ARM has to know their rate will go up substantially when their 3-5 year fixed term is over.

:2 cents:

Right on Lenny2!

I had no idea how many awesome properties there are out there in the U.S. that if I got at a 30yr fixed I could RULE.

Since I can work remote just an artpad and a scanner and computer and DSL I have it made. that opened the door to any number of homes and properties that if they were in Los Angeles would cost $5 million but I could get for $300k! I spend more on Haagen Daas ice cream annually than I would on a mortgage in some areas.

Glad I stayed in school!

So now the race is on to just settle on a property in a location I like and just chill. Lotsa land, lotsa FRESH AIR and FRESH WATER.

If I started an affiliate program I could easily in 6 months buy so many properties it would be stupid.

There's alot of opportunity still out there.

No bubble! Just demand and supply. Way too many buyers and very few homes. I predict a 10% increase in homes in Los Angeles for the next year. Then a soft landing.

I am predicting the top of the housing market and possible recession in the next 6-12 months. Especially after visiting florida and seeing all that new building..
This is the tech bubble all over again, but its gonna hurt a lot more people a lot harder.

Housing doesn't "burst".. it just deflates slowly. The housing market has definitely peaked..

As San Diego goes, so does the country.. the market here has flatten out - houses are staying on the market much, much longer. People here are starting to realize that and putting their houses up for sale to get the maximum price, but that just puts more supply into the market and that will start to drive prices down.

Then when all those 2000-2001-2002 ARM mortgages start hitting those 3-5 year adjustment periods, people are going to NEED to get out of their houses because they can't afford the new mortgage payments, putting even MORE supply into the market.

All this stuff is pretty basic.. I personally thought this stuff was going to hit last year, but long-term mortgage rates have stayed inexplicably low (even Greenspan doesn't know why long-term rates haven't risen).

I just wonder if Greenspan and the Fed are going to invert the curve (which typically predicts a recession within 6-9 months).

Well ABC News and Data Quck Information Systems has the following data for California:

LA County had a 20.2% Increase to $488,000
Orange County had a 14% increase to $601,000
and San Bernardino County had a 27.6% increase to $328,000

NY real estate jumped 30% in one year.

Incomes however have not.

Here's another major danger. Most credit card debts, insurance company policies and mortgages are OWNED by foreign countries primarily in Asia. So when you get a collection call it's in Chinese.

A dangerous scenario is in effect. China couldn't afford if we all defaulted and stayed healthy. Your own fellow American has pimped your ass to hock for 30 years and laughed all the way to the bank and the government sat back and let it happen.

Watch what happens in the next year.

you think there is a bubble down here in FL?

housing prices are just insane down here

I looked at a house the other day for 408k that was Nothing

:helpme

Precisely. Though I'm not an economist I'm a realist, an investor and a stakeholder in the stable long term capital growth potential of the real estate market.

4% growth per month is a ridiculous growth rate that is simply a factor of greed agression. However, as Biggy said, it will ultimately be a law of supply and demand. Much of middle America and rural America is has been favor to growth that many urban, heavily populated areas have realized. Trust me, I can tell you from experience that I have property in semi-rural America that has seen no real growth in 5 years.

If you're in a desirable area, I wouldn't sweat the long term stability of your investment but yes it's possible that a correction could normalize pricing slightly. One of the factors I look for when I buy is the income opportunities available in an area, namely the job market. In the NYC metro area, it will be unlikely that there will be a downturn. In semi rural Louisiana I'd be a bit more concerned if you just purchased on inflated values.

Our economy thrives on growth, a down turn in the housing market would be disasterous.

China really can't afford much of anything, it's sad we're letting them even buy our shit or trade with us when they're still governing the people as a communist country, I don't care what title they're promoting, they're communists.

the housing market will go through a correction, not a burst.

in hot usa coastal markets much of the price run-up is due to foreign money, and it is not tied so much to incomes of local wage earners---this insulates these areas from a true bursting bubble.

as you see a homogenization of a global economy based in large part on the internet WHERE you are will be less important than your ability to connect.

look for major property value increases in stable foreign locales that can provide good internet connectivity.

that is the next big profit area in real estate speculation; marketing these remote properties to westerners as retirement areas.

hint: tropical zones, thailand, philippines, south america, greece, belize, baja california

that's where the big ROI will be in the next 25-50 years in residential property.

:eek2


87654321

You know I just want a house to raise my family in, that's why this boom is upsetting me, because I was going to buy a house next year and at teh current rates I don't want to over extend myself getting into a 500k house in miami.

Texas is looking mighty nice right about now

I'd say a drop of 10% to a tops of 30%.. Anything more would take some sort of massive hit to our economy to happen before houses would drop that low.

Rinaldo

I live in hollywood and the prices there have gone so out of wack I cant even find a decent house for under 400k.

This is a comminuity where houses were selling 7 years ago for 70k-120k

just insane

My mother bought a condo in orland 4 years ago for 90k, 3 bedroom 4 bath, it's actual a townhouse, with about 30 feet on every side of her home seperating her from her neighbors. Now it's selling for 280

I'm shocked, what the fuck are people thinking?

My uncle bought a townhouse in bradenton on the west coast 1 1/2 years ago for 140k 2 bdrm 2 bath with a nice back yard.

appraised it 7 months later for double that

Unfucking real

:helpme

Thats exactly the truth. When everyone calls a bubble, there is no bubble. Sorry, but sheep don't call the movement, the shepard does.

true.

a lot depends on HOW you make your money. if it is internet based you have MANY choices.

calfiornia is not a good value. try sitting in a car for an hour on the bay bridge trying to go from SF to Berkeley.

listening to the jig's boom box rap tune in the car next to you.

the pool is just as warm in the midwest, and the birds are chirping this morning.

Yeah I live in Bradenton.. We built a house and its worth almost double what we paid for it 2 years ago.

the house he sold is on LongBoat Key on a canal. Sold it for 750k its now worth close to 1.4M

Beautiful house

yeah longboat has some very nice and expensive properties..

Here's the strategy of sanity. Take some time and take construction courses. Certifiable ones. That way you know what a house is about and can cut costs. Learn to build a house too. It doesn't take that long nor are the courses that expensive.

Once you have that knowledge under your belt you're ahead of the pack.

I don't buy to sell. I buy to live in. It'll grow in equity by default. I have woodworking, metal working, stone working, arts etc. so as I add on it grows in value.

Rural areas aren't going to go up in value because they're not near metro areas where whores and drugs are better. Plain and simple.

Good pussy raises real estate values. Cops should realize that to find the pimps and hos they should follow the real estate trail.

dont you know you're supposed to use the slow lane on the bay bridge???? it's much much faster. :2 cents:

Just went into escrow today on a condo here in Newport Beach, CA.

$799,000.00 USD (what a deal eh? lol)

midwest is the best, none of that stupid shit like california. 400k here means living like a fucking king, albeit we dont have all the jigs and spics everywhere fucking up the values :1orglaugh

Yes Recession ! And the Spike in oil is also often floowed by recession next 6-12 months !! You are spot on !

I will see you all back here on this thread in 6 months to discuss....

National Association of Realtors , sales of previously owned homes drop 2.6 percent

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http://biz.yahoo.com/ap/050823/wall_street.html?.v=15


The latest snapshot of housing activity suggested that the sizzling housing market may be cooling slightly. Wall Street has been closely watching home sales, worried that the housing boom is nearing its end.


Condos saw the worst hit and also price declines.

Get ready folks I called the top, we are starting to see the cracks now.

I am calling for a recession in the US in the next 6-12 months.

I hope you right and it becomes a buyers market in the next 6-12 months as im going to be in the market soon

I am with Lars on this.

Shit gonna hit the fan in a few months for housing.

On the one side of this discussion it can be said that you will likely not see a burst but instead a gradual decline because housing is by its very nature not a liquid asset. People live in homes, unlike stocks where a burst and rapid decline can happen in one day.

On the other side of this discussion it should also be pointed out in the last five years you have a seen a huge increase in very risky mortgage lending. Things like ARMs are nothing compared to the rise in interest only loans, 6 month teaser loans, multiple mortgages, home equity loans being tapped for vacations and other crap. The other shoe will drop on all these schemes and when it does it could create a situation that has no historical reference for people to say, "in the past when this happened...."...

As a Realtor & real estate investor since 1964 - I have seen many trends come an go......Real Estate has always been the 'best long term investment & probably always will be.

It is however always LOCATION, LOCATION, LOCATION that makes the difference. You have to be smart about it! There are areas that will really be hurt - my hometown already has been there & I did NOT make a profit on my home of 5 years that I sold this year, That is a first...... I did lucky to break even. However, at the same time, I made a profit on my home in Cape Coral of $120,000 that I barely owned for 2 years.

These price increases are insane & I think they will start to level off - but it will be due to 2 things..... Property Tax increases & Interest rates making housing less affordable. Also an important factor is lending policies. I cannot believe that there is still 100% financing available....duh..

From the opening lines of the article --
"Investors sold off stocks in early trading and continued selling after the National Association of Realtors said sales of previously owned homes dropped 2.6 percent in July as mortgage rates crept up. But even with the decline, sales were the third-highest level on record.

The latest snapshot of housing activity suggested that the sizzling housing market may be cooling slightly."

Sales were still 3rd highest ever. There will be no bubble burst, the housing market will simply come to down to reality. You also can't compare it to the tech bubble. At the end of the day, the houses still have a nice underlying value. Tech stocks in the bubble there did not have a real underlying value since many of those companies were losing money from the start. The market will cool off, but all that will happen is growth rates will come down to reality.

[QUOTE=Sharpie}
It is however always LOCATION, LOCATION, LOCATION that makes the difference. [/QUOTE]

So very true. Even in huge declines, like in the 80s when Hawaii was hit by the loss of the Japanese buying and suffered 20% declines, the best properties came through relatively unscathed. In most cases when property declines, the premium, most in demand locations seem to remain stable in price.

Interest rates keep going up :Oh crap

NY up 30% in ONE year. Homes in upstate NY rising faster than a boner in a Brazilian whore house.

Average home is 5 times the median income. It's becoming too expensive for the majority of Americans to own American homes. Who wants to bet during the next terrorist shit in Europe alot of European wealthy start snagging up homes in the U.S. ....Oh, maybe I should say look out here come the Chinese aristocracy.

china is gonn a be like japan was in the 80's only 1000 times more powerful

I'm closing on a 2 bedroom Condo with a garage in Coral Springs for 279k, great location. My parents bought a 4 bedroom single family house with a pool in Coral Springs back in 87 for 120k. That house is now over 500k, with the biggest jumps in the past 3 years.

Unreal.

Normally I would agree with you Lars, but I know China.

What's going to happen to China in the near future is gonna shock everyone for millenia to come.

50 Bubbles