Somebody told me today that it’s time to buy a home soon because the next housing bubble is right around the corner. Oh dears…
My sources from Wall Street are saying that we got at least 5 years to go before any significant recovery of real estate can even be considered. First time buyers, making up for nearly 30% of the buyer’s market, have been priced out and a major correction throughout the U.S. is inevitable. Even public builders like KB Homes are starting to realize what this market needs: AFFORDABLE HOUSING.
- Downsizing the American Home – CNN Money
Another article from USA Today is full of quotes that can be used to highlight the housing crisis we are facing.
While there’s still a plentiful pipeline of home buyers looking to make a deal, finding one willing to make a split-second decision to buy and pay whatever it takes to get in the door is no longer a lock, real estate agents say.
This one applies to Arcadia:
Part of the problem, Baker says, is that today’s sellers are pricing their homes based on what comparable homes went for six months ago and tacking on an extra 10%. That formula, he says, is too aggressive.
Bubble theory proponents say it will end badly, with sharp price declines and intense financial pain like that investors suffered after the tech stock bubble burst in 2000. But for that to occur, it would take a dramatic rise in interest rates or a major shock to local economies resulting in steep job losses,
Let’s see – It would take 3 things for the market to crash:
- Rise in interest rates
- Shock to the economy
- Leading to… steep job losses
This article on MarketWatch covers all 3 scenarios:
- Wall Street is betting 2 to 1 that Feds will increase rates.
- Today, oil made its largest one-day jump ever to $139/barrel.
- The unemployment rate is reporting its largest increase since 1975.
I am normally a very optimistic person but there is nothing to convince me that this housing and credit crisis is going to blow over anytime soon.
Here’s to a happy weekend to all you readers.