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| 7/8 |
| 2004/10/5-6 [Reference/RealEstate] UID:33937 Activity:very high |
10/4 Vegas bubble pops. Can CA be far behind?
http://biz.yahoo.com/ap/041005/vegas_pulte_2.html
\_ Your schaudenfreude is unseemly. I feel pity for you that your
\_ Wow, a Simpsons fan trying to sound smart.
\_ You nailed it perfectly. Now just read that paragraph
in the tone of "the comic store guy."
life is so hollow and empty that triumphalism about housing
prices is one of your high points. Enjoy your glee.
\_ An admirable effort, but still Worst. Troll. Ever.
\_ Uhm, having housing prices drop is a GOOD thing. We pay less
for the house, the property tax goes down, responsible people
can afford to buy a house again. This artificial atmosphere
of low interest rates/high housing prices is not healthy
in the long run. Look at what happened to Tokyo, look at
what happened to LA during the early ninties. The market
is way overdue for a correction.
\_ Lest we forget potentially massive fraud at Fannie
Mae, home of the Democrat sinecure. It could get very
very ugly.
\_ Housing prices drop will have cascading effects on the
economy. You may be paying lower prop tax or rents, but
those who lost their equity will spend less. This will
cause stores and companies to make less and start laying
off workers.
\_ Not to mention some companies own their office buildings.
Now they'll have less capital to work with.
\_ I'm with him. It sounds evil but watching a housing market
crash would please me quite a bit. I don't actually think
it will happen anytime soon though. This Vegas pop isn't
yet a pop so much as a "stop growing so fucking fast".
\_ Why would it please you? Still renting and missed the boat?
\_ No. I am more "nervous homeowner" than showingFreud. -op
\_ Nervous about what? If you truly believe what you're saying
then the only smart thing to do is sell now and buy back after
this coming catastrophe in the housing market.
\_ Nervous about a drop in the housing market of course.
Isn't that what I said? Nervous about something happening
isn't the same thing as being certain that it will happen.
\_ Well, look at it this way. There's no way that
housing prices will go up. $500,000 for a crap house
isn't going to last when interest rates hit 7-8% by
next year. Remember, this has been THE LOWEST rates
have been for the past 40 plus years. You're not
likely to see rates like this again in your lifetime.
So, although they might not go down, it's unlikely
that they will go up. In other words, you shouldn't
rush into a housing market. (Boy, where did you hear
that one before, oh yeah, a couple years ago when
everyone was buying internet stocks, har har har).
Plus, historically house prices track inflation, so
it seems like that there is a very high probability
that there will be a major adjustment coming in the
next 12 months. My family has personally seen this
happen with real-estate in SoCal during the early
ninties. Housing prices dropped 25-33% from peaks.
\_ That could be kind of a weird situation.
Homeowners' loans would not be 'underwater', but
housing prices could still fall in real dollars.
Hmm... So if inflation was a cumulative 200% and
housing prices went up 100%, then your house fell
33% in real dollars, but if you sell you gained
100% in book value.
Thinking about it a bit more, since houses are
generally a heavily-levereged investment, the
homeowner could come out way ahead in this
scenario. If you put $100K down on a $500K house
and a few years later you sell for $1M, you've
increased your equity by 500%, which in real
dollars might still mean doubling your money.
\_ like all heavily-leveraged investments,
you can come out way ahead or way behind.
As leveraged investments go, a house
ain't bad in terms of volatility. In
the current market, it's hard to say ...
\_ I guess just about any heavily-levereged
investment will do well in inflation if
you have fixed-rate interest.
\_ you seem to be talking about really
drastic inflation though. But how did
housing prices go during the 70s,
when inflation was very high?
\_ I just picked big numbers to make the
math easy.
\_ They rose a lot in CA. One thing
not to miss is that this money is
tax-free.
\_ Your HOUSE is so BIG and TAX FREE!
What does this mean? Basically it means that your
downpayment for your house is basically wiped out.
So, there is reason to be nervous... Let's just
hope the next quake isn't too big....
\_ Actually there is a really easy way for housing
prices to go up: inflation shoots up. I am
starting to believe this is how it will play out.
\_ when inflation shoots up, doesn't it mean
that the fed would be forced to raise
the interest rate more? would not that
cause a decrease in home prices? I am
confused on this one. Anyone?
\_ Sure, they would raise interest rates.
Sure this would tend to cause a crimp
in home prices. But inflation could
still force nominal prices up.
\_ I think the effect of a interest
rate rise would be more drastic
and immediate.
\_ I don't think this is going to happen in Bay Area anytime soon.
I can understand it happening in Vegas. LV has land to meet the
demand. But here, there's no more land. There's always a big
demand. Another reason for the Vegas bubble is very similar to
Japan and HK. People in Vegas buy houses in hope of making money
out them. But here people buy houses because they need a place
to live and start a family. Thirdly, there are still people who
can buy houses with all cash regardless of the interest rates.
\_ Oh, it will happen in the Bay Area and relatively soon, too.
The irony is that the renters still won't be able to afford
a house owing to higher rates and the homeowners will still
have a place to live that they can afford. After that, the
prices will go up again. There is a high demand and a lot of
wealth, but demand will fall and take prices with it. Prices
will still be expensive relative to elsewhere, but less than
they are now. All the factors you cite are already in play. |
| 7/8 |
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| biz.yahoo.com/ap/041005/vegas_pulte_2.html Associated Press Pulte Homes Cutting New Home Prices Tuesday October 5, 6:43 pm ET By Ken Ritter, Associated Press Writer Putle Homes Cutting New Home Prices After Aggressive Increases That Drove Up Vegas Housing Costs LAS VEGAS (AP) -- Pulte Homes Inc. is cutting new home prices in Las Vega s, abruptly abandoning aggressive increases that helped drive up housing costs by tens of thousands of dollars. The company, one of the nation's largest residential builders, also lower ed third-quarter and full-year earnings expectations, citing sluggish sa les from its southern Nevada developments. But most industry officials shrugged off the news, attributing the move t o overly aggressive pricing rather than a slowdown. "The main thing is, people are seeing that customers do have a limit," sa id Arthur Oduma, a real estate analyst for Morningstar Inc. Las Vegas is Pulte's second largest market after Phoenix. Those two are t he only markets that represent more than 10 percent of the company's bus iness. "The supply and demand equation has changed," said Sheryl Palmer, Nevada area president for Pulte Homes. Pulte price reductions ranged from 5 percent to 28 percent, with most in the 10 percent range, Palmer said. One Pulte home originally priced at $ 593,000 had been reduced to $425,000 and one home in Sun City Anthem was reduced from $656,000 to $499,000. Palmer said Pulte did not plan price cuts in its other 44 markets around the country, and did not believe the housing bubble had burst in Las Veg as. "I can tell you this is an isolated issue here," she said. "What we're do ing is recognizing the market is shifting, not burst." KB Homes, the largest builder in southern Nevada, said it did not plan to follow the lead of the region's second-largest builder. "Our sales continue to remain very strong and very healthy," said Jim Wid ner, KB Homes Nevada president. He attributed the Pulte price reductions to "overaggressive pricing." "The problem is not market-wide," agreed Dennis Smith, president of Home Builders Research, a regional real estate market databank. Still, Las Vegas area housing prices dropped in August after months of ra pid increases, and more homes were staying on the market longer, Smith s aid. "The bloom was off the boom about a month ago," said Monica Caruso, spoke swoman for the Southern Nevada Home Builders Association. She said she e xpected some of the other 100 builders in the region to also cut prices. "Across the board, we are going to see prices fall in the Las Vegas area. "We still anticipate selling 28,0 00 new homes in this marketplace for the year. The number of homes sold in August dropped 6 percent compared with July. The median new home price of $259,700 in August also decreased from the m onth before. Still, that was up 26 percent from $206,167 in August 2003, Smith said. Las Vegas-area existing home prices had increased 453 percent at midyear , from $165,135 in June 2003 to $240,000 in June 2004. One Las Vegas area developer and investor called the Pulte move a market stabilization after a period of low interest rates and rapid building. "I don't think anybody thought the superheated bubble we were in would la st, nor that it was real," Jim Dunn said. Easy and Fast Auto Loan from RoadLoans Be in control by shopping like a cash buyer. New and used car financing and refinancing, private party p urchase available. Refinance Your Car Loan and Save Money Refinance your car loan with no extra charges. We offer low rates through a network of national banks who compete for your business. The informati on contained in the AP News report may not be published, broadcast, rewr itten, or redistributed without the prior written authority of The Assoc iated Press. |