Are There Any Signs of Weakness in Your Micro-Realty Market?
by Chris Sanders, Double Eagle, Ole Bear, & Sol Palha, Realty Reality - Global Real Estate Markets Forum. July 2004
Current essay on Realty Reality, the monetary policy.
Are there any signs of weakness or cracks in your local micro realty market? If so, what are they and what do you see as the ramifications of these cracks in the foundation? If there are no weaknesses, how will your market hold as mortgage interest rates rise?
Inflation Up: Housing, Stocks and Liberty Down
To paraphrase Mark Twain, history may not exactly repeat itself, but it sure does rhyme. Since the 2000 collapse of the dot-com, telecom, and NASDAQ bubbles, Alan Greenspan has been desperately inflating in hopes of reviving the United States' economy. Through most of this "reflationary" process, unemployment has remained relatively high. Recent encouraging employment data seems to show that Alan Greenspan's low-interest rate policy is gaining traction. Moreover, people seem to be effortlessly making money in the real estate (i.e. housing) and stock markets. Indeed, the heroin-like effects of inflation induce feelings of euphoria and thus mass-manias inevitably emerge pertaining to "investing" in real estate and equities. To this end, Americans have become convinced that housing prices and stocks always go up "in the long run." This manic mindset dictates that one needs to get into the market now as prices are surely going higher. Of course, this is an illusion -- one heck of a smoke and mirror trick through the monetary policy of the Federal Reserve -- using housing to hold up the economy.
In Costantino Bresciani-Turroni's masterful book The Economics of Inflation: A Study of Currency Depreciation in Post-War Germany, he observed a boom-bust cycle brought about by Germany's monetary central planning. Bresciani-Turroni states the following:
At first, perhaps, the political and social effects of the inflation were not altogether unfavorable. In the period of the serious social and political disturbance, which followed the military defeat, the presence of acute unemployment would have been a cause of trouble. The inflation made possible the rapid absorption of the unemployed at the expense of the small capitalist classes. Later, however, the depreciation of the mark provoked continual agitation among workers, who demanded increases in wages; in 1923 discontent spread further and further among other classes of society. Among the old middle classes, ruined by the inflation, extreme nationalist propaganda was started and made rapid headway, and among workers communist ideas spread. (pg. 330).
The "ruin" mentioned by Bresciani-Turroni pertained to the bust inevitably brought on by the central bank induced boom. The value of houses collapsed. The stock market collapsed. However, prices for everyday goods such as food, clothing, and other basic necessities soared as a result of the rapidly depreciating currency. Unfortunately, this economic instability provided fertile ground for the National Socialists to emerge as the political party with the answers to Germany's problems. The rest is a sad history.
Today, in the United States, there is an ongoing debate if Alan Greenspan's monetary policy is going to result in an inflationary or a deflationary collapse of the American economy. In my mind, the whole notion that deflation will take hold is nonsensical. Deflation means that the purchasing power of the dollar will increase. Since the founding of the Federal Reserve in 1913, the U.S. dollar has lost over 95% of its purchasing power. Over the long run, no fiat currency has ever gained purchasing power and thrived. All have collapsed and have eventually become worthless. The U.S. dollar will be no different.
In the meantime, at the local level, I continue to see the real estate bubble expand in Oregon. As a surety bond underwriter, part of my job entails real estate subdivision bond analysis. Developers are having little difficulty acquiring bank financing for real estate/housing development. Many of these developers are first-timers and have little to no experience with the platting process, dealing with financial institutions, hiring competent contractors to put in the subdivision improvements (streets, utilities, et cetera), and dealing with home builders. Nevertheless, banks are clamoring for this business. What is even more amazing is that many of these "developers" have terribly low personal credit scores. Yet, they still manage to secure development financing in the high six-figure to low seven-figure range. To say the least, this indicates that credit is still extremely loose. At this point in time, there does not appear to be any slowdown in Oregon's housing-development market in spite of today's somewhat higher interest rates.
There is no doubt that a slowdown will occur. Of course, this will be a function of interest rates. It is not knowable as to when rates will rise dramatically enough to pop the housing bubble. I have no doubt that this day will come as the Fed's past monetary looseness will manifest itself in price inflation, as it already has in spite of the government's obvious manipulation of the CPI and the PPI. It is my opinion that Alan Greenspan is severely behind the curve and that long-term interest rates are going to increase markedly due to an inflation premium eventually being priced into long-term bonds. When this happens, many developers will be caught with a painful amount of unsold inventory (houses) and their lending institutions will end up sharing the pain with them, as may the taxpaying public should government bailouts, of banks and the GSEs, ensue.
To me, it seems inevitable that history will rhyme. Bresciani-Turroni's observations of Weimar Germany's economic implosion should give us a glimpse as to the United States' future. America's housing and stock bubbles will collapse whilst the prices of everyday necessities will explode. Social instability will increase and our liberty will decrease commensurately. This will not be an enjoyable episode and the responsibility will rest squarely on Alan Greenspan and the Federal Reserve's inflationary policies. Tragically, with America's rampant economic illiteracy, capitalism will be unjustly blamed and our march toward socialism will be greatly accelerated.
© 2004 "Double Eagle"
About the Author:
Double Eagle is the nom de plume for our surety bond specialist on the West Coast, who has linkages to the realty markets gig in his bond underwriting. He is a frequent essayist on www.lewrockwell.com as well as a few other financial sites. His favorite websites include www.lewrockwell.com, www.mises.org, www.gold-eagle.com, and www.hyperinflation.net.
Realty Reality Editor's Note:
A parallel essay on the smoke and mirror of housing holding up the economy may be found in our essay Ponzi and Electricty, part of the Blitzkrieg Essay Series. For a great dual authored essay on the GSEs and the black market economy, this great essay by Chris Sanders and Lady Catherine Austin Fitts, The negative return economy: a discourse on America's black budget, is a must read.
Buy others for news. Buy us for judgment.
According to the Halifax and Nationwide surveys of British housing prices, average house prices are inflating here in Britain at a 20% per annum annual clip. The rate of house price inflation has been accelerating steadily since the trough in the last bear market in 1991-92. The office of the Deputy Prime Minister John Prescott calculates another measure that is not increasing anything like as rapidly, but being based on completions of transactions rather than on mortgage approvals like the other two surveys tends to lag them. Yet a fourth measure, that of the Royal Institute of Chartered Surveyors, measures the balance of estate agents reporting higher prices. It peaked recently and is falling now, but has been positive for most of the last ten years.
There is basically nothing in the data to suggest as yet a peak in the housing "bubble." If the Halifax and Nationwide charts were securities, the technicians would be predicting new highs. Indeed, if the surveys are to be believed, the market bottomed from a correction late last year in the wake of the Bank of England's first cyclical rate hike. It has hiked a further three times this year and house prices just keep on inflating faster.
As in the US, the valuation of real estate is a supply-side phenomenon, which is to say that the appraisers, or surveyors as we call them, are not anxious to low ball their guess. Rather, being can-do people, they are anxious to make sure that nothing they do stands in the way of the bank making a loan and the buyer making a mistake. Being busy men of leisure as well, they are not inclined to find anything wrong with structures either, although it has been known that a sale can be held up until a thorough movie of the drains is made; by someone else of course, and at the buyer's expense.
Financing is not much of a problem, and while there may not be many of those 1% for three year deals that were out there a year ago, you can still re-mortgage your home for under 2%. Of course, the mortgage market in Britain being almost entirely floating rate, you pay through the nose after two or three years. Getting long term fixed rate money is not possible the way it is in the US, which may provide the answer to the most pressing question I can think of: what did the Queen have to say to Allen Greenspan when he received his knighthood in 2002? She may well have said don't let the masses have long-term fixed rates you dolt! Sir Allen left the Court in a hurry tugging his forelock, having been shown the way to hedge the massive systemic risk posed by the US GSEs who can't hedge their balance sheets. Having worked that problem out with the help of the Queen of Mortgage Finance he testified to Congress in February 2004 to the effect that it is the masses, preference for long term fixed rate mortgages that is the real cause of systemic risk posed by the GSEs balance sheets. Who says the Queen's not smart?
The truth I think is that the United States is following in the footsteps of the British, who some fifty-odd years ago began to de-industrialise and have just about completed the process of becoming a nation of gambling rentiers. In place of the factories that once made Britain the most powerful nation on earth there is the property market that provides entertainment for the workers if they can just get a foot on the ladder. This is becoming more and more difficult unless one inherits a house that they can then mortgage, since the increasing concentration of national income in the financial services industry and in the Southeast of England geographically has meant that local kids can't afford a home. Workers in London cannot afford homes there either, which explains the increasing crush of people on the underfunded and thoroughly stripped (in a financial sense) privatised train system, the price of tickets for which only go up while service only goes down. Stripping the national assets is a detail though, since if you are a good gambler you don't have to use the trains anyhow and can afford to pay $3 million for London digs next to your trading floor in the aptly named Isle of Dogs.
A few weeks ago, the governor of the Bank of England warned the house buying public that interest rates go up as well as down and that the rule of the market is caveat emptor. The following week he issued a similar weather warning to the leveraged hedge fund industry. Being a gentleman, I expect that he did this in good faith with the intent being to give everyone a chance t hedge. Which brings me to the topic of this essay, which so far I have assiduously avoided: in our little hamlet, we are gamblers all. Most of the houses here have been on the market in the last four years and most of them have traded. The last two were, however, withdrawn two or three months ago. Not a nibble, said the neighbours. Not even a look in from the tourists of other people's lives. Whose prices are going up, I wonder?
Editor, Realty Reality
Cracks in the Foundation?
Cruisin' in an Old Deuce...
The Columbia/Boone County Missouri Real Estate Gambling Casino
One of my favorite songs by Dean Martin is... Welcome to My World! -- cigarette and a John Daniels in hand... Won't you come on in? Ever since the Isle of Capri launched their latest gambling casino in Boonville, Cooper County Missouri, just 25 miles west of Columbia on I-70, the images of bankers throwing speculative money at the micro and macro markets of Boone County have danced in my head like the Sugar Plum Fairy from Tchaikovsky's Nutcracker Ballet. New housing starts, of which about 45% sell through the Columbia Board of Realtors reached an all time high in 2003 at about 1,276 units, with the second tier being made up of about 5-10% as builder direct sales. The remaining third tier are custom home constructions by individual owners. Guess what? We are on target for another 1,270+ new homes this year! Local lenders (there are about 140+) and national lenders appear impervious to no other notion that Columbia/Boone County and surrounding markets, with a labor force of about 89,000, give or take, and an unemployment rate generally under 2.3%, is a Recession -- Proof Mecca in the Universe. Hah! It has only been through interest rates kept at a false bottom to keep the GSE money pump going to Wall Street and to keep the DOW & S&P500 from plunging. The Federal Reserve uses housing to hold up the consumer as the US Economy, while the Working Group on Financial Markets at the NY FED (aka, the Plunge Protection Team) hold up the DOW and S&P500 -- all the while, the elitists ship our industries off-shore, gutting the total economy.
New Apartment Project Under Construction, West Broadway Corridor
The Columbia/Boone County Real Estate Gambling Casino really is some party, Dude! Got a couple of million FRNs you want to throw at the casino? Come on a My House, and build an apartment project! Let's Party!
The House That Shouldn't Be For Sale
When the neighbor up the street loses his job, it's a recession. When you lose yours and have to move to Omaha to find work, the move prevents your depression -- double entendre! This is my great next door neighbors' residence. Lovely home! It can be yours for $187,000 and change!
Interest rates at 45 year lows combined with MHDC state approved first time home buyer financing, as well as foundation and government home buying equity give away programs have fueled the entry level home market from $100,000 to $120,000 in new construction, and have helped to support values in used homes from $50,000 to $100,000. Yet the foreclosure notices in the Columbia Daily Tribune keep steady, and cross all price ranges even breaking $300,000 in residential values. Some party! It isn't quantum physics to know it is not if, but when the bough will break. Cracks in the Foundation? Nuclear quantum physics tells us the entry-level food chain supports the $160,000 to 400,000+ price range. Let's drop the Magical Mystery Tour delusion (The Beatles Album from 1967, Silly!) caused by Franklin Delano Raines at Fannie Mae and John Law, aka Mr. Greenspan, the greatest monetary charlatan since John Law. We shall forego detached single family housing and show you in my photo essay, the population explosion that the local Planned Parenthood on North Providence Road here in Columbia doesn't seem to be able to control: the "For Rent," "Leasing," "Space Available," population explosion! Grin! The motto is: Build It, and It Will Lease!" as a variant of "Build It, and It Will Sell.!" Other variants are, "New facility of XYZ Bank." -- "and on every street corner you hear.... silver bells?!" Ka-Ching... Ka-Ching... Ka-Ching... who's really making the money in real estate? Developers, or the Banks?
Duplex Explosion, or Implosion?
Give me a patch of ground in Columbia with R-2 (Duplex) Zoning, and I can cram a lot of XYZ Savings and Loan's speculative money near two new 400+ unit apartment projects on Old Business 63 -- with a 3rd coming on line across from the other, at a site cost of $1,675,000! Gee, I love out of town speculators, who have the propensity to throw money at my market.
And on every street corner a branch bank? Ka-Ching!
My Bride, Miss Paula Bear, says that one day we should consider living in one of the finely built commercial bank buildings that dot our landscape, as most of them have eye popping corner locations, such that we can impress all of our friends. I especially like the Callaway Bank on West Broadway, currently across the street from the new HyVee Grocery Store. Our local Wall Mart/Sam's Developer, has the second (of three total planned) Wal-Mart Super Center planned across the street at West Broadway and Fairview Avenue. Community United Methodist Church is across the street at Broadway and Park de Ville Drive. Paula Bear says we can convert the drive up canopy to a 12 car garage if we buy some lifts and add garage doors. How convenient to be able to walk to the liquor store with the best competitive prices, and walk to church on Sunday.
Let's see! I resprained my back in 2002 in the Spring and went to the Physical Therapy gurus on E. Broadway across the street from this rascal, which was for lease in 2002. Hummm.... Looks like 75% of the renovated lease space is still "available for lease."
Pay Day & Car Loans-- Ye Gad's,Gerome! The Moneychangers!
This one sits at the NW corner of Broadway and Providence Road. These rascals have multiplied like kitty kats "in heat" on a Hot Tin Roof! If folks can't make it from pay-day to pay-day or from pay-day to Sundown, even at 20% interest, I wouldn't loan money to these folks. Car Loan? -- most of these cars need work! This is absurd! These were not here in 1995.... All told, there's probably 30 or so of these moneychangers in our Recession Proof Temple� right here in Boone County Missouri. What did Jesus do with the moneychangers at the Temple? A very, wry grin.
Retail & Office is Hot! -- West Worley & Stadium Corridor -- K-Mart will always be K-Mart?
On Stadium Boulevard we have a Circuit City, Toys R Us, a new Best Buy and Hobby Lobby coming, and an established Michael's in a brand new building, all within one mile of each other. Talk about competition! The Best Buy and Hobby Lobby is replacing the K-Mart that left with its tail between its legs. Guess Sears didn't want this store, since Sears is in the Columbia Mall across the street to the west on Bernadette Drive!? K-Mart is being totally rehabbed and given a new billboard for identity for the National Credit Tenants. Whoppee! It's still going to be the K-Mart store that didn't make it. Did anybody ever hear of ruinous competition? Gee, I read about it once in a past life!
Sam's Club Corridor at East Broadway and U. S. 63
Do-Da Day Development (I think they wrote the song:
My, oh my what a wonderful day!
Plenty of sunshine heading my way
Mister Bluebird on my shoulder
It's the truth, it's actch'll
Ev'rything is satisfactch'll
Wonderful feeling, wonderful day!
From the Wonnnerful World of Disney!),
is putting up this stuff close to Sam's Club, the first Wal-Mart Super Center, and Lowe's... Good Luck! Mega Market which was the Sam's of now defunct local Grocer, Nowell's, which shut down three other stores two years ago is still sitting vacant south of Sam's Club. We have two other Wal-Mart Super Centers on Target, Target you're toast like K-Mart, Baby!
Multiple Purchases, Multiple Loans - one stop shopping?
Here we can get a taco tico and some enchiladas, our dry cleaning done, and get a loan at Beneficial, flip it to CitiBank, and take out a home equity loan at the other outfit. Can we use the same appraiser? And we don't have to drive all over town! Is the Appraiser going to drive by, or just charge us $300 for an AVM from the desk? As long as the value is pumped, I don't care about the $300.
Vacant Electric Meter Maid, or Ben Franklin and the Vacuum Cleaner
Electricity can be Greased Lightening (from Grease, the musical) and can, as my little brother John Thomas (JT for short) exclaimed to Mom Alice when he was about 4 years old...."Sarah, plugged the vacuum cleaner in, and it shocked the hell out of her!" I have news for some of these lenders and developers.... missing electric meters... could just shock the whazoo out of their so-called investment built on speculative construction funding?! I have been calculating on my Hewlett Packard, 12C Financial Calculator, just how many vacant electric meters I need in the market to make an offer to Callaway Bank for the SW Corner of W. Broadway and Park de Ville Drive, so I don't have to drive to church or the liquor store�. Grin! I want to buy it for 25 cents on the worthless FRN. Time value of money and all, I might have to be patient until Greenspan can work his magic at the prime directive of total banking consolidation in the Mid-West? A larger Grin!
S. Columbia, South Providence Road, Nifong Boulevard, & Grindstone Parkway Corridors
Man, this is where it's hot. 1, 2, 3, 4, 5 banks or S&Ls within .45 caliber distance of one another, and within 1.5 miles (30-06 distance for you deer hunters!), two more! Want some lease space here? In the NE corner of the Nifong/Grindstone/S. Providence intersection there is a vacant Nowell's grocery store.
Formerly Nowell's Grocery, South Columbia
Hummm.... Been vacant two years. Perhaps the developer/owner should have moved Best Buy or Hobby Lobby into this store instead of K-Mart? There's no Circuit City, Toys R Us, or Michael's in this corridor. It wasn't my decision!
The Restaurant Business
Let's see here. Smokehouse Bar & Grille is toast. Denny's melted down. Perkins Cake & Whatever just shut the door, and both of the Schlotzsky's at a million dollar investment each are now Toastskys, Too. Perhaps Miss Paula Bear and I should consider a restaurant building. Nah, no drive up canopy for the garage!
Conclusionary Comments or Just Saving Wear & Tear on Your Deuce and a Quarter!
Mid-West College Towns like Columbia are pretty great places to live. Ames, Norman, Stillwater, Manhattan, Boulder, Lawrence, and even Lincoln, to name a few in the Big 12 (formerly the Big 8). Columbia's recession proof dynamics seems resilient enough given the status quo. Cracks in the Foundation? Nah! Local developers and lenders don't understand Kondratiev, Austrian Economics, Histories of Markets, the application of Technical Analysis to Real Estate and the tea reading of stock charts, nor is there a real understanding, of the inner workings and hidden mechanisms of the banking cartel and the Federal Reserve, which urges development at increased debt through the destruction of the money system built -- of legal tender fiat paper money with pictures of dead Presidents, Mr. Franklin, and Mr. Hamilton printed on them. It's kinda like the movie Where Eagles Dare -- when they blow up the dam.... when the charge goes off, nothing happens. Clint Eastwood and Quint (aka, Robert Shaw) have time to get the flock out of Dodge.... it just takes a few cracks and a little bit of time ... before All Hell Breaks Lose... which then, becomes Every Which Way But Loose!
So far, local lenders have everyone duped that Folks (everyone else) are making money in real estate and realty development. Let's follow the money -- Ka-Ching! When the music stops, Miss Paula Bear and I plan on buying a nice corner lot bank building across from the HyVee and the new Wal-Mart Super Center, as we will be able to buy it for pennies on the dollar under the prime directive -- and our Prestigious new home will be right across the street from Community United Methodist Church. I will be able to save wear and tear on my 1970 Deuce and a Quarter -- not having to drive to church on Sunday, or the liquor store. I love it when a plan.... comes together!
"Sorry, We Are Closed,"
Schlotzsky's, South Columbia
© 2004 Gale Bullock
aka Ole Bear, Editor, Realty Reality
Editorial Archive on FSO
Market Top or A New Paradigm?
Are there any signs of weakness or cracks in your local micro realty market? If so, what are they, and what do you see as the ramifications of these cracks in the foundation? If there are no weaknesses, how will your market hold up as mortgage interest rates rise?
Leave this hypocritical prating about the masses. Masses are rude, lame, unmade, pernicious in their demands and influence, and need not to be flattered, but to be schooled. I wish not to concede anything to them, but to tame, drill, divide, and break them up, and draw individuals out of them.
~ Ralph Waldo Emerson 1803-1882, American Poet, Essayist
I would truly love to say that I see obvious cracks all over the place, because the real estate market looks like it is on a very strong hallucinogenic drug. However there are only subtle signs that not everything is well and these signs usually precede a severe correction. A slight increase in the number of people defaulting on their mortgages, an increase in the level of tensions as some people who took out ARMS 1-3 years ago begin to feel the effects of increased interest rates in their monthly payments. One huge negative sign is that everyone is convinced this is the time to put all their money into real estate; everyone is either renovating or extending their homes.
Otherwise the boom is in full swing. More and more individuals are tearing down their houses to repair them or extend just because the Joneses are doing so and because real estate prices can only go up right. I cannot go down any block without seeing some sort of massive renovation project in the works. One has to remember that most of these projects cost in excess of 70K. The proverbial theme is real estate is the place to be in and the Euphoria is slowly but surely getting to the frenzied stage. It is very hard to predict when the bottom will fall off or when the exact top will occur. I do know that when the market starts to tank it will plunge like a falling dagger. I remember that the during the first gulf war real estate prices in my area plunged from 40-50K overnight, astute investors were able to get some very nice deals.
Though I don't see any significant cracks in my area, rising interest rates will eventually be the straw that breaks the camels back. Many individuals are taking on 3-5 years ARMS and then comparing those payments to their current monthly rent payments. This is a really dangerous way of deciding whether you should buy a house or not. After 3-5 years those ARMS could change your monthly payment by several hundred dollars and put you really into a hole. In addition when you Rent you always have the option of moving one level down in a hurry.
I spent 3 days driving around, looking and talking to the individuals who moved in or to owners whose homes were undergoing extensive renovations in my neighborhood. I found out the following:
- Most new owners were spending a considerable amount of money renovating their homes. So not only did they have to pay an average of approx 450K for a matchbox, but now they had to spend any where from 30k-150K renovating their place.
- Existing homeowners are now jumping on the renovation or home extension bandwagon. Many of them had decided it was time to renovate their homes after their neighbors informed them how much their homes had appreciated after the renovations.
- Almost every block had between 1-3 homes that were undergoing extensive renovation.
- Those who had not started renovating yet felt that they should get into it because ones investment paid of almost immediately, unlike ones stock investments.
- More individuals felt that real estate was a far superior investment than investing in the stock market and many were actually putting less money in the market.
It becomes obvious that something is out of sync as the masses are famous for getting in very close to the top and always selling at or close to the bottom. There are many signs to indicate that we are at or very close to a top.
- We have just had one of supposedly many future interest rate hikes. No matter what the penguins say, higher interest rates do not bode well for future of the real estate market. One usually buys houses when the Feds have just started lowering rates and not when they have just started to increase them.
- The fact that all these creative financing products are being pumped out to mask rising rates is another long term negative. For example Interest only loans for a period of 3-9 years. These types of loans end up masking your true monthly payments and also enable individuals to qualify for homes they might not have been able to qualify if a regular mortgage was taken out. At the end of the term the homeowner usually refinances; everything is fine as long as the home has not lost value, the homeowner has not lost his job and or interest rates have not risen significantly. Anyone of those factors has the potential to lead to a huge increase in the rate foreclosures, which is exactly what happened when the Great Depression hit.
The following statement indicates that Greenspan is more than ready to increase rates faster if and when it becomes necessary:
- The Federal Reserve is ready to raise interest rates more quickly than its current "measured" pace if inflation suddenly worsens, chairman Alan Greenspan said Tuesday.
- If the economy shows signs of exhibiting significant inflationary pressures, ... if we are to maintain the mandate which the Congress has given us to create price stability ... we will do what is required to achieve that objective," he said. [Link]
The situation in my area appears to be fine, the key word being �appears�. However we have a feeding frenzy type situation where everyone is either trying to buy a house now and or spending excessive sums of money in renovating or extending their existing homes. History has proven that the masses always seem to jump onto a good thing just when it is about to become a bad thing. The best time to buy a house or extend/renovate one was from 2000-2002; the optimum period has passed and now the wise investor should be on the sideline.
I have spoken to some rather astute individuals that work in the banking, accounting and hi tech sectors and they feel priced out of the market even though they make between 80-120K a year. The sad part is that many of the new homebuyers are actually making a lot less and buying homes in areas that these astute individuals feel are simply to over priced. What is helping these people buy homes they might not have been able to afford or qualify for, are the slew of creative financing programs that are being aggressively marketed by banks and mortgage brokers. In the end everyone cannot make money for the prices to rise there has to be a constant supply of new buyers and with interest rates on the rise; the number of new buyers can only but decrease. Trying to time the exact top is madness but we all know that there are periods when one buys, and there are periods when one sells; currently we are in the time to sell period and not the time to buy period. For those that have not bought a new house, the best thing you could do is sit on the sideline and watch how this circus show unfolds. When the real estate market starts to correct it won't be a pretty sight as it is very illiquid in comparison to the stock market.
He that is useless on top of the ground; he ought to be under it, inspiring the cabbages.
Mark Twain 1835-1910, American Humorist, Writer