Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).
In a particularly sobering outlook for the economy and housing, Mark Whitehouse makes some interesting points on the argument for a hard landing in housing [WSJ]. The “aftermath” of a soft landing if you will. In other words, what happens next?
The boom has depended heavily on the upbeat psychology of consumers, builders and lenders. As moods swing, the landing could be very hard indeed.
“We could be underestimating the dark side,” says Mark Zandi, chief U.S. economist at Moody’s Economy.com and among the first to seek to quantify the housing boom’s broader effects. “Euphoria could turn into abject pessimism very quickly.”
The argument for this greater pessimistic view point is the idea that we have no prior track record of similar behavior:
- Biggest boom on record. – _House prices are still more than twice the level of 1991, when the boom began. Even after the recent decline, June’s rate of home sales is 40% above the 20-year average._
- Flood of capital – an unprecedented flood of cash into U.S. capital markets fueled the boom. Global demand for U.S. mortgage bonds, competition among big national lenders and the advent of exotic loans have made it easier than ever to borrow money to buy a house — and to turn rising home values into cash.
Which brings to mind the question: How will the consumer react?
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