Home prices: no end in sight

by charvaka Tue May 31, 2011 11:51 am

I was looking into buying early last year and I am kinda glad that I didn't. Although interest rates are rising which is another part of the story.

http://latimesblogs.latimes.com/money_co/2011/05/case-shiller-index-shows-home-prices-slide-into-double-dip.html

An index of home prices in the nation's largest American cities plumbed
new depths in March, pushing past a low set during the worst of the
Great Recession.

by Guest Tue May 31, 2011 12:09 pm

and here we are hit by runaway inflation. real estate prices are going up and up. when will RBI be able to tame it?

by charvaka Tue May 31, 2011 12:21 pm

Huzefa Kapasi wrote:real estate prices are going up and up. when will RBI be able to tame it?

Yay.

Is the RBI trying to tame it? Elections are a couple of years away, so they will probably let it slide, no?

by MaxEntropy_Man Tue May 31, 2011 12:27 pm

why do you have to buy now? if there are no kids in the picture just continue renting. some of us are not in the same happy place you are. for those wanting to buy here in new england it's a funny kind of market -- except those who really have to sell people are putting off putting their house on the market. end result -- there are houses on the market, but nothing that is compelling. and the people who want to upgrade are kind of stuck. can't unload their property, so can't upgrade either. we need a catalyst to get things going.

by Marathadi-Saamiyaar Tue May 31, 2011 12:37 pm

Huzefa Kapasi wrote:and here we are hit by runaway inflation. real estate prices are going up and up. when will RBI be able to tame it?

I expect some mistakes on the part of the Govt/RBI, and expect the housing bubble to leak out some air in the near future.

The RBI has to increase the rates which will push up the mortgages. Most Indians don't know about the ARM process, and will find themselves with their pants down. Also, expect the IT sector to go in for laying off the 40+ crowd and hire the 20+ singlets. Very few will move up the pyramid, with the rest sliding down - carrying with it the housing market (remember, Indian IT sector is already costly forcing them to open shops in Chinaland and Africaland - the writing is on the wall).

by charvaka Tue May 31, 2011 1:02 pm

MaxEntropy_Man wrote:why do you have to buy now? if there are no kids in the picture just continue renting. some of us are not in the same happy place you are. for those wanting to buy here in new england it's a funny kind of market -- except those who really have to sell people are putting off putting their house on the market. end result -- there are houses on the market, but nothing that is compelling. and the people who want to upgrade are kind of stuck. can't unload their property, so can't upgrade either. we need a catalyst to get things going.

I am not looking to buy right now. My wife is in grad school, so don't want to tie ourselves down to any place. But I was looking at it from a diversification point of view. Right now most of my money is in Indian real estate (which is in a long-running bubble) and in the stock market here (401k + some "play" money on the side). I guess 35 is a big milestone when you start thinking of investing in less risky things than stocks and emerging market real estate. We are talking about buying this time next year. Not sure where the market will be then.

by Guest Tue May 31, 2011 1:26 pm

charvaka wrote:Is the RBI trying to tame it? Elections are a couple of years away, so they will probably let it slide, no?

http://economictimes.indiatimes.com/news/economy/policy/rate-hike-rbis-subbarao-goes-against-majority-vote-to-raise-rates-by-50-bps-to-tackle-inflation/articleshow/8655709.cms

by CroMagnon Tue May 31, 2011 1:38 pm

When it comes to home prices in US, it is not a recession, it is merely bursting of a bubble, a bubble created in 1998.

If you look at home price data for last 20 years, you would see the exponential increase around that time.

e.g. Case Shiller home price index for Boston increased from 71.8 in beginning of 1987 to 78.1 at the end of 1997.

From there, it skyrocketed to 188 in the middle of 2005. Right now it stand at ~140, which is still much higher than historical trend line. Thanks to artificial increase in money supply (inflation), it will never hit the historic trend line.

by charvaka Tue May 31, 2011 2:13 pm

Huzefa Kapasi wrote:
charvaka wrote:Is the RBI trying to tame it? Elections are a couple of years away, so they will probably let it slide, no?

http://economictimes.indiatimes.com/news/economy/policy/rate-hike-rbis-subbarao-goes-against-majority-vote-to-raise-rates-by-50-bps-to-tackle-inflation/articleshow/8655709.cms

I wasn't keeping up with this. Interesting... they are talking about capital controls and raising the liquidity ratios of banks. I wonder if they anticipate the bubble bursting real soon. Perhaps Desichatter has a point.

by Kris Tue May 31, 2011 4:29 pm

charvaka wrote:I was looking into buying early last year and I am kinda glad that I didn't. Although interest rates are rising which is another part of the story.

http://latimesblogs.latimes.com/money_co/2011/05/case-shiller-index-shows-home-prices-slide-into-double-dip.html

An index of home prices in the nation's largest American cities plumbed
new depths in March, pushing past a low set during the worst of the
Great Recession.

>>>> While the general market trend is dismal, if you are looking in the bay area, there are certain markets that are holding up of late. If you are buying at the bottom of the market (or close to it), you are at least going to tread water. In the meantime, you do have the tax break. That being said, if you are going to buy, look at bank-owned properties first where you have a really motivated seller.

by Another Brick Wed Jun 01, 2011 12:58 am

Marathadi-Saamiyaar wrote:Also, expect the IT sector to go in for laying off the 40+ crowd and hire the 20+ singlets. Very few will move up the pyramid, with the rest sliding down - carrying with it the housing market (remember, Indian IT sector is already costly forcing them to open shops in Chinaland and Africaland - the writing is on the wall).

highly likely. another decade, and i am out. forcefully or otherwise.

by artood2 Wed Jun 01, 2011 12:59 am

Both China and India are now expensive in terms of salary.

by Nila Wed Jun 01, 2011 1:01 am

You can wait charv...so that you can buy a bigger house for a decent price.

I used to follow patrick.net for a while and got bored of that housing bashing...also drhousingbubble....yawn!

by MaxEntropy_Man Wed Jun 01, 2011 11:25 am

a good forum i sometimes visit: http://www.bostonbubble.com/

lots of discussion is specific to the greater boston area, but there are also general RE discussions.

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