Basically, the crap homes go up more when prices rise, and fall more when prices go down. Moral is buy best of breed. ----------------------------------------------- DURING the great housing bubble, it was the least expensive homes whose prices went up the most. And now it is those homes that are suffering the most. That is where the most creative lending was,” said David Blitzer, the chairman of... [more]
Basically, the crap homes go up more when prices rise, and fall more when prices go down. Moral is buy best of breed.
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DURING the great housing bubble, it was the least expensive homes whose prices went up the most. And now it is those homes that are suffering the most.
That is where the most creative lending was,” said David Blitzer, the chairman of the index committee at Standard & Poor’s, arguing that the lax lending standards played a significant role in the inflation of prices.
The S.&P./Case-Shiller indexes released this week showed widespread declines in home prices in the third quarter of this year as the market suffered from the removal of temporary tax credits that had led to a small rally in home prices earlier in the year. No region had lost more than 5 percent in a quarter since mid-2009, but that happened to Phoenix in the third quarter.
For 16 major regional areas, S.& P. publishes separate indexes for the top, middle and bottom thirds of homes in the area, as measured by price. Those figures show that from the beginning of the decade through each area’s peak, prices of lower-value homes rose faster than either of the other groups in each of the markets except one, Denver, where the rises were virtually identical for all groups.
http://www.nytimes.com/2010/12/04/business/economy/04charts.html?ref=business[less]
Response by notadmin
over 15 years ago
Posts: 3835
Member since: Jul 2008
> Basically, the crap homes go up more when prices rise, and fall more when prices go down. Moral is buy best of breed.
wouldn't the conclusion be (investing wise) to buy a crappy one for 2 cents once they reach the bottom?
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Response by Riversider
over 15 years ago
Posts: 13573
Member since: Apr 2009
Depends if you think we're in a bull or bear market..And if your are risk adverse
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Response by notadmin
over 15 years ago
Posts: 3835
Member since: Jul 2008
> Depends if you think we're in a bull or bear market
you mean in the stock mkt? i'm assuming you only buy when you think that RE prices are at the bottom
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Response by Riversider
over 15 years ago
Posts: 13573
Member since: Apr 2009
The article also discusses how the lowest value homes benefited from subprime credit. This is not likely to be a factor for the at least one or two generations of new home buyers.
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Response by Riversider
over 15 years ago
Posts: 13573
Member since: Apr 2009
Barry Ritholtz chimes in saying this suggests we didn't have a housing bubble so much as a credit bubble.
And since Manhattan as never cheap, in the same way other parts of the country were, it's not experiencing the same sort of decline.
Thus, it is not a surprise that the housing sector most dependent upon cheap abundant, indiscriminate lending suffered the most when credit standards reverted to normal.
The data continues to support this thesis. The boom and bust, the price collapses, the underwater homes, and of course, the Foreclosures, are most heavily concentrated in the lower priced homes.
> Basically, the crap homes go up more when prices rise, and fall more when prices go down. Moral is buy best of breed.
wouldn't the conclusion be (investing wise) to buy a crappy one for 2 cents once they reach the bottom?
Depends if you think we're in a bull or bear market..And if your are risk adverse
> Depends if you think we're in a bull or bear market
you mean in the stock mkt? i'm assuming you only buy when you think that RE prices are at the bottom
The article also discusses how the lowest value homes benefited from subprime credit. This is not likely to be a factor for the at least one or two generations of new home buyers.
Barry Ritholtz chimes in saying this suggests we didn't have a housing bubble so much as a credit bubble.
And since Manhattan as never cheap, in the same way other parts of the country were, it's not experiencing the same sort of decline.
http://www.ritholtz.com/blog/2010/12/more-proof-the-bubble-was-in-credit-not-housing/
Thus, it is not a surprise that the housing sector most dependent upon cheap abundant, indiscriminate lending suffered the most when credit standards reverted to normal.
The data continues to support this thesis. The boom and bust, the price collapses, the underwater homes, and of course, the Foreclosures, are most heavily concentrated in the lower priced homes.