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Monday, September 29, 2008
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13 comments:
here's a recent article on Yahoo! RE page: Renting Makes More Financial Sense Than Homeownership. near the bottom of the 'Questions/Objections' section the author says "Strong demand for houses keeps my rent cheap.
I always thought it's the other way around - high demand for houses keeps rent high. Anyone here familiar with the reasoning of that statement?
Strong demand for houses implies that there is weak demand for rentals, hence, cheap rent.
House rejects bailout; DOW off 700 pts.
Forget housing. I'm thinking tent now.
Washington to Wall Street: you made it, you fix it.
What does this mean for us. I see no upside for RE in the next six months as the credit markets have to unclog themselves. I think there will be another rescue package, but this time some sort of workout plan for underwater homeowners is going to be necessary to provide the votes. There were 96 Democrats voting against this package, and the only way to get some of them to come along will be to help distressed homeowners.
Well, I guess we will get to see just how bad things really are.
These guys placed their bets and made a lot of money for a long time. It looks like they are going to have a rough time for the foreseeable future.
The real question is how this affects main street. Despite all the dire talk, this whole crisis has been pretty anti-climatic for the average person. Mortgages are still cheap and widely available. Credit cards are everywhere, and nobody will give me a half decent rate for a CD.
If these banks are so desperate for cash why don't they do the traditional thing and offer a higher interest rate?
"NoVAwatcher said...
Strong demand for houses implies that there is weak demand for rentals, hence, cheap rent."
However in Arlington, what we're seeing in the rental market is quite the opposite: rent went up along with property values during the boom years; and only very recently the rental market has seen some softening/decline because houses are sitting.
>The real question is how this affects main street. <
Where do you start? Pension funds across the land are now bleeding, credit markets are frozen, and business spending across the board will decline. By close of Q4, without a bail, it's going to be quite horrible.
I don't see why this is horrible, but they will probably still pass some POS bailout, kob.
It won't prop up home prices though.
Constituents calling in and railing against this bill right before election are what killed it.
When House Members get that many calls on one side of an issue i.e. furious about this bailout - that is when Congressmen actually do what the voters want.
My god, it's beautiful.
Brutal, and sure to be painful; but beautiful.
Edward Allen: "There were 96 Democrats voting against this package, and the only way to get some of them to come along will be to help distressed homeowners."
Even with such opposition from Democrats, if enough Republicans turn around, they may be able to pass another version later this week.
While people were focused on this bailout, I think FDIC gave Citi an extremely sweet deal on the Wachovia deal, limiting Citi's losses to $30--42 billion. That Wachovia had to sell itself to Citi for only $2+ b shows how much Banks are hiding and how little the public and the markets know.
There were 141 Republicans and 95 Democrats against the bill, so all it needs is to persuade 10 to switch.
It is theoretically possible to reconsider the bill if one of the nay-sayers asks for it, but I think lawmakers will come back Thursday determined to make changes in it.
The other interesting point that should be of interest to this blog is how much power has transferred from New York to Washington in this economic turmoil. That should eventually make for a very buoyant market here, IMHO.
"Where do you start? Pension funds across the land are now bleeding, credit markets are frozen, and business spending across the board will decline. By close of Q4, without a bail, it's going to be quite horrible."
I don't know about that, things may become bad, but so far things have been pretty much business as usual. I expect this to be a pretty bad recession, we have been overdue for a long time, but I think the only people that need to be terrified are executives that built businesses around unbelievably cheap borrowed money with no strings attached.
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