bostonbubble.com

BostonObserver · Joined: 09 May 2009 Posts: 8

If these charts have any truth to them, I don't see how the housing market rebounds any time soon. Thoughts?

http://static.seekingalpha.com/uploads/2009/10/23/saupload_loan_resets.PNG

http://upload.wikimedia.org/wikipedia/en/thumb/d/d6/EconomistHomePrices20050615.jpg/581px-EconomistHomePrices20050615.jpg

http://static.businessinsider.com/~~/f?id=4a302f4d14b9b98b00d35d3e

http://graphics8.nytimes.com/images/2008/03/18/opinion/18opchart.large.gif

"Almost every circumstance leading up to the Japan housing crash has been present in the U.S. during the last decade:

Historically low interest rates
Housing touted as a 'can't miss investment'
Median home prices doubled
Median home prices in the six largest cities tripled
Lenders offered bad loans
Government acted as a partner to industry
Home price increases far outpaced wages and rents

After reaching peak values, Japanese home prices declined by an average of 40 percent. In the country's largest cities, the declines were worse, averaging 65 percent. Homes in Tokyo lost 80 percent of their value and are still on the downward slide to this day.

http://efinancedirectory.com/cimages/articles/japan-housing-decline.gif

If you are wondering what will happen in the U.S. when the disconnect between home prices and fundamentals finally becomes too much and knocks the knees out from under the housing market, take a look at the chart above"

Xenos · Joined: 24 Jun 2009 Posts: 31 Location: Western Mass

Turning Japanese?

I really think so.

john p · Joined: 10 Mar 2006 Posts: 1820

I think when you look at the second, third and fourth charts you can see how they align the two bubble lines at different time periods, which is fine, you just have to be aware of it...

Nice work.

The one thing I'd say is that Japan's economy and culture are a bit different and isolated so I don't see them being stabilized by other nations like say the US. Japan may be the canary in the coal mine, and when it dropped it didn't really bring down that many nations with it.

This current correction is more global and I was hoping the G20 summit would have been successful in establishing generally accepted principles for lending, leverage, underwriting, responsibility, etc.

admin · Posted: Sun Oct 25, 2009 9:09 pm GMT Post subject: Re: Turning Japanese?

BostonObserver · Joined: 09 May 2009 Posts: 8

Here is the latest version of the chart that I could find -- April 2009:

http://mortgage.freedomblogging.com/files/2009/05/reset-chart-for-blog-april.jpg

Source:

http://mortgage.freedomblogging.com/2009/05/20/loan-reset-threat-looms-through-2012/10791/reset-chart-for-blog-april/

admin · Posted: Sun Oct 25, 2009 10:46 pm GMT Post subject:

Thanks. That actually makes things look worse, given the higher scale.

- admin

Boston ITer · Guest

Throughout Japan's lost decade, now two lost decades, unemployment stayed between 3 and 5%. That's hardly a rampant job loss situation, albeit, it forced many to lose the chance (& prestige) of getting a 'salaryman' type of career, straight out of college since guarantee-ing a paycheck during a deflation was costly for many companies.

Instead, it was a general malaise of decreasing asset valuations, mediocre job growth, but reasonable international success for Honda, Sheisedo, Mitsubishi, Sony, a.k.a formerly Japan Inc (circa 1980s). All and all, most Japanese have an $80K+ savings mattress (real cash, not assets) and they can take that to some other asset rich nation to grow their funds which BTW, was happening with other Asia-Pacific nations during the lost decades. The Yen carry trade, which weakened the Yen actually helped both Japanese exporters and the ability of neighboring countries to finance their expansions. For Americans, however, only the upper middle class have such arbitrage opportunities. The rest are just keeping up with their housing payments so worldwide diversification isn't on the typical American dinner table.

ca.voyagehomeloans.sac · Guest

Nice Charts. I wonder where the market will in fact end up. One one side it looks like it is improving but on the other side it looks like mortgages are still on the frits.

BostonObserver · Joined: 09 May 2009 Posts: 8

From the WSJ:

Is the U.S. Economy Turning Japanese?

Easy money from the Fed hasn't translated into more consumer lending by banks.

http://online.wsj.com/article/SB10001424052748704224004574489530753794994.html

"All of the above behavior invites legitimate comparisons with post-bubble Japan, where banks took years to be cleaned up as a result of regulatory forbearance. The same kind of forbearance is preventing America's increasingly distressed commercial real-estate market from clearing. Similarly, as was the case with Japan, monetary-base growth has exploded in the U.S. over the past year courtesy of the Fed, while bank lending is declining. This is why there is every reason to fear that America is already in a Japanese-style liquidity trap."

Rental Lease · Joined: 28 Jan 2009 Posts: 21

I think as a nation we'll see even more of a dip this winter (as is customary for most of the U.S.), but my hope is that come spring 2010 we'll see more and more individual markets recovering.
Right now relatively few markets are going strong, but we should be seeing more markets improving as the job index improves and consumer spending recovers.
I'd like to stay optimistic, but I do know that I may have to keep my investment properties as rental units for some time to come.
We definitely live in "interesting times" though... it's a strange time to be a real estate investor!

____________________
Brian
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