The Golden Truth: Are Home Owners Being Realistic?

Tuesday, August 18, 2009

Are Home Owners Being Realistic?

A new survey by zillow.com, an online real estate services company, shows that 81% of those polled believe that their house will not decline in value over the next 6 months:

"homeowners are more optimistic than ever about the future values of their homes, with 81 percent of homeowners believing their own homes' values will not decline in the next six months - the highest percentage on record since the first quarterly Homeowner Confidence Survey, which was fielded in the second quarter of 2008."

Things That Make You Go "hmmmm"

Clearly homeowners still have their heads in the sand and are either unwilling to look at the facts of the marketplace or they are being misled by the flurry of positive data-spin and perception management being proliferated by Wall Street, the National Association of Homebuilders, the National Association of Realtors and the Government ("trust me, jump on in - the water is perfect").

For anyone who is hesitant about the future direction of housing prices, please refer to this post of mine from a few weeks ago:

Housing Values: Look Out Belowwww

The other factor lending slight support to the mid-price range of homes right now is the $8k taxpayer subsidization of first time homebuyers down payments (the FHA now lets a home buyer apply the $8k tax credit to the down payment). Let's see what happens to home prices if Obama takes away this wealth transfer payment...

6 comments:

[Mis]InheritanceTuesday, 18 August, 2009
It doesn't surprise people that are still confident in their homes price maintaining value.

Those mortgages are due for resetting after the Fed will stop quantitative easing.

Once the Jumbo/option arm loans reset we will see the next leg down.

I think the administration is beginning to realize that, regardless of the subsidies, home ownership is not a realistic option.
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Dave in DenverTuesday, 18 August, 2009
I doubt Obama understands this because he doesn't understand finance at all (remember his "stocks have a low profits-to-earnings ratio" comment?). Larry Summers may understand it but he doesn't care. when Obama appoints him to replace Bernanke, he'll really crank up the printing press.

It's not just mortgage resets/recasts that are screwing homeowners, it's unemployment as well. The pay-option mortgages just make things even that much worse.
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Harvey GeeWednesday, 19 August, 2009
They must be reading those articles that the recession is over and that "pending" home sales have gone up last month. Exactly what the hell is "pending" home sale...

What's scary is that the $8k credit is now able to be applied as down payment for many home sales from the same people that shouldn't have any businss buying one in the first place.

If you can't put the minimum down payment of 3.5% in cash w/o using the tax credit, you shouldn't be buying a house.

When the housing market tumbles again, those who could barely afford a house will be hit the hardest when their home values decline.
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Dave in DenverWednesday, 19 August, 2009
Harvey, even 3.5% is too low for a downpayment. LOL. Now GNMA is offering 125 LTV mortgages. The Government has shifted the old subprime machinery from CFC, WM, FNM and FRE to GNMA and FHA - to be guaranteed by you and me.
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Harvey GeeWednesday, 19 August, 2009
The cycle will continue, by making those loans backed by the gov't seems to be the only way they got banks to loan out money because w/o that they wouldn't have.

It's funny, don't they want to banks to avoid making the same mistakes that got us into this mess.

The gov't also wants consumers to increase their savings yet they are enticing them with free money for a new houses and cars.

Great way to spur the economy! Why not just give out free money to everyone.
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Dave in DenverWednesday, 19 August, 2009
re: why not give free money to everyone

LOL

Because they're too busy giving free money to the banks and CEO who's run them
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.