Krugman; The Housing Bust

[edhopper]

http://select.nytimes.com/2006/08/25/opinion/25krugman.html?hp

It's times select. But basically he is saying what has become more obvious to those who have been looking at the Housing Bubble of the last few years.
It is popping and will take the economy down with it.


I expect home prices will fall 40% to 70% by the time this is over.

[Nozebro]

1. That could be good news. Lower prices makes homes more affordable.

nt

[AndyA]

2. Good for people looking to buy, bad for those who bought to flip

and now can't sell. But most of them should have seen this coming. I'm all for home ownership, at reasonable prices. This is a good thing and a bad thing at the same time. Good for people trying to get their first home or move up to a bigger one, and bad for the Republicans as people who are trying to sell realize they can't and/or wind up with huge payments due to interest rates going up because of our poor leadership in this GOP-controlled country.

[Nozebro]

4. Good thinking. How'd you figure that out? EOM

nt

[AndyA]

5. I'm not a Republican, so I have the ability to think for myself,

investigate, and observe without being addicted to Kool Aid.

Unlike Bush, who is incurious and has a communication problem, among others. :rofl:

[MannyGoldstein]

3. Down 25% in My Neighborhood

I live in a reasonably upscale neighborhood - Newton MA. Very safe, amazing school system, borders Boston.

A fair number of homes have been for sale for as long as almost a year at this point - nothing has sold in the last year for less than a 25% reduction off of its asking price.

Pretty shocking stuff.

[FourScore]

6. I can't access the article.

Can you give a synopsis of what Krugman says? I'm very interested.

[truth2power]

10. Here's a link to the article on another site...

http://economistsview.typepad.com/economistsview/2006/08/paul_krugman_ho_1.html

<snip>

"Bubble, bubble, Toll’s in trouble. This week, Toll Brothers, the nation’s premier builder of McMansions, announced that sales were way off, profits were down, and the company was walking away from already-purchased options on land for future development."

"Toll’s announcement was one of many indications that the long-feared housing bust has arrived. Home sales are down sharply; home prices ... are now falling in much of the country. The inventory of unsold existing homes is at a 13-year high; builders’ confidence is at a 15-year low."

more...

[The_Casual_Observer]

7. Investors will just invest in something else instead.

One can only hope it will be in renewable energy technologies, I'm probably dreaming.

[Demeter]

8. The Housing Bubble Has Moved On to Oil and Gas

NPR reported that pension funds and other large investors were buying oil futures for no-risk, guaranteed 14% profits, and one of the experts opined that shaking out such people would bring the price of crude down by $20 per barrel. Speculation could be cured by investing in real things: taxes for example....

[bigscott]

9. not sure

how anyone could think this is good - if you own a home it sucks that it is not appreciating at all - or is in fact going down dramatically. if you bought to flip, you're screwed (no symapthy from me on that one) BUT even if you want to buy, why would you buy something NOW if you THINK it might go down in price? Even if you think it is reasonably priced, how many of you would not wait just a little longer to see if it goes down even MORE? Just gambling in a different direction

[marmar]

11. Humpty Dumpty (as in the U.S. economy) is about to have his fall...

Let's hope someone can put him together again.

[barb162]

12. I think the places that have had huge increases in prices will

drop a lot and those areas that have gradual increases will have a smaller decline