Come Back, Housing..
September 8th, 2008 by 
reality
Paulson, interviewed on the Fannie/Freddie debacle, indicated that the scale of the losses to be absorbed by the taxpayer would depend on how long it takes for housing to “come back.” Certainly there are a lot of people waiting out there for housing to “come back.” What I don’t understand, is what does this mean? Housing is here, it hasn’t gone away, in fact there is more than enough for everyone… but really what people - including Paulson, I assume - are thinking, is that the bubble pricing is coming back, and somehow, miraculously, all will be well again.
Oh sure, after a long period of time, those prices will be seen again, just by the inevitable process of government deficit spending and inflation. But we’re probably talking twenty or thirty years from now, certainly not soon enough to bail out over-committed borrowers in the near future. Housing prices not only aren’t going back to bubble levels in the near future, they’ve still got a long way to go on the downside as the recession starts to bite and real, honest borrowers find themselves unable to pay. Only when the deleveraging process has run its course will prices stabilize, and even then it will take a long time for appreciation to resume, simply because of the lack of credit.
Posted in Fixed Income, Government, Real Estate | 
September 8th, 2008 at 4:47 pm
I’m glad I didn’t buy a house.. I had a friend who was buying a house every other week.. All he would have to do is put some money down, have the house built, when it was finished 6 months later he could sell it and take a big profit on the sale.
I kept telling him one of these days he would have to make the payments.. When the run ended and he couldn’t sell the last 3 homes, he went into financial ruin… short sales, foreclosures, large notes, he lost more money on the last 3 than he make on the prior 12.
I don’t really feel sorry for him, he spent money like it was worth nothing.. $1300 dinners for 4, New Mercedes, New Plasma TVs.. I sat back gritting my teeth, of course wishing I could enjoy the good life too, but knew it couldn’t last.
I agree, the prices will be back, but someday when inflation causes prices to rise.. Do we really want housing prices to double again? Who can afford a home if they all cost 500k+ I for one don’t want to pay $3600 month for my mortgage.. I know someday I will just as my dad paid $750 a month and I now pay $2000 month for rent.
I think the housing market will stay here or fall at least until 2012.. before this is over, noone will want to hear the word real-estate, and there won’t be very many real-estate agents left.