Posted by phil fernandez on February 26, 2002 at 19:56:31:
I’ve been walking around in Vermont the last week with just a long sleeve shirt. No jacket. No sweater, no gloves. Where’s winter.
Where’s all the money coming from? - Posted by J. C. Amberger
Posted by J. C. Amberger on February 26, 2002 at 17:48:58:
On the surface, it doesn’t make much sense: Sales of existing homes in the United States AGAIN set a record this past January, if you believe the National Association of Realtors. Existing homes sales jumped 16.2% to an annual rate of 6.04 million units, following December’s 5.2-million-unit pace.
Here’s a reasonable question: How come that in what has been touted as the worst recession in a decade… with record numbers of unemployment filings… lousy earnings outlooks for just about any industry… and first cracks showing in commercial real estate and new development… how come people not only buy more houses than ever, but at record prices, too?
Sure, interest rates are low. But not that much lower than in, say, 1994. That’s because demand for mortgages is so enormous that lenders really don’t have to make the effort to pass those Greenspan-induced savings on to the customer.
So where is the money coming from? Bubble millionaires, after all, are back to being nine-to-five working stiffs again. Stock options would amount to enough for the first quarterly water bill. Leaves savings. Which, according to conventional wisdom, supposedly are nonexistent among Americans.
***I think there are three factors that have kept up demand. They all orbit around unique U.S. demographics. Take, for example:
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Delayed maturity. That large block of Americans born between 1960 and 1970 is finally coming to grips with the fact that not all is fun and games and career. With biological clocks ticking, even the prissiest princesses are settling for second best, as all but the most boorish Bud Lite boobs contemplate switching their bachelor condo for suburban family bliss. (In our area, realtors are now advertising for potential sellers, not buyers!)
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Inheritance money. Unlike anywhere else in the world, you need only a couple of thousand bucks for a down payment to become an American homeowner. With increasing numbers of elderly Americans passing away, even small chunks of their hard-earned money open the door to homeownership to people who think saving is buying a pair of alligator loafers at half price.
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Back to the 'burbs. Aging baby boomers who retired to the Dee-luxe Apartment in the Sky are noticing that city life still ain’t all it’s cracked up to be… and that Thanksgiving with the family now means turning the living room into an Afghan refugee camp. So it’s back to the suburbs. After all, that’s where the kids live…
What do I have to prove all this? Absolutely nothing. Except for this: last weekend, as I was scrubbing the floor in my old house’s basement, three youngish couples, one with kids, stopped to look at the house. And it’s not even on the market yet…
Could It Be… - Posted by Scott Ashbaugh (MI)
Posted by Scott Ashbaugh (MI) on February 27, 2002 at 13:15:39:
I have to agree with Steve-DC’s comments. Where I work, (worked, laid off now) 9-11 REALLY shocked everyone. I heard a lot of comments that the people killed both on the planes and in the buildings were working people just like us at work; “Gotta get ready for this meeting!” “Where’s that report that is overdue?” “Need to get this overdue report done myself!” And then all at once, they had to have been hit with the realization that, this is it. It’s all over, and what everyone in my office was saying was what is it all for?!?! I’ve seen and heard many talking about cutting back on the hours, cutting back on their own frivilous spending, not pushing for that next promotion, “who cares if I really impress management”, I need to re-focus on my family, my loved ones, my hobbies, thongs that I care about. Those things I keep telling myself, someday, someday I can afford it, someday I’ll have time. We don’t live to work, we work to achieve some reasonable quality of life. I have been even more re-focused on “getting out of the rat-race” so that I can enjoy my children, my hobbies, and not be a member anymore of the “affluent poor”. Those who are making the 6-figures plus and still just as broke, if not more so, than the blue colar person, or the average factory worker.
Could It Be;
- Pride in owning something together with your family.
- Shifting “out of balance” priorities back to where they should be.
- The rat race is filled with,… well, RATS.
- I want to hang an American Flag on the front porch of MY OWN HOME.
- I don’t know any of, or have any, real NEIGHBORS.
- FREEDOM - AND MY OWN SPACE!!!
- The corporation has had me long enough, now I realize that nothing is certain, nothing is guaranteed, and I need to focus on things that really matter and that will last, my family.
- And Yeah, low interest rates, ease of financing, and a slowed down economy. : )
Just a thought…
My opinion. - Posted by Steve-DC
Posted by Steve-DC on February 27, 2002 at 08:42:03:
“How come that in what has been touted as the worst recession in a decade… with record numbers of unemployment filings… lousy earnings outlooks for just about any industry… and first cracks showing in commercial real estate and new development… how come people not only buy more houses than ever, but at record prices, too?”
People are buying more houses as a response to the insecurity felt after September 11th.
Buying a house is not an impulse buy. It reflects the ideals of family, security, etc.
A rise in home sales makes sense too me, in the wake of September 11th, as does an increase in marriages, a decrease in divorce, etc.
-Steve
Re: Where’s all the money coming from? - Posted by mrwi
Posted by mrwi on February 26, 2002 at 19:26:45:
The question is though, is this a house of cards that will all come crashing down? I keep hearing reports on how bankruptcy and foreclosures on the rise. I agree that the mild weather has definately kept the “buying season” open, but WHEN is this all going to correct it self is the MILLION DOLLAR question! What goes up must come down as the old saying goes. I guess everyone is kind of waiting for the other shoe to drop. When and if it does it should be interesting to see how far it drops!
Also, the Gov’t is pushing home ownership… - Posted by Carmen_FL
Posted by Carmen_FL on February 26, 2002 at 19:08:09:
at least here in Florida, i’m getting a LOT of people who are getting grants/loans to buy a house - there seems to be more money than there are people. With some people getting $10-$15k or more, which they don’t have to pay back if they keep the house a certain number of years, it makes it easy to own and quite attractive - built-in equity.
The cities are the ones pushing most of the programs, but the county and state are also being proactive - the “first time homebuyers” classes are CHOCK FULL - I do a presentation in front of at least 50 people every month, and that’s just me, there’s many other organizations doing the same - and, mostly, with recent immigrants to this country who want a piece of the American Dream…
The requirements also don’t seem as stringent - there seems to be a loan for everyone, even if they had a bankruptcy/foreclosure last week, it seems. The mortgage brokers seem to be more aggressively seeking these people, and the internet/advertising is pushing these “not-so-great credit” loans as well.
Re: Where’s all the money coming from? - Posted by di(WI)
Posted by di(WI) on February 26, 2002 at 18:54:24:
I believe it’s due to a combination of the low interest rates AND easier qualifying for mortgages, both for the buyers income and the amount of the appraisals. Add in the internet mortgage brokers, the easing of bank regulations, and the huge increase in funds released by the Fed after 9-11 and it really starts to make sense.
just curious… - Posted by janice
Posted by janice on February 26, 2002 at 18:53:33:
Where is the sale on those alligator loafers?
Re: Where’s all the money coming from? - Posted by Joe C. (AR)
Posted by Joe C. (AR) on February 26, 2002 at 18:51:42:
It may be that there are not many other attractive investments right now. Stocks market is shakey; savings rates are low. Housing prices are stable with growth potential and mortgages are easy to get.
Just my .02
Joe C. (AR)
Re: It may be as simple as… - Posted by GregNY
Posted by GregNY on February 26, 2002 at 18:22:03:
…the weather. Here in my neck of the woods, there has
only been a few days that you really needed to bundle
up. We normally would have about 125 inches of snow on
the season about now. We only have 12 inches for the
season. Its like this in a lot of places, a very mild
winter. Realtors are unusally busy for this time of
year. We are all blaming it on the weather.
Just a thought,
GregNY
Re: Where’s all the money coming from? - Posted by David Krulac
Posted by David Krulac on February 26, 2002 at 18:14:45:
I agree that it could be surprising that existing home sales were so high.
But, interest rates are very low. i settled a place for 5.875% fixed. In 30 years of getting mortgages I never got one below 6% fixed before.
also the Fed rates are short term and mortgages are long term there is no direct coorelation between fed rate and mortgage rates.
You’re right that the boomer generation is the andwill be the benficiary of the greatest inheritance in history. I myself will see none of that, I got a watch and ring as my total inheritance. but lots of other people have/will be getting a “piece of the pie”.
Unemployment has been worse since 9-11, and the prime house buying time is Feb through June.
David Krulac
real estate is like Big K… - Posted by David Krulac
Posted by David Krulac on February 26, 2002 at 19:36:05:
the blue light is always on!
David Krulac