Comments on: Are We Nearing a Housing Market Bottom?

By: todd

todd — Mon, 16 Feb 2009 03:26:42 +0000

Excellent review of the existing "Experts".
I strongly urge more "experts" to focus on what was actually the cause of the economic collapse. It was the BUBBLE in prices and the speculators in flipping has far more than no doc loans and not the subprime mess.
If the base canard that prices will always go up had been burst early the subprime mess would never have begun.
It was the greed in pricing not Alt-A loans.
It was the greed of the so called "builders" who just greedily persued on any and every chance to overbuild at ridiculous prices. Why because they hoped there was always another sucker to buy it and flip or speculate on it. To continue to just blame the bank collapse on the subprime mess misses the mark. It was the exploding, huge, unjustified price increases that made the subprime mess necessary to "Keep the music going". The afforability factor issue has been ignored to our peril.

IF we don't recognize and understand that it was runaway price inflation that caused the problem and brought us the Sub Prime, no doc, and Alt A mortgage not the other way around.
The conventional view has it just backward it was not the subprime mess which was caused by the huge price escalation that (EVER HIGHER EXCESSIVE PRICES CAME FIRST) is what came first not the subprime mess driving the price increases., Todd

By: Rob W

Rob W — Mon, 16 Feb 2009 02:34:49 +0000

Ron Wallace,
Do you really mean "the cost to build is well below the current market prices. This certainly depresses new development." ?
How is development depressed if market prices are higher than the cost to build?

By: Gary Wardell

Gary Wardell — Fri, 13 Feb 2009 19:57:55 +0000

What will new built houses look like? Will they be smaller?

One of the main problems with the housing market is all the new built homes were either town houses or single family homes that were to large and/or to fancy.

Town houses over built the demand. People can not afford but would like to own large fancy single family homes.

By: Phil Steinschneider

Phil Steinschneider — Tue, 10 Feb 2009 04:15:06 +0000

The formula for calculating a market bottom is relatively simple. Historically, median home prices have averaged two to three times median family income. In other words, if a family earns $100k per year, their home should cost $200k to $300k. If homes in an area average higher than three time the median family income in that region, the homes there are still too expensive.

In all likelihood, however, due to the overleveraging that took place for so long, the market correction will initially take prices below the lower norm.

By: Busy Man's Workout

Busy Man's Workout — Tue, 10 Feb 2009 02:22:06 +0000

Interesting article. However, if the lack of newer homes being built will cause the reduction in new homes for sale…who's to say that the older homes will be sold?

Doesn't this suggest a lack of buyers in both areas and a further price deflation in the housing markets?

By: Jutia Group - Market Jitters & Political Critters

Jutia Group - Market Jitters & Political Critters — Mon, 09 Feb 2009 18:48:12 +0000

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By: Ron Wallace

Ron Wallace — Mon, 09 Feb 2009 17:06:57 +0000

All the analyses seem to miss one important point. How does the current price of a typical house relate to the cost to build the same house? Based on what I see in the Atlanta market, the cost to build is well below the current market prices. This certainly depresses new development but is a situation that will certainly adjust. Either the cost to build will come down which would indicate deflation of materials, labor, or both or the price of a house will go up as inventory is reduced by obsolescence or natural factors (fire, flood, etc.)