Why The Housing Market Has Much Farther To Fall

and yet radar logic is showing NY condos up YOY for November 2011, their most current report

Riversider if you took but ONE minute to skim that report you would see that the premise is that future interest rate increases will keep housing down. We know rates havent risen yet. So your comment is boneheaded to say the least.

If the author thinks that interest rates are very likely to increase, why would he write about the potential collapse in housing? I would think it would be more interesting to write about the potential collapse in treasuries and munis, etc. Of course that would sound stupid to many RE bears that think it is safer to park their money in munis and treasuries than RE because interest rates are bound to rise.

EVERY article on housing for the next few years should ONLY be the following:

"Mortgage interest rates are at an all-time low. And they really can't go any lower. That means they can only stay the same or go up. Since nothing ever stays the same, they will go up. And therefore housing prices will come down even more. The only question is when"

Every other article on housing is a waste of paper, bits and bytes.

unfortunately, the preponderance of articles say the exact opposite....great buying opportunity because rates are at an all time low.

I am sorry but this article is pretty stupid.

The just of it seems to be that you shouldn't buy now because interest rates will be higher in 5 or 10 or 20 or 30 years. Hey I agree that interest rates will likely be higher at some point in the next 30 years. I also agree that people buy payments, but the author fails to recognize that we do not live in a vacuum where interest rates could increase and nothing else changes. If interest rates increase it is likely because of an increase in inflation expectations or an increase in the real required return on capital. An increase in inflation expectations would likely cause an increase in rental prices as well (I know it is possible for inflation to increase and rent to not, but please....really, you think that is likely?). If we are lucky enough for real interest rates to increase it is likely because of an improvement in the underlying economy, employment, real wages, etc. That would be good for real estate.

I am not trying to argue that rising rates would be good for RE. I am pointing out that we do not live in a vacuum. That is why we did not see an increase in RE prices when interest rates fell from 2008 to the present. As rates fell, inflation expectations (rent increase expectations) fell as did real rates (underlying strength of the economy, etc). If you bought in 2008 (OUCH) you likely have a very large paper loss, but you could also refi now at lower rates (assuming you are not underwater), and your "payment" would go down.

Yes if rates rise, and nothing else changes, that would be bad for real estate, and bonds, and the stock market, and almost every investment in the world.

Um ... people will always need a place to live.

And eventually, they tire of renting OTHER people's dwellings.

Re: And eventually, they tire of renting OTHER people's dwellings.

tell that to my college classmate who bagged a rent controlled Chelsea 2 bedroom in 1987 and of course will never leave

but I'll remind him that he can step up in the world by buying a coop in Washington Heights

I've seen those rent-controlled apartments in Chelsea.

When he's ready to stop living like a bum, I have an agent for him.

Re: I've seen those rent-controlled apartments in Chelsea.

ha, what condition were you in at the time...horizontal, semi-conscious,...? ;-)

WHO THE FK has been sounding the ALARM of rising interest rate? ME! ME! Goooooodaaaaaaammmiiiiitttttttt.....

The prob of interest rate going down further 0%, prob of interest rate going up 100%.....

PLease PREPAY your rents NOW! bf prices stay the same or go down!

NYC MATT and RIVERSIDER... please buy some more prepaid "coops" in NYC... PLEASE.. just do it (nike swish mark)

""Mortgage interest rates are at an all-time low. And they really can't go any lower. That means they can only stay the same or go up."

Realy? In Japan, mortgage rates are below 2%.

Well done West34

with 10yr at 1.95% rates can def go lower especially if EU decides to blow itself up via an event and money rushes into $$$$ and treasuries

Digs -- Some experrts disagree, claiming there's a "floor":
http://www.cnbc.com/id/44413435/How_Low_Can_Mortgage_Rates_Go

Experts? Good one

The most important aspect seems to be forgotten. Many workers,lucky enough to have jobs, are being paid less. Therefore less money to purchase housing and many other things, as well. Can't buy without money. We saw how well that worked during the housing bubble.

"with 10yr at 1.95% rates can def go lower especially if EU decides to blow itself up via an event and money rushes into $$$$ and treasuries"

Indeed, the saving grace of the USD will not be that US politicians are rational, but that the EU's supposed leaders are even more fingers-in-their-ears irrational. The Euro is an artiface that is doomed to failure, because the goals and productive capacities of its member nations differ far too much to allow the inefficiency of a single fixed currency. Some states must be allowed to devalue. But by prohibiting that natural reallocation process for 10 yrs, Brussels beaurocrats are ensuring that ALL soon-to-be-ex Euro member states have highly volatile currencies, at the exact same time! It's a reciple for disaster. And it is unavoidable. The staunch defenders of the Euro - Sarkozy and Merkel - are nearly finished politically! Sarkozy can barely beat out an extremist for third place, and Merkel is seeing political headwinds form. Whomever replaces these two will NOT have the clout, power, and respect Sarkozy and Merkel had - certainly not enough to save the Euro.

"great buying opportunity because rates are at an all time low"

That just makes renting better (and buying less attractive).

milf?

Brooks2
about 4 hours ago
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milf?

A cow with a lisp.