Wikinvest Wire

What they say at market bottoms...

Tuesday, August 25, 2009

Is this some new kind of a long-term market bottom in home prices that we've been seeing over the last month or two - where buyers are fearful of missing the next move up in prices?

I thought market bottoms are made when buyers are disinterested and those who do have the stomach to buy have resigned themselves to waiting years for any future price increases.

Apparently not, according to this report at CNN/Money:

The rebound may mean that potential homebuyers will have more of a feeling of urgency, afraid that they'll miss the market bottom.

That's already happening in some of the markets that had gone through steep price declines over the past few years, such as the area east of Los Angeles that went through a severe boom and bust cycle. Home sales there are now booming again, according to Chuck Whitehead, a Coldwell Banker real estate broker.

"There's such a frenzy to get in before prices go up again," he said. "Buyers are more concerned about that than about getting the first-time homebuyers tax credit."
We have become a nation that is now fully conditioned to expect another bubble.

A lasting bottom in home prices would be much more believable if the local realtor were to say, "Look, nobody expects prices to rise like they did a few years ago. People are buying homes today because they just want a place for their family to call their own".

7 comments:

Anonymous said...

I don't blame them. People now rightly understand that prices of any damn asset is disconnected from fundamentals and are driven exclusively by inflation biased central banks. What else would explain oil staying stubbornly at $70+, gold at $900+ and copper at $3? Long live bubbles and I hope that Bernanke will be successful in blowing yet another bubble bigger than RE.

Banner Moffat said...

Tim, If you ever start looking for a new name for your blog again, it will have to have the word "bubbles" in it.

Tim said...

Maybe Bernanke's Bubbles??

Anonymous said...

Allow me to add to the froth:

http://www.usatoday.com/money/perfi/columnist/block/2009-08-24-home-buyers-rates-tax-credit_N.htm

(how can you not love an article that has a picture of Lawrence Yun next to it??)

"The window of opportunity is closing fast unless the tax credit is extended," Yun says.

"The NAR and other real estate trade groups are lobbying hard to get lawmakers to extend the credit into 2010."

But you'd better get on it now, because:

"However, Congress has a busy schedule when it returns from the August recess, so there's no guarantee the credit will be extended."

(as far as future blog names with Dear Fed Chairmans's name, it's gonna be hard to beat Bernanke Panky)

Anonymous said...

The San Francisco Chronicle on Sunday had a front page article on frenzied people snapping up foreclosures in Contra Costa and Solano county.
As many as 8 to 10 bidders show up for one house.
Of course, home prices there are down to $110. sq.ft, so some prices are now in the low $100,000.range- much cheaper than Bend,OR.

jm said...

Same thing happened in Japan a while after it's real estate bubble burst. After that last gasp it was relentless decline for more than a decade.

Anonymous said...

@banner and tim: Signs of Froth.

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