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Explain this housing bounce to me, please?

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November 23, 2009 – Comments (2)

So wait, the government throws a bunch of money at homebuyers to get them to buy houses at inflated prices. They sort of do for months, and then, when it appears the free money might end, they engage in a little panic buying to get that free money.

And this surprises Mr. Market? And this convinces Mr. Market that an bump built on market-distoring taxpayer-funded handouts means a sustainable... a sustainable what, exactly?

Sj

2 Comments – Post Your Own

#1) On November 23, 2009 at 12:18 PM, davejh23 (< 20) wrote:

I believe the jump in sales as the tax credit neared expiration was expected by most analysts.  The drop-off in new construction was also expected.  From everything I've read, most analysts (even the NAR) are still expecting sales to dip through the winter (even with the extended credit) and to surge in the Spring as the credit nears expiration again.  Most are expecting prices to fall up to another 10% by the Spring also.  I think it will be a suprise to many analysts as sales fall through the typically strong Summer months.  If mortgage rates jump any time soon, housing is going to be crushed.  Foreclosures in my area are already selling below the cost of construction.

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#2) On November 23, 2009 at 12:21 PM, davejh23 (< 20) wrote:

So...Mr. Market is dead.  Either the jump in the market has nothing to do with the housing report, or the market is not forward looking at all.

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