Replies to post #81879 on Zeev's Turnips Patch-No Politics (ZEEV)

[calzone]

I would think if there is a trend of high foreclosure by the banks when number of defaults arises. That may due to number of economic factors. But I would think unemployment would be one.

[punkle]

It's already happening in Northern CA, especially anywhere close to Silicon Valley. I believe in San Francisco, we're overbuilt with tons of high end (> $1M) condos and they have been dropping at least 10% from their highs. Also, commercial real estate in SF has an all time high vacancy rate of around 24%. And keep in mind I still see the Bay Area as one of the most desirable place to live on earth.

Just like everything else, we have too much inventory which is one of the reasons you see GDP improving. It takes a little time to stop the manufacturing presses but it will happen.

I see a correction in high end residential real estate of 10 - 20% off the highs coming in the next year or two. What happens is many of these people that were looking to buy $1M plus homes have now stepped down to let's say $500K - $1M homes so you are seeing that market and the lower end market improve in price but I believe that will only last another year at most and this is with interest rates at all time lows.

[Joe Stocks]

>>So what's going to cause a collapse? (housing)<<

I remember back in early 2000 when some asked the same of the Nas. Whta we will see in a housing is a lack of buyers. Other than lower and lower interest rates and strong demographics, the housing boom or bubble has been extended by offering mortages to those that in the past were not able to qualify. Sub-prime lending has added many new buyers. Once we work through this new crop of buyers it is hard to see where we will find others as at the same time new home buyer demographics are turning down. Of cousre and rise in mortage rates will end the boom in a heart beat.

Joe

[Newly2b]

It's simple supply and demand.

One thing that tends to depress housing prices is a high number of foreclosures coming onto the market (as a result of lowered lending standards and higher unemployment). The banks need to get these properties off their books quickly, so they are priced at "bargain" prices compared to the rest of the market, forcing other sellers to reduce their prices to remain competitive.

When the number of foreclosed properties for sale rises, and the number of qualified ready, willing and able buyers drops (due to higher interest rates, joblessness, lack of funds available to purchase, etc.), only the property that represents the "best deal" for the money is going to sell, competition sharpens and prices begin to decline.
Newly