Wed, May 12, 2010, 3:32PM EDT -
Among the crowded ranks of economists and market watchers, Dean Baker stands out. Baker presciently called the housing bubble when he published "The Run-up in Home Prices: Is It Real or Is It Another Bubble?" in 2002.
So does our guest Baker see the so-called housing recovery now? "No. I mean I think people that are saying that just aren't paying attention to what's in front of their eyes," says Baker, an American economist and co-director of the Center for Economic and Policy Research.
"I think we're going to see a big fall-off in purchases for the rest of 2010 and even into 2011," Baker says. "So the idea that somehow the market is stable, that housing prices will rise anytime soon "“ it's really hard to make a case for that."
Baker lays out several reasons for his bearish case:
Naturally the housing bulls disagree. Hedge-fund manager John Paulson, for example, said housing prices in hard-hit California will begin to rise this year, setting the stage for a wider recovery, as the FT reports.
So what are the chances of, say, another tax credit or purchase of mortgage-backed securities? "I think they'd be reluctant to do that because of the signal it would send," Baker says in the accompanying clip. "I mean it would send this unambiguous signal things really are bad, worse than had been advertised."
Click on the player to learn about Baker's idea to let struggling homeowners stay in their homes, and prevent home inventory from climbing even higher.
Happy Wednesday Gang! I opened a can of beans and a bag of rice and dumped them on my head. I'm rich! The cupboards are full of the stuff! smiles...
Great Article! Dean Baker is right on the money!
I live in California. Show me the lower rents here in California. My rent has gone up steadily for the last 5 years. Housing prices are up a good 10% from 2008 and there is a lot of demand. Many sellers are getting 10-20 bids in the first week of putting their homes on the market. The federal $ hasn't really made a difference. Most people who are buying would buy regardless of the $8,000+ tax credit, a recent survey just proved this to be accurate.
or they know something you don't know. Didn't you hear? There is going to be a worker shortfall soon too, when I need a job, jobs will be scarce and when I need to hire someone, people will be scarce. Just how it works. Law of conservation of energy, energy cannot be created nor destroyed. Where money = power = energy, thus money = energy. All the money that does or ever will exist exists right now, they are just shuffling it around to their favor.
idk. banks are basically slowing any payments for mortgage holders to pay thus keeping foreclosures clamped down, thus keeping inventory for foreclosed low. they've been getting fed money so they're not too concerned with losses on the books at this time b/c they have been allowed to let those loses stay off the books...so in a sick kinda way taxpayers have been paying delinquent mortgage payments...and the banks still technically are the slave masters for the homeowner...I mean if people had jobs they would make payments no? just think alot of things in the not too distant offering will throw a monkey wrench in their game: 1.) auditing the fed 2.) jobs or lack there of and the biggest 3.) the longer it takes for a debtor to pay back or make or start making payments, the chances of the lender getting full (heck any money) payment decreases dramatically...so i think banks will be stick with the loss, ultimately, the taxpayer is getting stuck with the bill
A new leg down in the housing market brings with it a fall in the wealth of most working Americans. This is a part of the global redistribution of wealth that is in the process of taking place from the Western world to the East. It is inevitable without changes to the infrastructure of the west and a change to the policy of maintaining living standards through incurring massive current account deficits that are supported through monetizing and borrowing. Investors will all be impacted by these sweeping changes to the distribution of the world's wealth and need to either adapt or be a part of the process. Google wall street's direction and you'll find strategies that may help and its free without questions. During the current correction they have profited, if you only experienced the pain of the fall and the excitement of regaining a portion of your loss, then considering a new strategy may be warranted.
hey i just poured a bag of gold and silver coins over my head....i got a headache............i think ill sell 2 or 3s and go to the keys
God knows...ONLY God knows.
Let house prices find their level. It's the only action that makes sense.
if that fed audit goes through, the appetite for these programs will subside as pols will move accordingly to populist sentiment. those who are in distressed properties won't be paying their bills for a while before banks do in fact kick them out...just inevitable..but, all this does is stall the banks next move for a short term spell..they will take loses because this malaise doesnt seem to have an end in sight in the time frame they need for everything to go back to business as usual. but the tax payer will be the one paying the bill...budget deficit just inched up...again... how much more will the government and the american people be able to stomach once these particular elements come more and more into the light?
David, true a fall in the wealth of most individual working middle class Americans. However, there will be more middle class working Americans next time, the average wealth of lower than the last batch.
inventories are set to soar, but banks wont let them onto the market...looks like instead of kicking the can down the road, the new plan is to launch that mf'er into space!!
Don't you just Marvel at the System of the Rich living in the world of Alice???? If you say CONfidence quick emough it sounds like CON. It's has always been artificial as the FED itself, constructs of a feeble human mind. You are living in a DREAM world NEO, welcome to the MATRIX!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
it is 6 in one half dozen in the other to them. Maybe they will change the rules again, and those they chose will have more wealth than most americans and widen the gap between uppoer middle class and middle class. In fact that is the tred I see happening. There are jobs out there and plenty of people who can do them, but they select certain people to do well, and certain ones to fail.
When the ride gets wild, hang on tight.
I can't buy a house at fair market value because it is a controled market "what fair value" 15% off the bubble price? San Diego it twice the national average.
Welcome to the REAL!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Do you see it now Mr. Anderson?? Trillions upon Trillions of Free, Monopoly money with the Central Banks sitting at the top of the Machine. Ben Bernake is a Man GOD--the power of the all worshipped $$$$'s. You actually think there is something called the USA??? Think again little minds, look to the Man God at the FED.
Housing will have a double dip the shadow inventory is huge in places like California, Nevada, Florida and Arizona and the banks can't keep them off the market forever. Also with the 8,000 tax credit gone that is a phsychological effect on the market also. Until buying a house with taxes insurance and the rest is equal to renting the same house then the prices are still too high. Don't listen to the realtors - they said it was justified from 03 to 06 also and look what happened.
Welcome to the REAL!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Do you see it now Mr. Anderson?? Trillions upon Trillions of Free, Monopoly money with the Central Banks sitting at the top of the Machine. Ben Bernake is a Man GOD--the power of the all worshipped $$$$'s. You actually think there is something called the USA??? Think again little minds, look to the Man God at the FED.
Real estate prices in many areas of California are still falling. I think it will take a couple years to stabilize this market.
Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.
Read Full Article »