Friday, July 29, 2005

chicken little

it seems like the sky is actually falling. or at least bottoming out:
Doomsday: the final months of the housing bubble.

a thoughtful look at the evidence of an imminent bust. some of the facts he quotes:

The current housing bubble is “larger than the global stock market bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stock market bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.” (The Economist, June 16, 2005)

The banks have lowered the standards for home loans to such an extent that the traditional loan of 20% down and a fixed interest rate is virtually a thing of the past. Instead, those conservative practices have been replaced with “creative financing” schemes that put the entire housing market at risk.

Consider this: In 2004 “one-fourth of all home-buyers -- including 42% of first-time buyers -- made no down payment.” (New York Times, July 7, 2005)


Post a Comment

<< Home