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View Full Version : Housing Market Will Cool with a Hiss, Not a Pop.



Scott
08-25-2005, 10:12 AM
It is pretty funny to see all of the "experts" back off from their predictions of a crash to a cool off. I still think it is a few years off before it "cools".




CREDIBLE NEWS SOURCE (http://rismedia.com/index.php/article/articleview/11497/1/1/)


A hiss, not a pop, will herald the cooling of the hot housing market, the Mortgage Bankers Association said Tuesday in a report analyzing the impact of economic fundamentals on the future of sales prices.

From the MBA's view the landing appears soft thanks to fundamentals, like job and income growth, that will remain solid.

Doug Duncan, the association's senior vice president and chief economist, said there has been a "crescendo" building on the issue of housing prices since 2001.

"There is no national housing bubble. (But) there are risks and they are far less dramatic than the hyperbole of the last several months."
Some regional or local markets where prices are out of line with fundamentals may see some decline.

But "there is some overstatement of the degree to which declines might occur," Duncan said.

Those most likely are markets where there is one large, dominant employer whose prospects are in question.

That seems to rule out Southern California, which has a diverse employment base.

"There is still significant population and job growth in California. Barring a turnaround in the economy, it's reasonable to expect price appreciation," Duncan said.

The housing market will cool, though, with appreciation rates slowing. The association anticipates sales to decline by 4% to 5% next year and price appreciation to be about 4%.

That could cause a modest slowing of the economy, but it would still continue to grow.
The MBA analysis also showed that:

--Fixed rates for 30-year mortgages should average 6% by the end of this year and move up to 6.5% in 2006.

--The wide variety of mortgage products are not putting large numbers of buyers at risk.

For example, about 35% of U.S. households own their homes outright, about 50% have fixed rate loans and 15% have adjustable rate mortgages -- and half of these are high wealth owners with jumbo loans. The association reasons that leaves 7% of borrowers in an interest rate-sensitive position.

"We do not see doom and gloom nor are we being Pollyannaish. We just think there will be a rebalancing of activity."

The MBA's view reflects that of some independent market watchers who have been predicting a narrowing of price gains and not a wipeout of the robust appreciation.

Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., notes there have been a rash of reports on the bubble issue and many contradict each other.

He agrees with Duncan, though.

Kyser said California's market remains underbuilt, especially for affordable housing, and that will help drive sales and prop up prices.

"When you look at California, you see a healthy and diverse economy that is growing. And you have the strong (housing) demand."

Epicman
08-25-2005, 10:49 AM
Lies all lies. After all what do these experts know compared to some of the people on this board. :lol:

Amortized
08-25-2005, 10:33 PM
bubble, schmubble, unemployment rates rival the pre- 911 rates, large appreciation numbers are a by product of low unemployment, rate are still VERY attractive, they can go up to 7-8% and still be VERY LOW historically speaking. I was going through an Amotization book printed back in the late 80's, it DIDN'T have any rates UNDER 11%.

I'm always reading what Greenspan has to say, and he doesn't show much concern for a bubble, even while raising rates to combat inflation. The man knows what he's doing, I'm crossing my fingers Bush....or is it the senate (can't remember who needs to give the nomination) doesn't make a nomination, if so, that would force Greenspan to work 4 more years.

Scott
10-16-2006, 07:54 PM
You have a PM Jeff.

I made time to send you a level headed one, I expect one back if you want to be taken serious.

Off topic stuff in this thread has been moved to another forum for review.