Weekly Roundup – Have We Hit a Housing Bottom, or is a Double Dip Inevitable?

A while back we shared ideas about the market’s direction. The consensus was that none of us knows where the market is headed, and a few of us don’t even care (to the extent we are long with nearly all investment positions). But what about the housing market?

Recent data appears to be a mixed bag. Home sales were up over the last month, but that period included what I believe amounts to artificial demand in the form of a home buyer tax credit. The problem with artificial demand is when it comes to an end, and if other external factors haven’t improved, you risk seeing even worse problems than if no stimulative action had been taken to begin with.

The Frugal Roundup

How Quickly Wants Can Turn to Needs. Baker talks about how he went from living in a tent to now living in a three bedroom house. (@Get Rich Slowly)

Getting Things Done: A New Practice For a New Reality. Trent gives some great advice on how he handles multiple hats. (@The Simple Dollar)

30 Ways to Live a Life of Excellence. Enjoy this great motivation post. (@Marc and Angel)

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Comments

  1. I think we are now skimming the bottom of the market and everyone knows that when you hit bottom there is no way to go but up. I believe we will begin to recover (i have to believe, being a real estate investor). Will we ever get back to the values that we saw just a few years ago before the bubble burst, maybe.

    We humans tend to have a short memory span and when and IF the whole economy starts to recover, housing will too. We will go back to what we are used to, the over-consumption, the waste, the stress of long working hours. All that and more will begin to drive the values once again back in the right direction. We will start running in a full sprint marathon only in time to once again trip over one of our own shoelaces and fall flat on our faces.

  2. I think the two things (the stock market and the housing market) are connected. People don’t buy houses when their retirement portfolios are wiped out.

    I think that another stock crash is not quite inevitable but close to it. The reason is that market prices always return to fair value after they have risen to insanely dangerous levels and we are only about halfway back from the insanely reckless business of the late 1990s. After the next stock crash, the housing market will probably collapse too.

    I believe that after the next crash we will be entering the Golden Age of Middle-Class Investing because Buy-and-Hold will be finished and we will all be open to learning all the wonderful things we should have been learning about how stock investing works from the academic research of the past 30 years. That’s if the next crash doesn’t bring on the Second Big Depression. If it does, then all bets are off on just about every money plan that any of us has made.

    We live in interesting times.

    Rob

    • @Rob: I do wonder if the investing landscape has made a dramatic shift after the “lost decade” from 2000 to 2010. It seems, at least in the short term, that ideas like buy and hold, or set it and forget it, are outdated – maybe even downright dangerous.

      I am out of the market for now, but looking to get back in. When I do, I plan to increase the amount of homework I do regarding the companies I choose to invest in, and the underlying companies my mutual funds invest in.

  3. Here in Florida we have a real estate depression going on and the only reason it has survived was the tax credit. The only things selling are vulture sales. I am a lawyer for a few hundred condo and homeowner associations and every day we get 30+ new mortgage foreclosures served on the delinquent owners, I say her we were first to crash, last to recover, maybe 30% down from here as all the foreclosed inventory and shadow inventory comes on line. And I’m a Cubs fan, ever hopeful!!!

  4. I think that the housing market doesn’t have the knee jerk reaction that the stock market has, so I think it is little easier to predict. Actually excluding present times, the market has traditionally gone up and up. I think (and hope) that this blip, while major, will be temporary, and we’ll continue the slow rise as we’ve done traditionally.

    My dilema is: do I purchase real estate for investment purposes or not… Some say this might be a once in a lifetime opportunity. Unfortunately, in the location that I live, it may not be as good a deal as more popular places.

  5. I like investment real estate and own a bit, but people have to understand that it’s a cash flow negative investment unless the property is purchased for cash. Also, this commitment to the property generally lasts twenty years or more unless you’re in the very unnatural situation in which the property prices increase dramatically causing people to “flip” an investment property, or unless the tax laws encourage property flipping, as the US laws currently still do despite the chaos caused by speculative flipping. (I think the homeowner’s exemption to the capital gains tax will most likely go away soon but no American believes me.) Having a regular payment to make is bad news in a volatile economy, so I’m not taking on any new long-term financial commitments right now. If I come into a sizable piece of cash and I don’t need to kill debt, I may scoop up a small property by buying it outright but I won’t commit to a mortgage.

    • @R A Williams: So you are not in favor of something like 50/50 financing? I don’t have enough to pay cash for a property, but with some addtional savings I might could scrounge up 50% down, which might put me a little closer to a cash-flow positive territory.

      I’m with you…100% down is the ultimate way to go!

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