The sales statistics for homes sold in my area for the first quarter of 2006 are out, and sales are down from the first quarter of 2005 by 14%. This, coupled with higher interest rates means that the pool of buyers is shrinking, which suppresses appreciation. Add to this the growing inventory from the lower sales rate, and, all together now, the boom is over. Oh, one more thing: in the next 18 months, millions of variable rate mortgages which started out as fixed for 2, 3 or 5 years will hit their adjustment period. This will flood the market with even more inventory as people try to jettison mortgages which they can no longer afford. Foreclosures will spike, putting more properties up for sale, and the bank-owned REOs will elbow out a significant number of regular folks who wish to sell and who may find themselves unable to get the price they need. Guess when this really hits the fan? 2008, which, by the way, is a presidential election year.
If you don't want Hillary to be president, you better pray hard that they catch bin Laden, because that's the only thing that will turn things around for this administration.
I agree that the administration will somehow look bad if things play out the way you describe, but how is it the President's fault that people take out loans that they can't afford think that somehow, real estate never loses value?
Posted by: Chris | May 02, 2006 at 12:53 AM
Well politically there's no reason to "turn things around for this administration." As "this administration" won't be running in 2008.
And ... the stock market is likely to be in very good shape in 2008.
And... people aren't going to dump their houses because their mortgage rate went up a bit.
And ... independent voters don't trust Hil.
Posted by: Tom faranda | May 08, 2006 at 11:30 PM