by Bob Stokes
[Editor’s Note: The text version of the story is below.]
The convergence of the internet, faster computers and a rip-roaring bull market gave rise to the 1990s stock market day-trading phenomenon.
It was all about the hope of getting rich quick.
The same psychology was at work with “house flipping” when the housing boom was at its height in 2005-2006.
Our January 2006 Elliott Wave Financial Forecast saw the writing on the wall and said:
We conclude that the latest real estate bubble has resulted from the easiest money environment in history.
U.S. homes prices peaked just six months later. A historic tailspin followed.
But old habits die hard. Even as short-term real estate investors had to re-calibrate after the big housing bust, the ensuing bull market of the past seven years has re-ignited the desire to “flip.” What’s more, this time around, more avenues are open for flippers seeking loans (Bloomberg, Sept. 21, 2016):
House-Flippers Turn to the Crowd for Quick Cash
Our October 2016 Elliott Wave Financial Forecast elaborated:
Flippers and property developers now get “quick financing” from Internet-lending platforms, such as RealtyShares, LendingHome, PeerStreet and Patch of the Land. … This is nothing but the “day-trading” mania of 1999 in new clothing. … Since these digital lending platforms essentially replace bankers with anonymous lenders, they necessarily represent a slackening of underwriting standards.
But, when a bull market is raging, it’s easy to ignore the warning signs, just like in 2006.
Indeed, returning to the January 2006 Financial Forecast, the publication showed this chart and said:
This chart of housing affordability shows the shaky foundation on which the final phase of the credit bubble rests. Just since 2002, the percentage of homes that families earning the median income can afford has declined from more than 65% to 43%. Every major real estate bust begins with a sudden realization that lending standards have slipped. Lax mortgage underwriting standards certainly attests to similar conditions in the present case.
And, now, according to the Wall Street Journal (Nov. 29, 2016):
U.S. home prices have climbed back above the record reached more than a decade ago.
A Jan. 3, 2017 Los Angeles Times headline reads:
California’s housing affordability problems ‘as bad as they’ve ever been in the state’s history,’ housing director says.
In our view, the implications are clear.
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3 thoughts on “U.S. Housing Market Shows Eerie Similarities To Pre-"Mortgage Meltdown" Bubble Days”
I got the popcorn! Gun’ be a HELL of a show!
THE ‘DEPLORABLES’ ELECTED TRUMP, NOW ENURE HE RE-INSTALLS
‘GRAHAM-STEAGALL’ & JAILS C-LEVEL EXECS. AT THE 12 PRIVATE FED RESERVE BANKS RATHER THAN JUST FINE THEM.
The friends at the Federal Reserve just print out their fines for payment.
Yeah, I can afford an flat in lets say in Amsterdam, or Rome, but I will not buy anything, because its way to exepemcive and the costs have inflated to levels I believed where only in our rotten state Norway, where legalized plundering is the mantra this days camouflaged as liberalism f….. politics.
Another word for robbing people blind, with the so called MSM whom drools along the scums fairy tales called “explanations”.
Witch I conclude to be an marked so hyped its an joke.
Witch again means I will probably never bother to invest into anything new, or have more houses, witch in it self isnt the problem but all the taxes that follows, I am not an milliner, just an ordinary man with an ordinary salary, but the difference is that I have almost no debt, except for my 6 year old car, and this Teslas, is even worse hyped shit to an price I find to be downright idiotically expensive.
I dont even bother to buy an new TV, the old clunker works, and my wife refuses to watch HD since it shows how bad the makeups are and all the “moons” covered in real time, so the heads covering spins/hovers in real time, hehe, the spec. effects are so bad its funny to watch.
All in all, I think I smoke it up, much more invigorating that buying some stupid dick enhancer, and I invest it more into the coming generation, I have what I need, the Younger ones is soaked in debt, I can imagine how they can be “lifting” anything since there is an burden on them that makes the future uncertain to witch extent they ever will be able to purchase what WE where from my own back-ground, when jobs where plenty, that world is gone, and part time solves nothing, god how f…. stupid are our rotten gov. and the so called “eCONmic policy’s” induced.
I am not f….. our children are f….
WE have to do something, otherwise nothing will be better.