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09:46 PM

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Subject Real Estate Bubble 2.0 - READ THIS

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[quote:Anonymous Coward 33389306:MV8yMTcwNTA5XzM2Njk5MTg5XzdFQTE5MEE5]
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FYI to anyone who doesn't know.....

[b]NOTHING that caused the 2007 real estate derivatives bubble crash has been fixed.[/b]
...and we are STILL living in the economy created by that crash.

NOTHING HAS BEEN DONE.

:rushhope:
[/quote]

Some houses have been sold to stronger hands, population has increased, some inventory has been damaged or destroyed by unusually severe storms (e.g. Sandy) -- the fundamentals have moved.
[/quote]

I reiterate and clarify....
[b]
None of the political or economic policies that brought about the 2007 crash have been fixed or dealt with AT ALL.

NONE.

NOTHING.

ZIPPO.
[/b]

In fact....somebody has made it even worse.

:spending:
[/quote]

[b]But political and economic policies do not directly cause prices to go up and down.[/b]  They influence supply and demand which determine the market clearing price.

Whatever the policies, even if the change in them is "zippo", the supply and demand relationship has changed, and prices are reflecting that.  The policies apparently didn't have to change for a recovery to occur, because a recovery is occurring.

And your caps-lock key won't change that.
[/quote]

You spewed....

[b][i]"But political and economic policies do not directly cause prices to go up and down."[/i][/b]

You are kidding right???
Flunked out of basic high school economics?

Prime example below of why you are so full of shit your hair is brown.

:bmoney:
[/quote]

No in fact I have forgotten more about this than you ever knew.  And Helicopter Ben can indeed affect the fundamentals of the housing market by manipulating the rates, and he's anticpated (not quite promised though) that rates will stay low for an extended period.

With the ECB and now the JCB doing very easy money policies, we would be remiss if we didn't continue.  Yes the world and its currencies may spiral down the toilet, but even then people will still need places to live.
[/quote]

Original Message You may not know this but in some places in the U.S. we are back to 2006 prices. That's right, we're right back where we were at the peak of this mess, but there's one huge difference. The banks are now completely in control of it and the forces of supply and demand are literally meaningless.

A few years back when the inventory starting gaining ground very few people watched the FED, government and banks moves to control inventory. The government put a crack down in place on the banks, the FED was buying mortgage back securities to lower interest rates and the banks were controlling inventory from short sale approvals to REO's. Fewer notice of defaults were given and today it's much less.

Now we have a MUCH BIGGER problem. With economies struggling in various parts of the country home prices are going up at a drastic rate. Now the impact may be smaller in small town America, but in places like San Francisco, Los Angeles, San Diego, where prices are much higher, we are seeing 10% gains in periods as little as one month. So the dilemma for the banks now is to loosen up criteria for appraisals and banks continuing to loosen up their criteria for lending.

On the flip side FHA loans now have mortgage insurance in place for the life of the loan. So doing what AIG did, from a more subtle perspective.

So as prices continue to skyrocket in both high and low demand areas due to the huge lack of inventory, the banks are still controlling a majority of inventory through stalled notice of defaults and much slower than normal short sale approvals. But here comes the flip side. In spring, as these prices continue to go north, homeowners will now be positive equity and homes will come back on the market. This could derail the entire market, it's uncertain what affect this will have but we could see another interesting market meltdown, although highly doubtful with the amount of control the banks and FED currently have.

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