- The amount of negative publicity
- Although the market is horrible, things are not as bad as they seem at first glance. There are only 4 or 5 states were market prices are going down and it is mostly higly leveraged areas in Florida and some highly speculative areas in California (remember the million dollar trailer home?) where prices are falling at unusual double digit rates. Curiously enough, you only read about that kind of news during the summer of 2005 (oops, the top).
- I am hearing rumors of foreign companies buying properties in Miami as long term investment (not flipping)
- Friends in the high-end real estate market commented that the market seems to be beginning to start moving again (you can tell they are cautious)
- I am still wondering when the government is going to announce that we have been in a recession
If you are a buyer and you have access to feed news to the media, you want them to picture a bleaker picture than it is. From this point of view alone, this looks a lot like stock market bottoms, when you ONLY read negative information.
That said, next year should be a tough one. Right now they are flushing out the market. Ever wonder what happens with all those houses going to foreclosure? Somebody is buying them, and they are not that cheap either.
Back in August I said that I expected government intervention to salvage the financial markets. They acted to create a plateau in the real estate market so that there aren’t too many houses in the market. I guess that the gluttony of the banks is about to get satisfied and they don’t want the rest of the pie (god forbids they get a severe case of real estate indigestion).
As it is, we all are going to pay for their feast, either through direct taxation or indirect taxation (trough inflation). Before unleashing the beast of inflation though, they need to make sure that most large-bank mortgages have variable rates, and the greatest number possible of Americans are renters.
Franklin @ December 28, 2007