Houston Chronicle Home sales drop-off rekindles talk of housing bubble

"New-home sales fell by the biggest amount in almost nine years in February while home prices declined for a fourth straight month, raising concerns that the once highflying housing market could be in for a rougher-than-expected landing."

""The new-home market looks like it is starting to stagger," said Joel Naroff, chief economist at Naroff Economic Advisers, a Pennsylvania forecasting firm. "Bubbles do burst, they really do.""

redux [12.29.05]

New York Times Home Sales Drop to Lowest Level in 8 Months
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"Existing home sales dropped to their lowest level in eight months in November and the total number of homes for sale rose, an industry group reported today, suggesting that the housing market was continuing its slow but steady slowdown."

"Real estate agents and other housing experts have said recently that it is taking longer to sell homes in several of the hottest housing markets on both coasts and sellers have been forced to reduce asking prices. New home builders, which make up about 15 percent of the national housing market, have said they are offering more incentives to convince vacillating buyers."

Smart Money Don't Buy the Bubble Talk

"JUST BECAUSE THE HOUSING market has been on fire for several years, doesn't mean homeowners are about to get burned. In fact, housing costs are now only a bit above historic norms, and are not extreme even in boomtowns like Miami and San Diego, according to Todd Sinai.

Tell that to someone on the market for a new home and they'll think you've been renting an apartment on Mars for the past five years. But Sinai makes his academic home at the University of Pennsylvania's Wharton School, where he is an associate professor of real estate."

USA Today As risky home loans rise, house-price 'bubble' inflates

"As any savvy Realtor can argue, surging prices by themselves might not prove the existence of a housing bubble. In communities that are growing rapidly, demand for housing exceeds supply. Prices naturally rise.

Nevertheless, one sure sign of bubble trouble is the irrationally exuberant lending industry. Almost one third of all new home loans made in July, August and September included an introductory period in which the borrower could choose to pay only the interest and no principal."

redux [12.10.05]
The UCLA Daily Bruin Anderson Forecast predicts looming crash

"The housing bubble is bound to pop, creating a sharp decline in real estate costs that could trigger a recession, several economists at the UCLA Anderson Forecast said.

The business school issued its quarterly economic forecast Wednesday, an evaluation considered by many to be one of the leading independent economic forecasts in the nation."

redux [11.25.05]
NPR - All Things Considered Fewer People Line up to Buy U.S. Homes

"Across the country, homes are beginning to take longer to sell, a sign that the hot real-estate market of the last decades is starting to cool. In the Boston metropolitan area, which has seen a faster appreciation of home values than most of the country, homes prices are not rising as fast they used to. Fred Thys of member station WBUR reports."

Seattle Post-Intelligencer Housing bubble's burst could cost 1 million jobs

"Much of the nation has had a lovely real estate boom for the past five years, but the house party is almost over, and the cleanup won't be pretty."

""The demographic story behind the housing market boom, as we always thought, was a giant hoax," Merrill Lynch & Co.'s North American economist, David Rosenberg, wrote in a recent report."

"A final nightmare scenario: The center predicts that a federal bailout of the mortgage market is likely if housing crashes. So, if corporate pension funds continue to falter and this dire prediction does come true, the feds could conceivably end up holding your mortgage and your pension."

Washington Post Bernanke: There's No Housing Bubble to Go Bust

"Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve.

U.S. house prices have risen by nearly 25 percent over the past two years, noted Bernanke, currently chairman of the president's Council of Economic Advisers, in testimony to Congress's Joint Economic Committee. But these increases, he said, "largely reflect strong economic fundamentals," such as strong growth in jobs, incomes and the number of new households."

redux [08.25.05]
New York Times Be Warned: Mr. Bubble's Worried Again
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"Today, nine years after his lunch with Mr. Greenspan and five years after the markets finally did crash, Mr. Shiller is sounding the same warning for real estate that he did for stocks. In speeches, in television and radio interviews and in a second edition of his prophetic 2000 book, "Irrational Exuberance," he is arguing that the housing craze is another bubble destined to end badly, just as every other real-estate boom on record has.

These, in short, are his second 15 minutes of gloom. He predicts that prices could fall 40 percent in inflation-adjusted terms over the next generation and that the end of the bubble will probably cause a recession at some point."

USA Today Home prices 'extremely overvalued' in 53 cities

"Single-family home prices are "extremely overvalued" in 53 cities that make up nearly a third of the overall U.S. housing market, putting them at high risk of price declines, according to a study released today."

"The highest-risk markets are in California; Southern Florida; parts of the Boston area; the Long Island, N.Y., counties of Nassau and Suffolk; and Ocean City, N.J."

""For the U.S. as a whole, I expect we're going to have an orderly correction. But that doesn't mean it's going to be equally orderly in all places," DeKaser says."

BusinessWeek Is A Housing Bubble About To Burst?

"But this time something important is different: Interest rates are inching up. It was the Federal Reserve-engineered decline in rates that inflated the housing bubble. But starting with a quarter-point increase in the funds rate on June 30, the Fed has begun what promises to be a prolonged tightening cycle. Even if the Fed's hikes are measured, higher mortgage rates will inevitably make houses less affordable. If 30-year fixed-rate mortgages rise just one percentage point, to 7.2% from their current 6.2% -- well within the range of forecasts -- house prices would have to fall 11% to keep new buyers' monthly mortgage payments from rising. If fixed rates went to 8%, prices would need to fall 20% to keep payments level.

Rising rates will hurt more than in the past because the market is more dependent on heavily leveraged buyers."

National Housing Institue The Housing Bubble: A Time Bomb in Low-Income Communities?

"These data indicate that the housing bubble has even affected the lower-income homes. While the price declines may be smaller than for higher cost housing, many lower-income homebuyers may still see the price of their homes fall by 20 to 30 percent when the housing bubble bursts. This could mean, for example, that a home bought today for $160,000 sells for $120,000 to $130,000 in two or three years, if the housing bubble bursts.

Price declines of this magnitude will be devastating for families who have struggled to afford the homes they purchase. While some homeowners may live in their houses long enough for inflation to eventually restore home prices to current levels, few would be happy to sell their house in twenty years for the price they paid today."

The Economist In come the waves

"NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?

According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history."