More Housing Bubble Update
Mish thinks if you haven't gotten out yet, you better now. Throw this analysis from Professor Piggington and these bubble stats into the hopper, and it could be downright ugly in the next two years.
From 2004 in San Diego (atypical of a bubble area):
80% of San Diego mortgages were adjustable-rate
47% of San Diego mortgages were interest-only
27% of San Diego mortgages involved no down payment
37% of San Diego condo conversion buyers were investors
High expectations or just really high?? An Economist poll of Los Angeles homebuyers indicated that the buyers expected, on average, that their new homes would increase in value by 22% per year for the next 10 years.
But, its different this time because we have a diversified economy, Say what?? From the San Diego Union-Tribune, 50% of our job growth in recent years has taken place in the real estate industry itself. The number of San Diego jobs outside of real estate and construction has grown at an anemic 1% annualized rate since 2000.
And what about all the job growth in the economy?? According to Moody's Economy.com, the real-estate industry is responsible for creating 1.1 million of the two million net jobs that the nation added in the five years that ended in October. That backs up the San Diego 50% number.
I'm sticking to my guns, interest rates go up farther and faster than anticipated, recession from yield curve inversion creates more layoffs and we see some near term real pain.
60% of adjustable loans reset in 2006, and we could see by 2008 the nominal appreciation over the last 7 years going negative. Kash is all over that one in Housing Prices.
Theres only one way out, global growth and petrodollars flood money into our bond market keeping rates down and generating jobs here. In addition, the Treasury ramps up the presses and doubles M3 by 2010, setting the table after a minor deflation for another round of hyperinflation and debauchery. Any thoughts?
From 2004 in San Diego (atypical of a bubble area):
80% of San Diego mortgages were adjustable-rate
47% of San Diego mortgages were interest-only
27% of San Diego mortgages involved no down payment
37% of San Diego condo conversion buyers were investors
High expectations or just really high?? An Economist poll of Los Angeles homebuyers indicated that the buyers expected, on average, that their new homes would increase in value by 22% per year for the next 10 years.
But, its different this time because we have a diversified economy, Say what?? From the San Diego Union-Tribune, 50% of our job growth in recent years has taken place in the real estate industry itself. The number of San Diego jobs outside of real estate and construction has grown at an anemic 1% annualized rate since 2000.
And what about all the job growth in the economy?? According to Moody's Economy.com, the real-estate industry is responsible for creating 1.1 million of the two million net jobs that the nation added in the five years that ended in October. That backs up the San Diego 50% number.
I'm sticking to my guns, interest rates go up farther and faster than anticipated, recession from yield curve inversion creates more layoffs and we see some near term real pain.
60% of adjustable loans reset in 2006, and we could see by 2008 the nominal appreciation over the last 7 years going negative. Kash is all over that one in Housing Prices.
Theres only one way out, global growth and petrodollars flood money into our bond market keeping rates down and generating jobs here. In addition, the Treasury ramps up the presses and doubles M3 by 2010, setting the table after a minor deflation for another round of hyperinflation and debauchery. Any thoughts?
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