Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 09:57 AM   #1
Thinks s/he gets paid by the post
Jay_Gatsby's Avatar
 
Join Date: Oct 2004
Posts: 1,719
Study: Tech, not spec, fueled U.S. housing boom

Interesting article:

http://tinyurl.com/ozwr6

Don't look at me. That is essentially the message of a new Federal Reserve study arguing that productivity--not the central bank's own policy of rock-bottom interest rates--was behind a five-year housing boom that now seems to be ending rather abruptly.
__________________

__________________
He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald
Jay_Gatsby is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:07 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Study: Tech, not spec, fueled U.S. housing boom

*sniff* *sniff*

I smell bullsiht...
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:17 AM   #3
Thinks s/he gets paid by the post
Jay_Gatsby's Avatar
 
Join Date: Oct 2004
Posts: 1,719
Re: Study: Tech, not spec, fueled U.S. housing boom

I thought we were in a real economic slump from 2001-2003 or so. As such, how could productivity have caused the housing boom? If we were so productive, why was it necessary to cut interest rates to the bone?
__________________
He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald
Jay_Gatsby is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:20 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Study: Tech, not spec, fueled U.S. housing boom

Real world & our creditors: "You idiots! Negative real interest rates and lax lending standards caused a US housing bubble that threatens to wreck the US economy and take the rest of the world down with it!"

Fed: "It wasn't me. It was the one-armed man..."
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:24 AM   #5
Recycles dryer sheets
 
Join Date: Dec 2005
Posts: 137
Re: Study: Tech, not spec, fueled U.S. housing boom

What are the phases of a bubble? Optimism, speculation, greed, blame, or something ...

It's laughable, while the bubble was due to more than low rates, the root cause was certainly low rates. They're just trying to stay clean.

__________________
danm is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:27 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Posts: 2,119
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by brewer12345
Real world & our creditors: "You idiots! Negative real interest rates and lax lending standards caused a US housing bubble that threatens to wreck the US economy and take the rest of the world down with it!"

Fed: "It wasn't me. It was the one-armed man..."
I am so glad I have positioned my self to be able to sit back and not worry about how to pay my mortgage.

Getting rid of the house with the 225,000 mtg and cashing in before the housing markets sure sign of hitting the skids getting the builder of my new home to cut the price by 7 K and now only have a 390 dollar a month mtg and paid almost 3 years ahead, being in a place with real estate tax bill at 3K not 9K like NJ.

And to think I have been offered jobs to teach down here in NC and to have a nice pension with medical and cola and to be only 50.

Wow. How did I do something right for a change??
__________________
newguy88 is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:34 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: Study: Tech, not spec, fueled U.S. housing boom

you shouldn't rely on the media interpretation of the research!* here's a link to the original [/url]http://www.chicagofed.org/publicatio...er_quayyum.pdf
they state "our findings do suggest that to the extent
that house prices have grown considerably in recent
years, this is not due to unusually excessive speculation
in the housing market, such as would occur in a
bubble. Instead, our findings point toward the high
prices being driven by fundamentals"

BTW, the "wealth creation" referenced was "over the previous
decade", not early this decade.

__________________
d is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:35 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by danm
What are the phases of a bubble? Optimism, speculation, greed, blame, or something ... They're just trying to stay clean.

What's the line in that old Johnny Cash song(A Boy named Sue) - 'the mud, the blood, and the beer.'?

Hopefully - all the adjustments - won't be a replay of our 1966-1981 or the Japanese experience.

We're smarter this time around - Right

Buckle up - it's gonna be fun!

heh heh heh heh heh
__________________
unclemick is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:48 AM   #9
Thinks s/he gets paid by the post
Jay_Gatsby's Avatar
 
Join Date: Oct 2004
Posts: 1,719
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by d
you shouldn't rely on the media interpretation of the research! here's a link to the original [/url]http://www.chicagofed.org/publicatio...er_quayyum.pdf
they state "our findings do suggest that to the extent
that house prices have grown considerably in recent
years, this is not due to unusually excessive speculation
in the housing market, such as would occur in a
bubble. Instead, our findings point toward the high
prices being driven by fundamentals"

BTW, the "wealth creation" referenced was "over the previous
decade", not early this decade.
Not surprising, the report is somewhat contradictory:

"While over the last two years nominal mortgage rates have started creeping up, real rates have continued to fall because inflation expectations have been rising. These considerations suggest that sustained low interest rates, possibly driven by unusually loose monetary policy, could be fueling the housing boom." Page 32.

Strangely enough, they then say in their conclusion section that:

"Our main findings are as follows. First, it appears that the housing boom has not been driven by unusually loose monetary policy. This is not to say the monetary policy has not been unusually loose, but that to the extent it has been loose, this is not what has been driving spending on housing. Second, the current levels of spending on new housing are largely explained by technology-driven wealth creation over the previous decade. Third, changes in the demographic, income, educational, and regional structure of the population account for about one-half of the increase in homeownership. That is, without any other developments, the homeownership rate is likely to have gone up anyway, but not by as much as it has done. The last finding is that substitution away from rental housing made possible by developments in the mortgage market, such as subprime lending, could account for a significant fraction of the increase in residential investment and homeownership." -- Page 43

The last sentence is the real kicker. In other words, "it wasn't us, blame the greedy bankers!"
__________________
He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald
Jay_Gatsby is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:52 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Posts: 2,119
Re: Study: Tech, not spec, fueled U.S. housing boom

I just got off the phone with the realtor who listed my house she didn't sell it someone else did , BUT she told me NOT 1 house in the 1000 home neighborhood has sold in the past 6 weeks. There are 57 listed.

Said mine was the last to sell !

I looked at the realtor site and sure enough the same houses are listed with lower listing prices. Some substantially lower. In fact a house that was listed at 600,000 in Jan is now listed at 525,000. A house listed in may at 634,000 is now listed at 579,000. Kinda looks like the number of homes that are on the market might still in buyers eyes be over priced.

We bought ours for 230,000 sold it for 513,000. 10 years old we bought it new, Toll Brothers house. It is common knowledge what people paid for these homes in the neighborhood, it looks as though buyers are saying we will wait em out. 400,000-465,000 range ? Maybe??

Heck it still would be a good profit for many except I know how many people refinanced and used the equity as a cash cow only to see that they now have little equity!

Dummies!
__________________
newguy88 is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:54 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by d
you shouldn't rely on the media interpretation of the research!* here's a link to the original [/url]http://www.chicagofed.org/publicatio...er_quayyum.pdf
Thanks d! *You are sooooo right! *Writers and editors who claim to be giving us an easy path to knowledge by interpreting studies and reports for us always wind up twisting the facts and sensationalizing. *
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 10:59 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by Jay_Gatsby
The last sentence is the real kicker.* In other words, "it wasn't us, blame the greedy bankers!"
Uhuh, but who regulates the banks?
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 11:15 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,275
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by newguy888
I just got off the phone with the realtor who listed my house she didn't sell it someone else did , BUT she told me NOT 1 house in the 1000 home neighborhood has sold in the past 6 weeks. There are 57 listed.

Said mine was the last to sell !

I looked at the realtor site and sure enough the same houses are listed with lower listing prices. Some substantially lower. In fact a house that was listed at 600,000 in Jan is now listed at 525,000. A house listed in may at 634,000 is now listed at 579,000. Kinda looks like the number of homes that are on the market might still in buyers eyes be over priced.

We bought ours for 230,000 sold it for 513,000. 10 years old we bought it new, Toll Brothers house. It is common knowledge what people paid for these homes in the neighborhood, it looks as though buyers are saying we will wait em out. 400,000-465,000 range ? Maybe??

Heck it still would be a good profit for many except I know how many people refinanced and used the equity as a cash cow only to see that they now have little equity!

Dummies!
Hmmm.. so, you sold a house that would SEEM to be about the same as the ones listed for $513K... but the people are listing them for $600K and now have brought them down to $525... yes, seems like they have a ways to go before they can sell.. and it looks like it will be lower than what you got for yours... so, congratulations!!
__________________
Texas Proud is online now   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 11:18 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by brewer12345
Uhuh, but who regulates the banks?
Are banks actually making more profit on subprime loans? *Or do they wish more borrowers qualified for standard loans and are only offering subprime because demand for standard loans has decreased? *I haven't seen any numbers on this.

I find it interesting how individual Americans, the borrowers, seem to be skating free of responsibility for their own predicaments. *Of course, how could the Fed, or anyone else, make a statement that would place the blame for people's situations squarely in their own laps? *That would be way too unpopular............. * :P

I wonder today, who would get the blame for the bubble in tulip prices in the prior century.......the famous "tulipmania" scenario. *What government agency is actually responsible for people's stupidity and greed?
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 11:20 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Posts: 2,119
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by Texas Proud
Hmmm.. so, you sold a house that would SEEM to be about the same as the ones listed for $513K... but the people are listing them for $600K and now have brought them down to $525... yes, seems like they have a ways to go before they can sell.. and it looks like it will be lower than what you got for yours... so, congratulations!!
They were bigger homes but very similar, if you have ever seen a toll brothers development they are all 4 bedroom 2.5 bath centerhall colonials, these two I listed have an extra room downstairs but if you were to look at them next to my old house they look similar.

We priced the place to sell, never had any home equity lines of credit never refied and took cash out.

We sold they have not, I know what that 525 guy paid for his house 331. He also bought two fancy cars in the last 4 years.

__________________
newguy88 is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 11:20 AM   #16
Thinks s/he gets paid by the post
Jay_Gatsby's Avatar
 
Join Date: Oct 2004
Posts: 1,719
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by newguy888
Heck it still would be a good profit for many except I know how many people refinanced and used the equity as a cash cow only to see that they now have little equity!

Dummies!
This is one of the major problems associated with a housing bubble burst. Significant appreciation led to significant paper equity, which then led to people using their houses as piggy banks.
__________________
He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald
Jay_Gatsby is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 11:22 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Posts: 2,119
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by youbet
Are banks actually making more profit on subprime loans? Or do they wish more borrowers qualified for standard loans and are only offering subprime because demand for standard loans has decreased? I haven't seen any numbers on this.

I find it interesting how individual Americans, the borrowers, seem to be skating free of responsibility for their own predicaments. Of course, how could the Fed, or anyone else, make a statement that would place the blame for people's situations squarely in their own laps? That would be way too unpopular............. :P

I wonder today, who would get the blame for the bubble in tulip prices in the prior century.......the famous "tulipmania" scenario. What government agency is actually responsible for people's stupidity and greed?
I saw the mortgage that the people who bought my house have. They bought my place at 513,000 put 135,000 down he sold his place she is trying to sell her place below what she owes. A 387,000 mtg with a HELOC and some other new fangled things. I just shook my head and quickly signed the papers gavem the keys and said adios!
__________________
newguy88 is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 11:30 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by youbet
Are banks actually making more profit on subprime loans? *Or do they wish more borrowers qualified for standard loans and are only offering subprime because demand for standard loans has decreased? *I haven't seen any numbers on this.
Much of the activity in this market is driven by the securitization markets. *Banks make the subprime loans, package them up, and sell bonds backed by the loans. *The difference between what it costs them to make the loans and what they can sell the bonds for is the profit. *Margins on subprime deals are far higher than on prime mortgage deals. *Since the banks keep little of the credit exposure to these loans, they are happy to do as much lending as they possibly can to feed the securitization machine.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 11:32 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by newguy888
I just shook my head and quickly signed the papers gavem the keys and said adios!
That's right.* Your attorney at the closing is to ensure you get paid in full and their attorney is to see that they, and their financers, get clear title.* After that, their details of financing are not your worry.* I wouldn't even want to know where the money is coming from.........as long as it is indisputably turned over to me!* *
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: Study: Tech, not spec, fueled U.S. housing boom
Old 08-25-2006, 11:49 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: Study: Tech, not spec, fueled U.S. housing boom

Quote:
Originally Posted by brewer12345
Much of the activity in this market is driven by the securitization markets. *Banks make the subprime loans, package them up, and sell bonds backed by the loans. *The difference between what it costs them to make the loans and what they can sell the bonds for is the profit. *Margins on subprime deals are far higher than on prime mortgage deals. *Since the banks keep little of the credit exposure to these loans, they are happy to do as much lending as they possibly can to feed the securitization machine.
Thanks Brewer, nice explanation.* Still, I'm curious, is the banking industry actually experiencing higher profitability due to all these subprime loans?* Are subprime loans actually "bringing home the bacon" to their stockholders?* If so, it implies that the higher rates charged for subprime loans are more than making up for the higher risk, that the market is not efficient for these products. Interesting.....

Anyway, my main point is still my surprise at how individual Americans seem to be dodging blame and responsibility in the media for their own self-induced predicaments.* Blame the banks, blame the Fed, blame the gummint, etc.* I'd like to see the media nail the borrowing public.* Maybe that would help the public "get it."* What's the point of telling them that they're OK, it was those big, bad businesses and government policy that did it to them?
__________________

__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Housing boom or bust? Brat Other topics 34 04-11-2006 09:47 AM
Asian housing boom lures U.S. immigrant investors ForeignExchange Life after FIRE 3 01-21-2006 12:24 PM
U.S. Government Rigging The Equity Markets? Donner FIRE and Money 57 09-15-2005 04:01 PM

 

 
All times are GMT -6. The time now is 09:13 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.