Debate over housing prices as bubble continues to rise


DOWN TWO, 3% ON THE LATEST NUMBER. REVISIONS FOR PRIOR TWO MONTHS AS WELL. NEIL: NICOLE, THANK YOU VERY, VERY MUCH. WHEN IT COMES TO HOUSING A VERY SAME GUY BACK 2004 AND 2005, WORRIED ABOUT RUNAWAY REAL ESTATE MARKET. TAKE A LOOK.>>IF THE RISK TO THE MARKET IF PRICES ARE OVERINFLATED, IF ECONOMIC SLOWDOWN AND IF INTEREST RATES ARE HALF OR FULL PERCENTAGE POINT HIGHER THAN HOUSING PRICES COULD COME DOWN A NOTCH OR TWO AND POSSIBLY MORE IF WE GO INTO AN ACTUAL RECESSION. NEIL: ALL RIGHT. WHAT ARE THE ODDS THIS MARKET CAN SUSTAIN ITSELF THE WAY IT HAS BEEN OF LATE?>>I THINK IT IS PRETTY MUCH A CERTAINTY AT SOME POINT IN, AT LEAST WITHIN THE NEXT TWO TO FOUR YEARS WE HAVE TO LOOK AT THE PROSPECT OF A RECESSION. NEIL: ALL RIGHT. NOW, YOU CAN QUIBBLE WITH THAT. OF COURSE HE WAS PREDICTING, THE LAST HOUSING MARKET CRASH, HE IS NOT NECESSARILY SAYING IT WOULD BE AN OUTRIGHT CRASH, BUT WE’VE IT COULD DRAG THE MARKET DOWN WITH IT WHEN IT OCCURS. A HOUSING EXPERT IS HERE. WE HAVE ALSO MARKET WATCHER JOE DURAN. TO YOU FIRST, WHAT DO YOU SAY IT IS SOME INCENTIVES TO OWN HOMES ARE TAKEN AWAY IRONICALLY WITH THE TAX-CUT PACKAGE? PEOPLE IN HIGH-TAXED STATES HAVE DESPITE IMPROVING ECONOMY, DESPITE ALL THE EXTRA DOUGH AMERICANS ARE GETTING THEIR HANDS ON IT WILL NOT PAN OUT. HE IS WORRIED. I HAVE BEEN IN FLORIDA FOR 15 YEARS RIGHT NOW, WHAT I CAN TELL THE ECONOMY IS VERY STRONG. THEY HAVE A LOT MORE PURCHASING POWER. IT IS NOT JUST THE NUMBERS AND PERCEPTION OF THE BUYERS. THERE ARE VERY CONFIDENT RIGHT NOW IN THEIR SENTIMENT IS VERY>>I THINK THAT THE HOUSING MARKET IS NOW BECAUSE OF THE TAX BILL, A LOT MORE REGIONAL THAN IT HAS EVER BEEN. AS YOU CORRECTLY IDENTIFIED IN STATES LIKE CALIFORNIA AND NEW YORK, THE AFFORDABILITY STATES LIKE FLORIDA AND TEXAS ARE GOING TO SEE INFLUX OF POPULATION AND THE COST OF OWNING A HOME ISN’T WHAT IT IS HERE IN CALIFORNIA. THE SECOND THING IS, IT APPEARS WE’RE FOLLOWING BUSH’S DOCTRINE OF A LOWER DOLLAR. WE TALK IT UP BUT WE LET IT GO DOWN. THAT MEANS MORE CAPITAL INVESTMENT FROM THE REST OF THE ESTATE. WHAT HAPPENS IF UNFORTUNATELY TOO MUCH FOREIGN MONEY COMING IN TO OUR ASSETS, MAKES IT LESS OPTIMISTIC. I AGREE THIS IS THE MOST BUSINESS-FRIENDLY PRESIDENT WE’VE HAD IN VERY LONG TIME. THAT IS MAKING PEOPLE WEALTHIER. THE STOCK MARKET IS MAKING PEOPLE WEALTHIER BUT IT IS ABOUT AFFORDABILITY. SORT OF DANGEROUS AGAIN OR GOING BACK TO THE PERIOD IN THE LATE NO-DOC LOANS AND ALL THAT, BUT RISKY LOANS ARE COMING BACK AGAIN. NOT AGAIN IN THE NUMBERS THEY WERE BUT ENOUGH THAT IT CONCERNS HIM, AND THAT IT IS PROPPING UP>>WELL IN 2007 WE HAD SOME VERY IN THE PAST YOU HAD PEOPLE WHO WERE GETTING MORTGAGES THAT THEY COULDN’T AFFORD. YOU HAD HAIRSTYLISTS WHO WERE BUYING TWO MILLION DOLLARS PROPERTIES THAT THEY COULDN’T REALLY SUPPORT. WHAT I’M SEEING NOW, PROPERTIES THAT ARE GOING AND SELLING VERY SO PEOPLE WHO ARE BUYERS, VERY THE CRASH IN 2007, AND THEY’RE SPENDING THE MONEY, BUT SPENDING IT WISELY. ALL MY CLIENTS, THEY WANT VALUES, AND THEY WILL NOT PAY OVER THE MARKET VALUE. THEY’RE VERY CAUTIOUS OF COURSE. BUT THEY FEEL MUCH STRONGER FUNDAMENTALS BECAUSE THE BANKS ARE NO LONGER OFFERING SUBPRIME PEOPLE WHO CAN NOT AFFORD THOSE MORTGAGES. SO THOSE ARE THE TWO MOST IMPORTANT FUNDAMENTAL SHIFTS. THEY ACTUALLY CAME AS REGULATORY CHANGE IN THE AFTERMATH OF THE — NEIL: IF SHE IS RIGHT, JOE, I HAVE NO REASON TO BELIEVE SHE’S NOT BUT ONE OF THE THINGS YOU COULD ARGUE IN THE EXTREME CASE LET’S SAY JIM STACK IS RIGHT. MAYBE HOUSING THOUGH ISN’T THE LEADER IT WAS OR INFLUENCER, PARDON THE TERM, THAT IT WAS AND OTHER THINGS COME TO THE FORE TO HELP THE ECONOMY THIS TIME WITHOUT HOUSING. WHAT DO YOU MAKE OF THAT?>>I TOTALLY AGREE WITH YOUR VIEW WHICH IS FIRST, I DON’T KNOW IF IT IS YOUR VIEW — NEIL: IT IS WHICH IS DANGEROUS, EXTREMELY DANGEROUS.>>WELL THE ONE THING I KNOW WE STANDARDS. THE BANKS ARE VERY WELL-CAPITALIZED NOW. WHAT LED TO THE DECLINE, TWO THINGS HAPPENED, PRICING BECAME COMPLETELY UNTENABLE AND BANKS WERE NOT ABLE TO SUPPORT IT. WE DON’T HAVE THE BANK PROBLEM NOW. WE HAVE MARKETS THAT ARE FROTHIER, SOME ARE FINE. WE HAVE OFFSETTING INCREASES IN IN INCOME, DEFINITELY, UNLIKELY ALMOST IMPOSSIBLE TO GO BACK THE WAY WE WERE 2007 AND 2008. YOU LIKELY TO SEE CERTAIN MARKETS FLAT LINE OR COME DOWN A LITTLE. WE HAD A GOOD RUN. VERY GOOD MARKETS IN CERTAIN PLACES T WOULD BE NORMAL. PANIC MODE IS UNIMAGINABLE TO ME

19 thoughts on “Debate over housing prices as bubble continues to rise

  1. Wow! This stock market is indeed the "hail mary" before the SHTF. And it will. Sit tight. Don't be fooled. Or throw the dice and risk it all. Have you won every day you play at the casino lately.? Same thing folks. Realtors love it! they are "back biting" little Yorkies nipping at everything they can taste while the griddle is still hot. Not me. I'm staying on third base until someone hits me in.

  2. The housing market will be fine because we don't have democrats in power, so there is no push for every American to own a home. So people with 580 credit scores are not buying with no money down and people with 720 credit actually have to prove their income. Right now the economy is hitting on all cylinders, which I guess bothers democrats and some republicans who dislike Trump

  3. She is full of shit. The laws that allowed the last housing crash. Never got fixed. They got worse. As the Government took a bigger roll in loan guaranties. As in Freddy and Fannie…

    So get ready. As they raise interest rates. All them A.R.M will adjust to higher mortgage payments…

  4. They said Reno would never recover from the crash. Bought a townhouse, bank Repo. These were selling for $150,000 and I paid $29,000. Sold it 3 years ago, asking $62,000, accepted an offer for $68,000. Bought a house here in Mineral County, Nv with full basement, shop in back, $32,000. Expect to sell for $66,000.

  5. Why are we still referring to people with heavy interests in the public perception of real estate as experts in the real value of real estate? The media will not change to save itself.

  6. The fundamentals are still the same as 05 06.. Nothing has changed, the bubble has been and still being reinflated by the FED Only this time when it bursts it will be much bigger and far more devastating than 08.. Get the Government out of the Housing market, then and only then, will we have a true Housing Market

  7. Will the banks be well capitalized when home prices fall again and they are holding foreclosed properties with declining values? Rising debt loads and lower wage inflation, not to mention higher taxation, will all become more apparent in the next recession. Time will tell…

  8. Housing doesn't follow the stock market. Its about supply and demand in housing. Right now we have WAY more demand then we have supply, the housing bubble of 07 changed the market fundamentals for real estate right now.

    70's the stock market was horrid, homes in some areas went up 10X in 5 years, same with 2000 stock market crash, housing didn't care about that one either.

    Stocks do well under lowering interest rate environments, real estate is the root cause of inflation, and thrives when the fundamentals are like today, so we will see inflation, rising interets rates, and a stock market that will probably crash along with bonds. Real estate is the best spot to be in the next 5-10 years or when it peaks. We have supply/demand imbalance with better lending at the moment.

  9. Predatory land strategy was devised to create property barons. The astronomical price of shelter comes from robbing present and future generations of their lifetime earnings.

    Over the past several decades a variety of spurious pretexts were employed to place a halt on the further use of land. The price of homes in Vancouver, for example, rose from $12,000 to $3,000,000 from $27,000 to $4,000,000 and from $59,000 to $10,000,000. (A three-bedroom home in Detroit costs $15,000). A home in Vancouver that should cost $230,000 based on earnings level combined with inflation is offered for $5,000,000. Average sales price in Vancouver in 1969: $23,939.

    Citizens are taking the bait.

    If it sounds too good to be true, it likely is.

    While we have abundant land it has been placed off limits for use in housing. Agricultural land on which no crops can grow. Farmhouses of 1000 sq. ft. replaced with 40,000 sq. ft. mansions and land is left fallow. A tiny nine-acre farm recently sold for $9 million. Forest that you can follow for 1000 miles northward and 3000 miles eastward. A mile at the forest edge over a short distance near major cities would eliminate the housing issue permanently. Organized opposition puts a stop to each attempted use of land. Local regulations with unattainable requirements and excessive delays serve as a barrier to prevent new home construction. These have caused home prices to escalate beyond reach. Their true objective is to consolidate ownership and concentrate wealth into fewer hands.

    The property needs of a growing population were ignored and a disproportionate amount was declared parkland and forestland. Those most affected unwittingly tighten the snare on their own demise. A generation that had everything was determined that those that followed afterwards should have nothing. Don’t touch that tree. That all homes and farms with the exception of those on the prairies are on forestland that was cleared is conveniently ignored.

    Homeowners are multi-millionaires, but cash broke. They must slave to retain their homes. If they sell, their heirs become slaves. To realize cash they may borrow on their equity, which means their property must be sold to repay loans and deferred property taxes upon winding-up of their estates. Ownership by individuals is ending.

    Rhetorical question: Where and how is the property tax money from what are now multi-million dollar properties that were formerly in the tens of thousands range, or 180 times their former value, being invested? Civic maintenance costs might have doubled or even tripled during that time, but are not 180 times their former level. Is this excess money being siphoned/gifted out of the country on the pretext of “investing” in the equivalent of “municipals” that return $3 of capital in forty years time for each $100 spent to acquire them turning Canadians into vassals of a foreign state?

    A deliberately created artificial shortage has resulted in a multi-million dollar gulf to home ownership. Foreign purchases, a convenient scapegoat, is a symptom that exacerbates the issue, but is not the source. With no prospect of ever becoming established couples have stopped having children. The sense of fulfillment gained from home improvement and the legacy they will pass on to their heirs is absent when living in an apartment. Consumerism fails to fill this purposeless void so they seek escape in Islam. They serve the corporation, die in debt and building their home is relegated to the afterlife.

    Immigrants unaware of the impossibility of achieving the Canadian dream arrive to fill this gap.

    A few large corporations will end up owning all homes. Astronomical home prices justify corresponding rents. Rent absorbs as much as eighty percent of employment income and now exceeds pension income, serving as an abject reminder that citizens are victims of their own misguided policies formulated without vision.

    Homelessness and drugs decimate the underclass and middle class. (Homeless count in Vancouver: 3605). While the numbers are still low at about 100 deaths per month in Vancouver, for example, they are accelerating. The post-industrial, post-national era is neo-feudalism in which all property is owned by a few wealthy landowners. Rent is their source of income. Government will pay rent for new arrivals, at least for a while. When their benefits expire they are easily replaced from a global pool. Boundaries are redundant.

    Sharia Law is essential in a neo-feudal society comprised of two classes, wealthy landowners that grow richer daily without effort and the remainder that exist to serve their landlords and are separated from them by a multi-million dollar gulf, in order to protect the assets of the former and to keep in check the latter.

    In unending sequence yet another tract of land is “protected” and prevented from use by citizens.

    All of the property on this planet belongs to the chosen few, together with the increase that it yields.

    It is being redeemed.

    Footnotes:

    In 1969 I earned $7284 per annum that was raised to $9180 eighteen months later. A home in Point Grey was on the market for $29,000. An offer of $27,500 was finally accepted. An equivalent home in Winnipeg cost $11,000. Vancouver was an expensive city. Prior to 1972 it was difficult to sell a home and might take two or more years. Then legislation that placed a stop to the use of land turned homes into a commodity and created a virtually monopoly market with monopoly prices.

    (Average sales price of houses in Vancouver in 1969: $23,939.)*

    $27,500/$7284 = 3.8. In 1969 a home cost the equivalent of 3.8 years earnings.
    Today that home is worth $5,000,000 while an equivalent salary is about $60,000.

    Wage rise due to inflation: $60,000/$7284 = 8.2 times.

    Cost of home now in terms of equivalent earnings: $5,000,000/$60,000 = 83.3 times or the equivalent of 83.3 years earnings.

    A price comparison yields: $5,000,000/$27,500 = 181.8 times its former cost.

    The home should cost $60,000 x 3.8 = $228,000.

    With both earnings and inflation taken into consideration $5,000,000/$228,000 = 21.9 times its normal value.

    The market for homes used to be a free market like that for cars and persons at each income level could afford to buy one as homeowners whose income increased moved on to newer, more expensive homes leaving their old homes to be purchased by new entrants.

    * Home prices may be verified from actual transactions for those years at the public library. My example is for Point Grey. A home in East Vancouver cost about $12,000 or less at that time.

  10. "Buyers are confident" – Were they not confident in 2007?

    "The banks are no longer offering subprime mortgages" – Is this lady brain dead or what? Fanny Mae and Freddie mac buy subprime mortgages from the banks; in fact most of them ARE subprime. They still have creative financing, no income check and interest only mortgages. They're called NON-QM mortgages.

    House prices are normalized to low interest rates. When rates rise, the prices will have to re-normalize to the higher rates; which means prices will fall. A lot of real estate is owned by hedge funds. They are just holding the properties because prices have been rising. When rates rise and property values stop rising and start falling, they will unload these houses on the market and it will exacerbate the crash.

  11. Does this woman understand economics, A CRASH HAS STARTED IN THE BOND MARKET AND AMERICANS ARE GETTING POORER BY THE DAY AND FOLKS CANNOT AFFORD HOUSES !!!! Ask her what happens when the interest rates go to 5 % !!!

  12. Love how they don’t mention the investor factor… there are real estate agents who own 70% the Homes they are selling now they are setting the price for this market … we are on a bubble…

  13. Six months after this video was made,, the housing market is on Fire. Bidding wars abound and buyers are paying more than the asking price by thousands of dollars. Houses are rarely on the market for more than a few days. If you are lucky enough to be able to view a home before it's gone pending or contingent you're likely to be blind bidding against 5 or 6 other buyers.

Leave a Reply

Your email address will not be published. Required fields are marked *