I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: Aug 31, 2004 Posts: 275 Location: Austin, TX
Posted: Sat Jan 28, 2006 12:53 am Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
Help me out Jaws, you sage;
Let's say I wanted to buy some land in central Texas, 20-50 miles outside of Austin: 5 to 10 acres, good soil, historically sufficient rainfall average, decent demographics. In the future it will be an invaluable tract of land provided something doesn't wipe out a large number of people in a relatively short period of time.
The people who own such a tract now, if they bought it maybe 15 years ago, paid $2000 an acre or probably less. Currently, some owners are willing to finance to me for 10% down and $5,000 per acre.
My question is this: when oil shocks begin to occur, and people realize that if they want to keep their jobs, they will have to move closer into town, will there be a period of time when these acreage properties decrease substantially in list price --- like before people wake up and realize that their way of life is unsustainable and what they need is a farm --- and then later by 2015 or something the land perhaps skyrockets in value...
So should I buy now or later? If I thought these acreages are going to get cheaper for a time, and gold and silver more expensive, I would buy bullion now, and then sell enough later to make the down payment on the cheaper land.
On the other hand, I'd sure like to get land now and start building the perfect house while materials are still cheap, and money pretty easy to come by and the dollar strong. Basically I'd like to start building, collecting, and growing food as soon as possible. But wouldn't that suck to pay $50k for something that will possibly sell $30k in 3 years?
Posted: Sat Jan 28, 2006 1:39 am Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
Edit: Ok sorry I should have known it myself, but I couldn't resist...
I hoped it forced nobody to out himself as a doomer at work... _________________ "Democracy means the opportunity to be everyone's slave."
Karl Kraus
Last edited by Free on Sat Jan 28, 2006 10:21 am; edited 1 time in total
Posted: Sat Jan 28, 2006 6:06 am Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
Wonderful theme music...
... if you're a kid reading the site on your cell phone.
But for people at work it sucks.
No warning... music just starts blasting out...
VERY UnCool. _________________ "When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.
Posted: Sat Jan 28, 2006 4:03 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
The price of a mc mansion may go down, but I'll bet the value of rural land holds its own or goes up. Take woodlots for example: the value of the wood on the land goes up as the cost of energy goes up. It makes more sense to own as the price of oil goes up. A Mc Mansion is the other way around. As the price of oil goes up it becomes more expensive to heat and cool. I think there will be a rush to smaller, well insulated, nice houses. There weren't very many made in the past 20 years. I'll bet the price holds steady for them. A zero energy, earth bermed, passive solar house will go up in value, I'll bet, because you won't have to pay as much to heat and cool it.
Posted: Sat Jan 28, 2006 4:03 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
jaws wrote:
U.S. Average Sales Price
Dec '04 $284,300
Aug $295,000
Sep $299,600
Oct $291,400
Nov $286,000
Dec '05 $272,900
And at the same time sales price go south, you have a sluggish GDP growth. Correlation, anyone ? Is the bubble bursting ? _________________ Freedom is up to the length of the chain.
Posted: Sat Jan 28, 2006 4:35 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
Out here in California some developers are offering "incentives" to help get their new homes sold. One gimmick involves giving away a plasma TV to anyone crazy enough to pay $500,000 for a condo....I kid you NOT.
Posted: Sat Jan 28, 2006 4:45 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
Phil wrote:
Help me out Jaws, you sage;
Any help would be appreciated.
My advice is you can still wait at least a year. It's almost certain that Bernanke will slash rates to stop prices from falling, so he'll be paying you to buy assets at some point.
Posted: Sat Jan 28, 2006 5:43 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
jaws wrote:
...It's almost certain that Bernanke will slash rates to stop prices from falling, so he'll be paying you to buy assets at some point.
I'm not certain about that. There seems to be 2 schools of thought debating which way interest rates will go:
down - wall street and the real estate market needs the extra cash so Ben will most likely slash or keep rates steady
up - granted our economy may be totally dependent on credit but ultimately the federal reserves job is to defend the dollar...so "Helicopter" Ben will have no choice but to raise rates.
Which theory is right? My crystal ball tells me rates will eventually go up not down. However Helicopter Ben is certainly not Paul Volcker.....we'll never see rates go up to double digits.
The stakes are much higher then what Joe Sixpack (who hasn't done his homework) thinks. America has a choice. Do we wish for the dollar to remain as the world reserve currency? There's only one way to ensure this and that's to raise interest rates.
Posted: Sat Jan 28, 2006 6:01 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
If the USA desires for foreigners to continue and purchase its debt then interest rates must rise-considerably. If Bernanke lowers the Fed Fund rate to stimulate "growth", then he's telegraphing his intent to inflate the currency, but I doubt that will stop him. China won't play along with this charade for another minute longer unless long term interest rates rise precipitously, which they probably will. Housing appreciation, as we've witnessed it lately, is a thing of the past no matter what Bernanke does with interest rates. Bernanke is the sacraficial lamb. Did he pose in the buff with barnyard beasts?
Posted: Sun Jan 29, 2006 1:26 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
The dollar has lost 95% of its value since the gold standard was abandoned. Do you think these people give a crap about devaluation? They live in morbid fear of deflation. Bernanke himself is obsessed with it occuring in the Great Depression.
If nobody buys treasuries, the Fed will buy them. As many as it takes.
Joined: Jan 07, 2005 Posts: 139 Location: Mpls, MN, USA
Posted: Sun Jan 29, 2006 2:52 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
I am in a position to be able to put a very reasonable downpayment on a house here in Minneapolis. My wife and kids are very interested in doing so.
Me? I'm curious to se whether the economic bubble really bursts and causes house prices to fall more, as people walk away from mortgages they can no longer afford.
Is this a likely scenario? Or do you think banks will play all sorts of games to allow people to stay in homes -- extended mortgages, more interest-only options and so forth.
I ask because I think the housing bubble is just beginning to burst, and I wonder if TPTB will allow it to really play itself out with "hands off." I think it is more likely that the motivation will be to try to prop up the housing market by offering special terms to keep people from walking away.
Another aspect of the decisions about housing is this. If things get real bad real fast, will I be better off to have some (worthless?) cash or a debt on a house?
Will housing be down another 4% in two months? Will it be down 10% or 20% in 6 months? What do folks think? _________________ pedaling for peace and ecojustice -- Gary
Posted: Sun Jan 29, 2006 3:07 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
Gary wrote:
Me? I'm curious to se whether the economic bubble really bursts and causes house prices to fall more, as people walk away from mortgages they can no longer afford.
Is this a likely scenario? Or do you think banks will play all sorts of games to allow people to stay in homes -- extended mortgages, more interest-only options and so forth.
If the housing bubble bursts then those who are leveraged the most will suffer the most. I, for example, have 60% equity in my home, while at the same time owning a home in the median price range for my area. Unless we have a complete economic collapse, which I wouldn't discount, I feel I've a decent hedge against most burst scenarios.
If housing deflates, say, 5% in 2006, then the ripple effect on consumer spending could be severe, not to mention the economic hit the last manufacturing vestige in America (home construction) would incur.
The prudent course for housing investments, for someone like yourself, might better be served by waiting a year or two when potential fire sales are going gangbusters. Waiting might save you hundreds of thousands $'s.
Joined: Aug 19, 2004 Posts: 1757 Location: Republic of Texas
Posted: Sun Jan 29, 2006 3:29 pm Post subject: Re: U.S. Housing prices DOWN 4% in 2005!!!!
Phil wrote:
Let's say I wanted to buy some land in central Texas, 20-50 miles outside of Austin: 5 to 10 acres, good soil, historically sufficient rainfall average, decent demographics.
Your time may soon come.
Last week I drove from east Texas to Austin and back. (Elgin, Caldwell, Bryan, Crockett).
I've been running that route for 20 years. I have NEVER seen so many properties for sale. I couldn't ride more than 2 miles without seeing a "For Sale" sign. These were very nice rural homesteads like you describe.
I believe these people are aware the housing bubble is beginning to deflate. I believe they are trying to cash out while they still can. _________________ Conform . Consume . Obey .
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