Federal Reserve: No recovery without housing market recovery

chewmylegoff

HAMISH_MCTAVISH wrote: »

Yeah..... that's worked out really well for the Irish.:cool:

Down 50% and their economy was flushed down the toilet.

I should think that if house prices fell 50% in nominal terms nationwide in the near future, pretty much every bank would go bust. That would be helpful for the envisaged influx of buyers....not.

Road_Hog

Generali wrote: »

There are groups of investors buying up huge areas of places like Detroit and making foreclosed homes into something worth living in. Companies are starting to move back to the 'rust belt' as they can find cheap land and cheap labour (labor?). People will work for less in places like Detroit as they can find very affordable housing.

Oh Jeez, have you been to Detroit? I think not. It isn't somewhere that you'd want to go, it really is a cesspit. I'm struggling to convey how bad it is. There is a reason that land/property is so cheap there. It looks like a city that has barely survived an atomic bomb attack.

Really, Detroit, it's different to everywhere else. It's also become America's number one Islamic city as well, just to make it worse.

ILW

HAMISH_MCTAVISH wrote: »

Yeah..... that's worked out really well for the Irish. :cool:

Where are their legions of first time buyers spending vast amounts of money buying white goods, furniture, garden products etc?

Oh wait.... That's right. They all left, thanks to the 50% falls in house prices destroying their economy.

http://theweek.com/article/index/212558/irelands-exodus-by-the-numbers

Their prices are down 50%, and their economy was flushed down the toilet.

Possibly the 400% rise in prices over the previous decade could have been a factor in the collapse.

SecondLegDownIsTheBigOne

This is pi$$ing in the wind by the Fed. They haven't got the faintest clue what to do. I suspect that at their latest meeting, they furballed a lot of ideas, stuck them on the wheel of fortune, gave it a spin and then called Mr President with their advice. They killed the golden goose; stuffing it and begging it to lay is their next gambit.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Wrong again.

It's the situation the global financial crisis has led us into, as a result of American sub-prime slime being fraudulently mis-sold as AAA investments.

But you just stated that house prices falls are what causes a recession? Now you are suggesting it's the financial crisis which has led us here?

Bit mixed up? Hence why i feel sorry for you!

RenovationMan

mcc100 wrote: »

I agree, but a housing market recovery does not necessarily mean an increase in house prices.

LOL, what an idiot! :rotfl::rotfl::rotfl:

ILW

RenovationMan wrote: »

LOL, what an idiot! :rotfl::rotfl::rotfl:

Why?

I would have thought a recovery could be defined as an increase in activity, not necessarily an increase in prices.

Unless for example you think there has been no increase in the mobile phone market in the last 20 years.

HAMISH_MCTAVISH

ILW wrote: »

I would have thought a recovery could be defined as an increase in activity, not necessarily an increase in prices.
.

I see.

And do you think that would work well for other asset classes too?

I can see the conversation now.....

Broker--"Don't worry Mr ILW, your shares are recovering nicely after the stock market crash."

ILW-- "Really? Tell me more."

Broker-- "Well, the price hasn't recovered at all, but volumes are through the roof!!!"

ILW --

Jimmy_31

HAMISH_MCTAVISH wrote: »

http://www.bloomberg.com/news/2012-01-06/fed-policy-makers-urge-more-housing-aid-while-split-on-central-bank-s-role.html

Well it seems the Americans have at last grasped the basic fact that there can be no sustainable economic recovery without a housing market recovery.

Shame they're sitting on a 13% over-supply..... A problem that the UK thankfully doesn't have, hence why our prices are just 10% below peak and their prices are now nearly 40% below peak.

Much like in Ireland, for large parts of the US (especially areas like Detroit) the only solution will be a Bulldozer.

The housing market is on its ar5e where i live.

This is due to lots and lots of people losing their jobs.

No jobs = lower house prices.

ILW

HAMISH_MCTAVISH wrote: »

I see.

And do you think that would work well for other asset classes too?

I can see the conversation now.....

Broker--"Don't worry Mr ILW, your shares are recovering nicely after the stock market crash."

ILW-- "Really? Tell me more."

Broker-- "Well, the price hasn't recovered at all, but volumes are through the roof!!!"

ILW --

Depends if you class housing purely as an asset and ignore all other considerations. Some people actually buy houses primarily as a home rather than an investment.