The Beginning Of The End
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Will The New Housing Bubble That Bernanke Is Creating End As Badly As The Last One Did?

Will The New Housing Bubble Lead To Another Housing Crash?Federal Reserve Chairman Ben Bernanke has done it.  He has succeeded in creating a new housing bubble.  By driving mortgage rates down to the lowest level in 100 years and recklessly printing money with wild abandon, Bernanke has been able to get housing prices to rebound a bit.  In fact, in some of the more prosperous areas of the country you would be tempted to think that it is 2005 all over again.  If you can believe it, in some areas of the country builders are actually holding lotteries to see who will get the chance to buy their homes.  Wow – that sounds great, right?  Unfortunately, this “housing recovery” is not based on solid economic fundamentals.  As you will see below, this is a recovery that is being led by investors.  They are paying cash for cheap properties that they believe will appreciate rapidly in the coming years.  Meanwhile, the homeownership rate in the United States continues to decline.  It is now the lowest that it has been since 1995.  There are a couple of reasons for this.  Number one, there has not been a jobs recovery in the United States.  The percentage of working age Americans with a job has not rebounded at all and is still about the exact same place where it was at the end of the last recession.  Secondly, crippling levels of student loan debt continue to drive down the percentage of young people that are buying homes.  So no, this is not a real housing recovery.  It is an investor-led recovery that is mostly limited to the more prosperous areas of the country.  For example, the median sale price of a home in Washington D.C. just hit a new all-time record high.  But this bubble will not last, and when this new housing bubble does burst, will it end as badly as the last one did?

Federal Reserve Chairman Ben Bernanke has stated over and over that one of his main goals is to “support the housing market” (i.e. get housing prices to go up).  It took a while, but it looks like he is finally getting his wish.  According to USA Today, U.S. home prices have been rising at the fastest rate in nearly seven years…

U.S. home prices in the USA’s 20 biggest cities rose 9.3% in the 12 months ending in February. It was the biggest annual growth rates in almost seven years, a closely watched housing index out Tuesday said.

In particular, home prices have been rising most rapidly in cities that experienced a boom during the last housing bubble…

Year over year, Phoenix continued to stand out with a gain of 23%, followed by San Francisco at almost 19% and Las Vegas at nearly 18%, the S&P/Case-Shiller index showed. Most of the cities seeing the biggest gains also fell hardest during the crash.

But is this really a reason for celebration?  Instead of addressing the fundamental problems in our economy that caused the last housing crash, Bernanke has been seemingly obsessed with reinflating the housing bubble.  As a recent article by Edward Pinto explained, the housing market is being greatly manipulated by the government and by the Fed…

While a housing recovery of sorts has developed, it is by no means a normal one. The government continues to go to extraordinary lengths to prop up sales by guaranteeing nearly 90% of new mortgage debt, financing half of all home purchase mortgages to buyers with zero equity at closing, driving mortgage interest rates to the lowest level in 100 years, and turning the Fed into the world’s largest buyer of new mortgage debt.

Thus, with real incomes essentially stagnant, this is a market recovery largely driven by low interest rates and plentiful government financing. This is eerily familiar to the previous government policy-induced boom that went bust in 2006, and from which the country is still struggling to recover. Creating over a trillion dollars in additional home value out of thin air does sound like a variant of dropping money out of helicopters.

And the Obama administration has been pushing very hard to get lenders to give mortgages to those with “weaker credit”.  In other words, the government is once again trying to get the banks to give home loans to people that cannot afford them.  The following is from the Washington Post

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

We are repeating so many of the same mistakes that we made the last time.

But surely things will turn out differently this time, right?

I wouldn’t count on it.

Right now, an increasingly large percentage of homes are being purchased as investments.  The following is from a recent Washington Times article…

Much of the pickup in sales and prices has been powered by investors who, convinced that the market is bottoming, are scooping up bountiful supplies of distressed and foreclosed properties at bargain prices and often paying with cash.

With investors targeting lower-priced homes that they intend to purchase and rent out, they have been crowding out many first-time buyers who are having difficulty getting mortgage loans and are at a disadvantage when competing with well-heeled buyers. Cash sales to investors now account for about one-third of all home sales, according to the National Association of Realtors.

And as we have seen in the past, an investor-led boom can turn into an investor-led bust very rapidly.

If this truly was a real housing recovery, the percentage of Americans that own a home would be going up.

Instead, it is going down.

As I mentioned above, the U.S. Census Bureau is reporting that the homeownership rate in the United States is now the lowest that it has been since 1995.

In particular, homeownership among college-educated young people is way down.  They can’t afford to buy homes due to crippling levels of student loan debt

For the average homeowner, the worst news is that these overleveraged and defaulting young borrowers no longer qualify for other kinds of loans — particularly home loans. In 2005, nearly nine percent of 25- to 30-year-olds with student debt were granted a mortgage. By late last year, that percentage, as an annual rate, was down to just above four percent.

The most precipitous drop was among those who owe $100,000 or more. New mortgages among these more deeply indebted borrowers have declined 10 percentage points, from above 16 percent in 2005 to a little more than 6 percent today.

“These are the people you’d expect to buy big houses,” said student loan expert Heather Jarvis. “They owe a lot because they have a lot of education. They have been through professional and graduate schools, but their payments are so significant, they have trouble getting a mortgage. They have mortgage-sized loans already.”

And the truth is that there simply are not enough good jobs in this country to support a housing recovery.  In a previous article, I used the government’s own statistics to prove that there has not been a jobs recovery.  If we were having a jobs recovery, the percentage of working age Americans with a job would be going up.  Sadly, that is not happening…

Employment-Population Ratio 2013

And as I mentioned above, the “housing recovery” is mostly happening in the prosperous areas of the country.

In other areas of the United States, the devastating results of the last housing crash are still clearly apparent.

For example, the city of Dayton, Ohio is dealing with an estimated 7,000 abandoned properties.

As I wrote about the other day, there are approximately 70,000 abandoned buildings in Detroit, Michigan.

And all over the nation there are still “ghost towns” that were created when builders abruptly abandoned housing developments during the last recession.  You can see some pictures of some of these ghost towns right here.

So the truth is that this is an isolated housing recovery that is being led by investors and that is being fueled by very reckless behavior by the Federal Reserve.  It is not based on economic reality whatsoever.

In the end, will the collapse of this new housing bubble be as bad as the collapse of the last one was?

Please feel free to post a comment with your thoughts below…

Federal Reserve Chairman Ben Bernanke

  • Tim

    Please, in the future would you spare your readers the pain by not posting a picture of that vile miscreant who heads the Federal Reserve? :-)

    • Ayn Rand

      Lol, the only bad part of this otherwise wonderful article!

    • Rodster

      I agree, I can even deal with a picture of Gary2 at an Occupy Event over that POS.

      • 2Gary2

        I guess that is a compliment of sorts?

        I really was at a occupy event and I really did put a link to the picture. Michael you should put the link up again so people can see what real courage is. Hint–its not simply posting on web blogs.

        • jokyjo

          You are right Gary, however, no amount of protesting will stop these crooks from destroying our country.

    • markthetruth

      Go Figure our Luck !

      The Face that Can Brake Mirrors
      Is Braking the County !

      the end…

    • Handog

      The photo is at the A$$ end of the article ..

    • Orange Jean

      Save the picture, print it out and use for a dart board!

  • rentier

    Another salient point, going along with the volume of allcash sales is the exemption realtors have to many of the cash sales reporting requirements. zero hedge theorizes many of these all cash sales are foreign money laundering or safe place to park capital.

    • Jim Davis

      Foreign money laundering maybe, but US real estate is anything but a safe place to park capital.

      • Derek DeCot

        I live in the SF bay area houseing around here is off the hook you know theres a problem when a blue callor worker has to save for 10 years to get a 20% down payment to buy a house thats 10k a year and almost impossible when rent is 2500 and up 2-3 bedroom

    • Orange Jean

      Well, one of my brothers bought his house for cash, and he’s not a foreigner, nor is he money laundering or “parking capital”.

      Just a very frugal guy, who was married with a paid off house… when they divorced and split the profit (for a fairly modest house too), he was able to buy his dream home (very old farmhouse, somewhat falling apart by some people’s standards but better than some he was looking at). Was something like $150K, in part because of where it was (NH) and in part because he paid cash.

      I’d hate to think this puts him on some kind of “watch list” … because he is frugal.

      • K

        Jean it’s real simple.If you have ever stood up for your rights, you are on a list. Ever bought ammo more than two boxes at a time, you are on a list. Bought storage food, you are on a list. Most retirees, bought their current house with cash. In short if you have acted like an American, you are on a list.

  • RICHARD

    I believe that the banks are going to suck a bunch of investors and the average Joes into buying a house. The banks are sitting on millions of homes and only releasing a few at a time giving everyone the impression you better get a house now because the prices are going up. The truth is the housing market is going to crash even worse than the last bubble. Especially when the economy comes crashing down. Welcome to the real world. .

    • cannuck21

      Good comment to an excellent article.
      Zero Hedge published a very good article recently suggesting that the rise in house purchases was due to Wall Street Corporations and large ‘speculative’ companies buying for rental – not individuals. If I remember correctly the number of new mortgages to individual was had not increased in 3 years. Yet if you look at the major press you would be forgiven for believing that a new housing boom was here. More lies and disinformation from our masters…

      • RICHARD

        Good post I see your on it. I will tell you something else you probably already know. The people that sell all these homes are worried about the tax deductions disappearing on your property. Something to think about. Personally I always thought a tax write off for your home was a rip off. What would you rather have the 1,000 dollars the government is going to give you back or the 6,000 dollars you just paid them crooksters at the bank. To me it’s a no brainer.

        • cannuck21

          Thanks Richard for making a good point – which I was not aware of. As I become older and see the rise (yet again) of despots it is very concerning for our younger people.

        • Jaybird7

          Yeah but you got to live somewhere. It’s rent or home ownership unless you pitch a tent in the woods.

    • DownWithLibs

      It’s not too hard to figure this out given that even the least market savvy among us can see that the Stock Market is being held up by nothing more than spit and bubble gum.

  • Dave Webb

    What the government is doing is putting 120,000 in renovations into foreclosed properties that are worth approximately 85,000 on the open market and only because they are brand new inside. This is being done by a federally sponsored program to restore neighborhoods.
    Since the average value of a home in these neighborhoods is 35,000 over what people are willing to pay the government is taking a bath on these properties.
    The tax base remains the same because these homes are no longer like everyone of the same model around them. So someone buying a 120,000 home in a neighborhood of 85,000 homes will never get their money out of the home in this market. The only winner hear is the contractors that do the work.

  • stuck

    I wish I didn’t own a home now. Or should I say own a mortgage? But my area is not one of the booming cities and I know if I tried to sell I would be upside down.

    • Tim

      Many American homeowners are upside down in their mortgages. Around 2002/2003 I knew that the real estate bubble would pop. At that time I lived in Maryland where real estate values were particularly overinflated, which is why I didn’t buy a house. I had coworkers who were buying houses and getting into insane mortgages. One coworker, for example, bought a house in Sterling, Virginia and his monthly mortgage payment was $2,200! Another coworker bought a house in Rockville, Maryland, and her monthly payment was close to $3,000!

      The only positive thing that may result from re-inflating home prices is that it will bring many homeowners out of negative equity. If that does happen, people should take advantage of the situation and get out before the bubble inevitably pops again.

    • DiscouragedOne

      I don’t get that, if you owe more than your house is worth are you not upside down whether you try to sell or not?

      • http://www.facebook.com/donald.smith.792 Donald Smith

        DiscouragedOne,
        It only matters if you are trying to sell the house, or if you can’t afford the payment due to job loss, etc. It also pretty much insures you cannot refinance into a lower rate. If your job is steady and you can afford the payment, then the idea is to wait it out until values recover. That may take 10-15 years, from recent estimates….and the desirability of the location, etc…..

  • Rodster

    Quite honestly I don’t think he cares if this ends worse than 2008. He’s gone and a lot of the politicians who have made the economy worse will probably be gone too. These corrupt individuals know full well what’s going to eventually happen. For now they vote in policies that will keep their job and when they are gone they will let the successor deal with the problem. Rinse and repeat until some event lights the fuse and at that point the rats flee the burning ship.

    • Weston

      Well said. This is very true. These gangsters know the outcome and are doing personal planning to ensure they profit from it. The middle class is going…going…gone.

  • McGregor

    Since Canada might become part of the Amero Union, the same housing boom is occurring in cities like Toronto and Vancouver. Funny part is, the houses are becoming overpriced it costs no less than $400,000 for a 1 bedroom condo in the Old Toronto. The debt ratio for Canadians on average is 165% and the economy in 7 out of 10 provinces are bad. Alberta has oil and America buys lots of oil, but if America economy tumbles, so does Canada.
    I don’t understand how the number of houses sold and cars on the road is measured as progress????

    Time like now, you see long lines at McDonalds hiring events and long lines for summer jobs. Mainly students are in those lines and future generations are going to end up waiting longer for jobs at the rate the economy is doing.

    Not even bank jobs are safe. The Royal Bank of Canada laid off 40 employees to offshore jobs to third wordl cheaper labour centres,.

    • B T

      A one bedroom, new condo, here in Makati, the business district of Manila, is going for about P 3.4M or $80,000. US. ($900/mo for 10 years.) That is the average. It will get you about 450 sq.ft. and security, maintenance, access to a pool, gym and common area. Everything you have in the US except high prices. $400,000 would get you a prime two story penthouse condo with 3 bedrooms, a maids room, parking space in the garage, security, .maintenance, etc.

  • JAH666

    When Ben and the Fed can pump all the phony fiat they want into the system, and bully the main players into doing what they want what do you expect? A bubble has to be the result. Many are speculating that Ben sees that the end is near and that he may be ready to step down (no Jackson Hole appearance) and will get out while the gettin’ is good. If Janet Yellin goes in as the next Fed Chairman, she’ll take the blame when the SHTF.

    • DiscouragedOne

      But we will all be blaming the real culprit.

  • Mandy

    Hence why many are looking to downsizing big time for the X generation and baby boomers. People are either building tiny homes or going for campers and RVs which are now the only affordable housing options compared to renting many are facing. That or living with family or buying a home so several generations of the family to live in. I will be getting out of college with little debt compared to others of my generation and plan to focus on paying that off as fast I can before even thinking of buying a house… Well, buying junk land to make my home and farm at as I am planning to go off grid as I know how bad the grid is in my area and since it is remote anyways, I just got to go out a little farther to be in the boondocks.

  • markthetruth

    U.S is on Steroids, But not to worry, we run the United Nations so we will not get Banned or Kicked out.

    But it also has Cancer. shush !

    PTSD.

    the end…

  • markthetruth

    Advice from the 18th Century.

    Jack and Jill went up the hill
    To fetch a pail of water
    Jack fell down and broke his crown
    And Jill came tumbling after

    the end…

  • K

    Lets’ sum it up. The stock market is manipulated. Precious metals are manipulated. The housing market is manipulated. Anyone care to come up with some part of this economy, that is not manipulated?

    • markthetruth

      Are you trying to manipulate us into thinking everything is manipulated

      the end….

    • DownWithLibs

      Pay no attention to the man behind the curtain.

  • glamandvampallround

    I just wish it wasn’t all so difficult these days…..

  • Watching the Ship Go By

    Housing prices in my area are also rising and the houses are being scooped up left and right. Especially if they are decent looking inside and looking like the year they were built. Think 1972 for a visual.

    First time buyers like myself who want a reasonably priced house in a decent neighborhood are out of luck it seems once again. I seem to always be the one on the dock waving as the boat passes by with everyone on board having the time of their lives. Again I only get to watch and wait on the sidelines of life.

  • LazyIke

    What about the subprime auto loan market. That is even worse.?

    • Moore

      once it is a loan that many people cannot pay back in the event of job loss, economic crisis, etc…it affects the banks who will blantantly take away our money to bail-out or bail-in as in Canada bank laws.

  • Moore

    Whitney Houston said, “I believe the children are our future, teach them right and let them lead the way”…

    This website article says,Secondly, crippling levels of student loan debt
    continue to drive down the percentage of young people that are buying
    homes. So no, this is not a real housing recovery. It is an
    investor-led recovery”

    I wonder what sense it makes for millions of students to be under $40k debt on college and compete for minimum wage jobs upon graduation.

    The middle class is indeed disappearing in both UsA. If youngsters can’t start their lives and raise families the human population will have low birth rates.

    Yet, they encourage mass immigrants per year because “to support an aging population” mantra. If youth are struggling to get jobs what sense is the government allowing huge influx of persons and openly encouraging more foreign workers to come into the country?

    I read that JP Morgan makes millions from illegal immigration in the UsA and that is a sick business because mass immigration leads to economic chaos. I am not racist for saying that. Too many people in one area increases competition for already scarce jobs.

    And the messed up thing is…most people don’t really give a flying saucer because criticizing immigration is not politically correct.

    The housing bubble is risky along with the overprinting of money.

  • Hooptee

    It is, however, an awesome time to re-fi.

  • seth datta

    Learn how to do basic first aid. You won’t be able to afford to see an MD (me) as obamacare/repubcare (doesn’t make a difference) is going to ensure this, as well as a shortage of doctors, esp. in primary care.

    Keep improving your skills. Its survival of the fittest. When I lived in singapore, every kid 20+ knew first aid, 3-5 languages, had military experience and a ton of other things.

    Know your enemy. He doesn’t live in another country. He’s here and bringing the country down form within. Your other enemy is being fallible; sin.

    We’re going to be in for a real rocky ride. The end times/economic collapse is already here for some. For others’ it will take 20 or so years. But we’ll all get there in the end

    • DownWithLibs

      I understand this “can’t afford a Dr. even if you can find one” thing coming down the pike. So, given that, could you recommend any books for us non medical professionals that could come in handy in a SHTF emergency? I have a few, like “Where There Is No Dr.” (The only problem with them is that they tell you what to do, then tell you to seek medical help right away!)

  • Ralfine

    Basic rules when buying a house.
    Make sure you can afford it, even when losing your current job for two years.
    Make sure it survives the weather – wind, storm, rain, snow, flood, etc.
    Make sure it protects your family and possessions against the environment – drive-by shooting, burglary, cars out of control, etc.
    Easy upkeep, low operation costs.

    • DownWithLibs

      Do you know of a quick and easy way to shore up walls against drive-by’s? And I am referring to existing housing.

      • Ralfine

        Confiscate the guns. :-)

        Put a nail board on the street?

        Boulders?

        Move to China?

        Move to the 20th floor?

        Park a bus in front of your house?
        Fill the bus with concrete top to bottom, blow the tyres.

  • chilller

    These are not Obama mistakes being repeated…the economy was still too strong the last time the housing bubble burst, so they are TRYING once again to add to the destruction but this time with an economy teetering on the edge.

  • chilller

    Oh, and I agree on the Bernanke photo at the end. This early in the morning I about choked on my coffee…YIKES!

  • markthetruth

    Here we go again with the ” NO INFLATION ” crap again is it because everything is made cheaper and cheaper , and smaller but we pay a premium. Take a tablet you have to by a case protector, screen protector . Clothing i see cheaper material and shoddy workmanship sewing threads all over clothing that has to be cut off and unravels , why do you think all the junk end up in the Dollar store.

    the end…

  • Mark

    In my neighborhood I have notice an uptick in home renovations. Two houses down they renovated a house in which they asking 650K for it and it has recently sold. I do not know what the price the house was settled on. Next door to my house they haven’t started renovation yet, but they are already planning to ask 650K for it.

    A few months ago I was offer to sell my house. The offer price was too low so I didn’t exactly said no, I said heck no!

    Mark

    • DiscouragedOne

      My neighbor across the street is doing renovations, and housing values have gone up 6% in the last year here.

  • Jack Hoff

    You say: “the “housing recovery” is mostly happening in the prosperous areas of the country”.
    well. Keep your day job. Your dead wrong!

  • nikxdog

    We just sold both of our rental properties: ranch style home and a condo. Both pretty nice and both snatched up by investors within days of listing. We are thankful we sold both so quickly but feel sorry for the folks who may have just purchased near the top of another housing bubble.

  • XSANDIEGOCA

    Bernacke is due to make tens of millions when he leaves the Fed. Wall Street will reward him handsomely. I would put his base compensation when he goes to Goldman’s at 20MM. Book deal will be worth 10MM minimum! This is how the bribery is done.

  • jokyjo

    Will The New Housing Bubble That Bernanke Is Creating End As Badly As The Last One Did?
    Yes, and the bond bubble and the equities bubble will also end badly. The crooked banksters, politicians, and corporate CEO’s have created a mess that no one will be able to escape.
    Stock food, precious metals, guns and ammo and prepare for the worst. I believe this will all end very badly.

  • Trailer Park Investor

    You think what they did to the Gold & Silver price they are doing the same thing with housing???
    Just a thought, banksters got a lot of tricks up their sleeves, got to watch them.

  • 2Gary2

    Friends–I know I have not posted much–going through some personnel issues, however, I have learned that I can learn more by keeping my mouth shut. everyone here already knows what my answer to 99% of the issues Michael writes about anyway.

    In case you forget–Tax the rich hard and spread the wealth. The record setting income inequality we have in the USA is simply not acceptable and whether or not you blame this or that for why we are in this mess, the vast majority of people are simply blaming capitalism and are coming to the conclusion that capitalism is not working out for them and they want a capitalism that works for the many, not the few.
    The distinction between crony capitalism and

    capitalims is fear is lost obn most folks.

    • Ayn Rand

      I respectfully disagree. I just don’t want to be forced to pay for other people’s things. I love giving to charity (small charities, not charities that give their “administrators” large bonuses). I just don’t like the thought of being FORCED to give. I am for the rich paying higher taxes than most people, but I would prefer it if taxes could be avoided almost entirely (maybe one percent for poor, two for middle, and 5 for SUPER rich with 3-4 being for moderately rich). In a truly prosperous society (true Laissez Faire Capitalism) people are so prosperous that they CAN give to charity, and resources have a lot of competition so as that prices are low enough that people can afford it.

      • 2Gary2

        There is no successful example of a libertarian society and there never will be. I do agree with you on the big admin salaries of the large charities.

        • Ayn Rand

          19th century America. During the Gilded Age, due to hard money policies and having plenty of free spirited enterprising people, we created an immense economy out of what used to be a bunch of backwoods hicks growing cotton, tobacco, and hemp. Very little gov’t regulations or taxes.

          • 2Gary2

            And we had children working and dying in the mines and factories, little to no worker protections as a lot of people died due to preventable workplace accidents, there were no regulations such that drugs like heroin and cocaine were sold as part of snake oil remedies. People were poor in old age etc etc

            I would hardly hold up the gilded age as any example of anything we should emulate.

            We are living in a second gilded age with wealth and income being even more unequal now than then.

            At least life during the second gilded age is long brutish and hard as opposed to short brutish and hard so I guess there has been some progress.

            Thank you though for the reasoned response. Its great that we can disagree without being disagreeable.

          • Ayn Rand

            I try to be as reasonable as possible. Yes, workplaces were bad back then, however, they would still have been just as profitable if they took care of their people. If anything, they would have been even more profitable. Besides, a large part of the problem was the fact that unions were outlawed, although they are voluntary associations. Unions would have demanded worker’s rights, and would have gotten them, but big Gov’t shot them down for the longest time. The gov’t need not stand up for the workers, the workers can stand up for themselves.

          • Brack

            Wow, this is a reasonable, and well though out exchange by both parties involved. We really need more of this.

          • Brack

            Well thought out…. Stupid bad typing skills.

  • DB200

    Michael,

    Most of the time I don’t comment anymore, because I don’t think it helps. But
    after having read a document recently (from 1970) about hyperinflation in Germany, I
    conclude that the behaviour you describe is perfectly normal in a inflation
    period. The report can be read here:
    http://www.usagold.com/publications/germannightmare.pdf

    You can have a 30 year fixed mortgage rate at 3.47%. In a country that is
    heading towards stiff inflation – say 10 – 20% p.a. for a couple of years –
    this is a bargain. So if you have, say 500k U$ in savings, buy the house in an
    upper class neighbourhood at low interest, and 100% financed, and buy for the
    savings (tangible) gold. And then, sit and wait, until de dollar collapses (guaranteed
    100% between now and 30 years). After
    that, you’ll only need a few ounces of gold to pay the bank in order to have a
    house for almost nothing.

  • SAM

    “In the end, will the collapse of this new housing bubble be as bad as the collapse of the last one was?”
    I think that this housing bubble will lead to a stock market crash like in 2008. The big question is will an economic meltdown happen this year or not? We just have to wait and see.

  • Economy Reformer

    Why are we even starting to see this trend again. Enough
    should be enough. But the investors are treating the housing market the same
    way they treat the stock market: buying low and selling high. If they are
    allowing those who can’t afford loans again, the bubble will bust as soon as
    those people can’ afford to pay for their mortgage. The banks need to have
    higher standards for giving loans to people. The student housing market doesn’t
    bother me. If they have a “mortgage” size loan, then they really
    shouldn’t think about buying a house. They should rent and pay off their loans.
    You can’t accuse the banks for choosing people that don’t have money while they
    should allow the banks to give loans to former college students who have no
    money but have debt. Both are bad decisions for the housing market.

  • Rach

    It
    is ridiculous to think that Bernanke believes that somehow he is doing society
    a favor by falsely representing how the economy is, specifically in the housing
    market. His concept/principle is that as part of the Federal Reserve that he
    will buy homes so that they may appreciate in value, and then continuing to
    allow individuals whom have no way to pay for the mortgage to buy homes too.
    Bernanke has disregarded history because Greenspan has set-up the economy for
    the “housing bubble”. This is what frustrates me the most. Bernanke should in
    not be able to get away with doing this again especially if it was previously
    seen with Greenspan that this did not work.

  • http://www.facebook.com/profile.php?id=100000973940774 John G. Davie

    Eliminate the Federal Reserve which is not public but is private.

  • Scorporal

    If this is happening again we should rather ask why this is happening? why are a select few being targeted to gain from this?What are they planning on doing with their wealth when the majority of the working class will start getting off-grid from the financial structure? I can see something bad coming, do you?

  • greg gardner

    one thing that never gets mentioned is the insane costs to build. Lumber,plywood,electrical,plumbing ,roofing etc etc materials are at cost prohibitive prices. Not to mention lack of construction loans. House flipping is like buying and selling apple or google now….kind of like daytrading for houses

  • soporter

    apple has 100 billion offshore , govt do something corruption

  • HomePriceFuture

    So….what are going to do with this information. Sell you house (and you can’t sell half of it)? Rent? Short some stocks that “kind of” move w/housing? Why not learn more about the Case Shiller(home price index) futures that are traded on the CME? The contracts settle between May 2013 an Nov 2017 on the index value at that time. So if you have a strong view on where the CS home price indices are headed (across ten regions) you might want to learn more about how to financially express a view on this key subject.

  • seanickson

    Its not a housing bubble its a reasonable reaction to lower interest rates, they raise all productive asset prices. The cost of owning a home is among the lowest its ever been

  • Brian Wollner

    Bernanke is a really smart guy. Tons of home owner’s who were tipped are now moving on with their lives. They are being replaced by buyers who have solid jobs, strong down payments and fixed mortgages at a great affordability index. Take out the last recession predicated on adjustable loan products and scams, replace it with the appreciation we have seen in the last 15 months and you will see that based on a average 2% year over year appreciation of Real Estate we are exactly where we should be. Get the job market back on track and we will be okay. Bernanke saved the private sector and kept credit flowing. Please don’t say he is ignorant, that only makes you ignorant.

  • femme417

    Market of cash investors like flash eating ants. Make people run around and chase properties they can hardly afford. The media in this matter is useless. When are the people going to stand up against a worthless government, that regulates everything except it’s own spending. As a legal immigrant not too proud to be an american right now.

  • Vbanne

    I know this is old news, but does anyone have an opinion on doing a 1031 exchange in this market? We sold high thus past summer in Los Angeles and the option of buying high vs paying taxes is on the table.

  • Senseless

    If you keep doing the same thing why on earth would you expect different results?

  • Senseless

    Flint, MI is right behind Detroit….

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