HOUSING IS GOING DOWN HARD

[jeffolie]

“Nearly 28% of homes bought last year were for investment purposes, and an additional 12% were vacation homes, the figures show”

So 40% of homes bought last year were either investment or vacation homes. Wow. The bubble markets are NOT in for a soft landing. This thing is going down hard.

[blazespinnaker]

Well, I think we need to be thoughtful about this. The UK market is firming somewhat.

My guess, and I'm really not trying to be difficult here, is that the market itself will not crash but rather forces will gather outside of it that put significant pressure on the housing market and push it downward.

But even those forces have their counter arguments, for example:

a recession could make things difficult, but then rates may stay low or even go lower and therefore people can still afford outlandish mortgages.

We may currently be in a hyperinflation environment (my pet theory) and what we're seeing here is just asset inflation and the real prices of houses have been underestimated.

Rather than the bubble popping, we may find core inflation starts to catch up.

I personally like this theory, because even if it isn't true, we may find that ben makes it true.

[jeffolie]

HELIBEN WILL SHOW NO MERCY FOR HOUSING

In a speech to the Economic Club of New York this week, he said he would not let a faltering housing market deter him from the necessary action to wring inflation out of the system.

In other words, no mercy now, and no bail-out later, regardless of warnings.