Skip to comments.

Housing Bubble Correction Update: Fasten your seat belts, here comes the jobs crash

iTulip ^ | July 2, 2008 | Fred

Posted on by Freedom_Is_Not_Free

Housing Bubble Correction Update: Fasten your seat belts, here comes the jobs crash

The housing market has fallen hard but it's not time to buy, no matter what you hear. Depending on where you live it's time to decide if you can afford not to sell before prices go lower, or grin and bear it. The choice depends on your likely future employment prospects and where you live.

In our first major update in our series of housing bubble forecasts since 2006 that began with our August 2002 Yes, it's a housing bubble analysis, we delve into the next phase of the housing bubble correction: regional housing price crashes caused by rising unemployment and falling incomes, especially in any state that has a poorly diversified economy not tied to energy or food production. The rate of growth in unemployment in some states may shock you, but our analysis turns up some positive surprises as well.



(Excerpt) Read more at itulip.com ...

TOPICS:

Business/Economy

KEYWORDS:

bubble

housing

layoffs

recession

This is an absolute must read. iTulip has been correct about the housing bubble every step of the way. Even if you disagree, they make a lot of compelling points and anyone with an interest in housing should at least read and digest this analysis.



To: Freedom_Is_Not_Free

Falling house prices is a GOOD thing! Would you want car prices to double just because you own a car?



To: TigerLikesRooster; Travis McGee; Attention Surplus Disorder; bruinbirdman; Vet_6780; NVDave; ...

Ping. A must read.



To: Freedom_Is_Not_Free

The sky is falling... we are all going to die!!! Buy now... buy often.... sell when the time is right.



by 4 posted onby Porterville (I hasten karmic justice through revenge.)

To: Porterville

I always buy high and sell low. Eliminates stress./s



by 5 posted onby exit82 (People get the government they deserve--and they are about to get it --in spades.)

To: exit82

sarcasm?... then you never play.



by 6 posted onby Porterville (I hasten karmic justice through revenge.)

To: Freedom_Is_Not_Free

I am both a mortgage broker and realtor and you can take this to the bank: prices of bank owned properties have dropped to the point that a rational buyer sees a bargain. At least in AZ, I think we reached a bottom in April and are coming back up. When the price of homes dips below replacement cost, people will buy, and they are in spades. Most reasonably priced bank owned have MANY offers.



by 7 posted onby Hoosier-Daddy ("It does no good to be a super power if you have to worry what the neighbors think." BuffaloJack)

To: Hoosier-Daddy; exit82; Porterville; Still Thinking

It appears that not a single one of you has read the article. The article is not about housing. They are projecting future unemployment rates caused by the collapse of housing. The article is fascinating and is presented clearly but with an astounding level of detail. There is a ton of compelling information presented in the article for anyone who will bother to read it. Not just about housing, not just about projected unemployment, but about many economic topics besides those two. This is a compelling article and even if you disagree with their projections, anyone reading this article stands to learn a great many things. Please click on the link and take the time to read the article. It is very thought provoking.



To: Freedom_Is_Not_Free

Thank you, thank you for posting! I’m in the middle of making some large financial decisions and this was very informative and written in laymen’s terms.



by 9 posted onby 444Flyer (Marriage=1 man+1 woman! Vote "YES" on Prop 8, amend the Calif. State Constitution this November.)

To: Freedom_Is_Not_Free



From the article...

To: Hoosier-Daddy

I am both a mortgage broker and realtor and you can take this to the bank: prices of bank owned properties have dropped to the point that a rational buyer sees a bargain. At least in AZ, I think we reached a bottom in April and are coming back up. When the price of homes dips below replacement cost, people will buy, and they are in spades. Most reasonably priced bank owned have MANY offers. That's good to hear, but this article is about the job market. If people have lost their jobs, they will not contribute to the economy, they will not buy houses, and they may lose their homes. And you don't even have to lose your job, you only have to fear that you will lose it. You may have reached the bottom, but you may stay there for a long time too.



To: Freedom_Is_Not_Free

No, I did read the article and the information is fascinating. It stands to reason that jobs will now be jettisoned as companies stuggle with rising costs. I’ve lived through this cycle a few times. I just posted what I did so I wouldn’t slit my wrists.



by 12 posted onby exit82 (People get the government they deserve--and they are about to get it --in spades.)

To: All

The point of this article is to project the increase in unemployment in the various states and to evaluate how that rising unemployment will impact home prices. It is something of a double-whammy. House prices go down, unemployment goes up, and unemployed people can’t afford homes which causes prices to go down further. But the analysis is not simplistic. The analyst takes into account the various state economies and how that will impact unemployment and the resulting additional drag on home values in those states. It is an exceptional article and well worth reading. As you can see from above, Rhode Island has seen the greatest increase in unemployment in the last year. Who would have thought that? I certainly wouldn’t. Who would have thought that South Dakota would be poised to experience the least unemployment and the least damage to the price of houses? Again, you may not agree with their assessment, but it is well worth taking the time to digest.



To: Freedom_Is_Not_Free

In that chart, all of the states except Wisconsin that are reducing unemployment can be explained by the boom in energy prices.



To: exit82

Hopefully your homes state is not one of the ones experiencing an increase in unemployment. I guess the odds are against that. I am an hour out of Sacramento, California and I agree with their assessment that unemployment is going to go way up, perhaps even double as they say. I found their claim very interesting that the best leading indicator of future unemployment is duration of unemployment. We can see that job loss is not yet that bad, but the number of months people are going without work is indeed going up and they are saying that is a leading indicator of soaring future job losses. I have never heard that before. So I’ll be watching future unemployment numbers very carefully to verify or discount their claim. Very interesting.



To: Vince Ferrer

I thought they made that clear in their analysis.



To: 444Flyer

You are welcome. I was compelled to post it because it is a fantastic article, well written and because they source has so far been absolutely correct about the magnitude and duration of the housing bubble, and about its aftermath. They are predicting a very, very long time before housing truly recovers and it remains to be seen if this ruins their track record of being right about the housing bubble. So far they have been dead right, and I am inclined to take a validated source much more seriously than one that has proven to be dead wrong over time. Industry analysts, talking heads, and bloggers who first said their was no housing bubble, and later kept calling bottoms and saying that prices would not go down this far, have absolutely no credibility. I would rather pay credence to those who have been proven so far to be right.



To: Freedom_Is_Not_Free

WARNING! This article is only going to be available for free to the general public for 2 days, until July 12th. If you bookmark for later read, there will BE NO LATER READ. After July 12th, the article will not be accessible unless you are a subscriber to iTulip. I heavily recommend you MAKE THE TIME to read this analysis while it is available for free. If I sound like a commecial, oh well... But on July 13th, this knowledge is going to be lost to you, so read it or weep. You won’t get another chance.



To: Freedom_Is_Not_Free

I think their theory is correct. The housing collapse is one stage. Job loss is another stage and it follows the housing collapse. What makes this time more ominous is that people are extended in credit, have no hard assets to fall back on,and are without savings. The things they have are not commodities to be exchanged, but toys that do not hold value, on a scale not seen before in America. My state is Delaware and we have seen this rise in unemployment. In southern Delaware, where I live, the housing market is still fluid, as there is an influx of retirees coming into new housing due to the favorable tax climate here. That has offset a stalling of the non retiree portions of the housing market. House-on-market times for resales of 12 or more months is not uncommon. More retirees would come but they cannot sell their existing homes yet, and that has stalled many new developments. After 9/11 I never would have thought we could bounce back and have six good years after that. But this oil price rise will now affect every economic sector, whereas in the past, only some sectors were affected by changes in the economy.



by 19 posted onby exit82 (People get the government they deserve--and they are about to get it --in spades.)

To: Freedom_Is_Not_Free

Their outlook for my state of California... Ground Zero state National Unemployment Growth Rank: 4 Macro-economic Vulnerability: High Unemployment Growth Rate: High Estimated Post Recession Peak Unemployment Rate: 10% Future Home Values Rating: Poor



Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

FreeRepublic , LLC, PO BOX 9771, FRESNO, CA 93794

FreeRepublic.com is powered by software copyright 2000-2008 John Robinson