FED INDUCED BUBBLE PART DEUX

6 comments

Posted on 23rd July 2014 by Administrator in Economy |Politics |Social Issues

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More proof that Bennie and Bubbles have created a 2nd housing bubble that will pop again. Prices are up 35% from their lows even though home sales languish at 1999 levels. Mortgage applications are at 1998 levels when inflation adjusted home prices were $190,000. Today inflation adjusted prices are $240,000. This bubble is 100% driven by Federal Reserve monetary policies and the buy to rent scheme hatched by Wall Street and their puppets at the Fed and Treasury. When this bubble pops (they always do) home prices will drop 20% to 30% from current levels. The dupes who’ve bought in the last two years will be underwater and over their heads. Some things never change.

For some perspective on the all-important US real estate market, today’s chart illustrates the inflation-adjusted median price of a single-family home in the United States over the past 44 years. There are a few points of interest. Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased — increased. All those gains and then some were given back during the following 6.5 years. Over the past two years, however, the median price of a single-family home has trended significantly higher. More recently, the inflation-adjusted price of the median single-family home has declined and is now testing support of its two-year upward sloping trend channel.

6 Comments
  1. archie says:

    there are several houses for sale on my road. they’re not going anywhere. there are even reasonably priced houses on the ocean languishing in the market. i am pretty sure the idea is to get the illegal immigrants to buy up all these properties. 2% down with EBT cards, then take out second mortgage to buy more shit. use that shit as collateral to buy even more shit. that will get the economy going again. krugman told me so.

    23rd July 2014 at 9:25 am

  2. card802 says:

    Just had a conversation at lunch with a buddy. Funny how he is on board with the dollar demise, the fed, the market manipulation, fiat vs assets, the main stream lying news and when the free money stops flowing, blood will flow from the march of the FSA.

    The fucker still wants to buy a house as soon as he can because he feels pressure that he is missing out.
    The only thing that will stop him is he must first sell the old family farm. The house hasn’t been updated since the 1950’s, if it sells, it will sell cheap, then he will be forced to buy during a bubble.

    He won’t listen and he buys all the books.

    23rd July 2014 at 1:40 pm

  3. Eddie says:

    I was looking online for a house here for my daughter last night. Nothing at all available anywhere near her work for less than 250K. The starter homes here are 40 miles to the north, and even those are really beyond her ability to easily make the payment on a teacher’s salary.

    I tried to get her Mom to agree to helping her buy a lot and then letting her save cash until she has enough to build a modest house, but my wife can’t see the benefit. Attitudes change so slowly. Everyone is still following advice that hasn’t made sense for twenty years.

    23rd July 2014 at 2:01 pm

  4. spinolator says:

    @ archie,

    You’re wrong!!!! They should be torn down and the land should then be used to build new houses or perhaps a mall. You need to review your economics 101.

    23rd July 2014 at 4:27 pm

  5. archie says:

    Spinolator. good call. I was also thinking a whole lot of Dunkin donuts.

    23rd July 2014 at 6:01 pm

  6. TE says:

    Proof of the fed induced bubble.

    More new bigbox retail buildings are going up all over town. Even as the same businesses struggle across town.

    I guess with 3% interest rates for the mega-corps (just try to get a small business loan with similar rates and leverage), they feel it is a no lose situation.

    Our city council continues to approve new developments, even as the existing ones die.

    My guess is they somehow believe that changing their location (within the same darn city, btw), will magically change their revenues.

    Insanity continues until it can’t. That day continues to come closer.

    24th July 2014 at 2:43 pm

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