Comments on: When bad news doesn’t take stocks down, the rally is still in charge

By: twoyrfixed

twoyrfixed — Thu, 19 Nov 2009 20:16:05 +0000

I agree with Pat, T2 and Walt but would like to stress 1 thing. There is WAAAAAAAAY too many houses/condos/units in this country. As an owner of rental properties in multiple locations, I’ve never seen rent prices collapse as they have in the last 3 months. Like someone above mentioned, no one cares what I think, but I think the future will bear out exactly how big the Real Estate bubble was. You almost can’t over-estimate how many empty/shadow foreclosure properties there currently are.

Jim, I hope you’re convinced.

By: amtrend10

amtrend10 — Thu, 19 Nov 2009 14:22:29 +0000

Could be normal. housing historically slows in late fall…as does employment. To a builder weather is a big factor…also shorter workdays(daylight). The real test for housing and emp;oyment is in the spring. Should rise significantly.

By: waltmiller3

waltmiller3 — Thu, 19 Nov 2009 13:57:15 +0000

I agree with Pat and T2 – I don’t think this housing data is the “huge piece of bad news” that Jim says it is. I think the drop in housing starts is actually good news. The housing market already has a glut of inventory. Sooner or later, prices must come in line with the true market (i.e. non-gov’t-supported). And that market is one of increasingly un- and under-employed folks who are seeing their standard of living decimated by reckless currency policies. The correction will be painful, but the longer it is postponed, the more havoc it will wreak.

By: t2much

t2much — Thu, 19 Nov 2009 06:40:24 +0000

Pat is correct. The government is stimulating demand for residential purchases while commercial real estate owners and lenders are suffering. Some former homeowners are renting but a significant portion are doubling up with family. In addition, many of the condo developers have chosen to rent out their units until prices rise, which increases rental supply. There is less demand than you think and more supply.

By: pat

pat — Thu, 19 Nov 2009 06:27:48 +0000

“What’s going on? I haven’t heard a convincing explanation”…
Simple,the gov’t doesnt provide a backstop for the banks to lend money for buying or building mulitifamily housing. The local or regional banks who usually would back these projects are up to their eyeballs in bad commercial RE loans already. Additionally I would think that until unemployment turns the builders of these types of housing would be asking themselves, “who is gonna rent from me and how much will they be able to pay?”. Everybody thinks the rental unit demand will increase. I agree but at lower rents than were being paid in the past. If the price of housing has come down but the ability to buy isn’t there then people will rent. Logically if the cost to buy is down then the cost to rent will have to come down as well. Dropping rents, rising unemployment and banks who won’t lend to builders who don’t really want to build at these prices. Biggest issue is nobody wants to touch anything that Uncle Sam isn’t a partner on. Think about how that effects the outlook to start these projects.