What do you think. Will building come back or are we sunk.  This is as bad as 1981, I almost starved to death. 22% Intrested, 10% unemploment, 10% inflation. What do you think????????????????

Move up to Iowa. We have more work then contractors available. My firm bids out, on average, 1 project a week. Houses are going up all over the place. Universities are traveling around the state to try and get contractors to bid on work. Over 2 billion dollars of work bidding out in the next several months. We are having problems BIDDING jobs. Contractors are too busy. My area never really felt the housing crash much....

My area never really felt the housing crash much....

Could you be in a micro-environment or something? Iowa is on track to build about half as many units this year as they did back in 2004 and 2005.

Housing will be back, is back in some markets, but it won't be boom times again for many many years. The long wave theory holds that the economy moves in 30 or 40 year cycles, the argument being that a generation of chastened bankers and homebuyers must die off before anyone believes again that you can't lose money on housing. Here is a look at the two pieces:

The mortgage market is looking almost normal. Freddie Mac and Fannie Mae package home loans and sell bonds on Wall Street based on monthly payments from same. When they went broke in 2008, the government and the Fed kept the housing market alive by purchasing Freddie and Fannie securities when no one else would. The Treasury is selling them now for a profit, and hedge funds are circling mortgage backed securities warily. http://dealbook.nytimes.com/2012/02/18/bonds-backed-by-mortgages-regain-allure/

But that doesn't mean that buyers in your part of the world will find willing lenders, which is the second piece of the puzzle. Jim Cramer said famously in 2008 that EVERY mortgage written in 2006 or later will end up underwater, which is to say that the house is worth less than the mortgage on it. Could be it was only three out of four but the effect is the same. If you can't sell your house without bringing a check to closing, you are officially out of the move-up market. If you lose your job, foreclosure is in your future. Foreclosures make lenders skittish so, in many markets, a perfectly good buyer gets turned down and the sale falls through.

All real estate is local, so go to realtytrac.com, type in your zip and count the foreclosure sales in your neighborhood. As a general rule, things will look reasonably good in markets where prices never really got out of whack (Iowa), bad in formerly hot, hot markets (Las Vegas) and terrible in move-out markets, the latter being the fringe bedroom communities to places like San Francisco or Washington DC where ordinary folks could no longer afford to live. Exhibit A is Fresno, which is broke itself.

How does this get fixed? Time. The foreclosure rates drop to normal; prices appreciate to the point that debt/equity is reasonable; lenders regain confidence. I've lived through two housing busts: fla in the '70s and texas in the 80s. Marginal contractors leave the business. Solid builders find ways to compete. It works out.

Your coming out of a recession and it's an election year

You may see a mini boost at the beginning of the fall, not much after November and depending on who gets in will dictate your spring

Not to make you feel bad...Chicago has no cranes in the air, Toronto meanwhile has 164 last count!!!

Not to turn this political but to avoid same: What would you propose the president would do to turn things around by next spring? 23 percent of all US mortgages sport a higher balance owed that the house is worth.You could give the lenders a haircut but that would be the end of private mortgage financing in the US for the foreseeable future.

I wouldn't crow too loudly about Toronto cranes. http://www.montrealgazette.com/business/Condo+bump+Toronto+could+signal+overbuilding/6444877/story.html

Not that anything like our housing bust could happen in Canada. One of the advantages of having roughly 20 banks in the entire country is that lenders are very conservative about handing out loans. Of course, one of the disadvantages of having roughly 20 banks in the entire country is that lenders are very conservative about handing out loans.

You could give the lenders a haircut but that would be the end of private mortgage financing in the US for the foreseeable future.

Everyone needs a haircut once in a while. :-)

And, according to your previous post, they probably won't even remember they had a bad one after thirty or forty years or so.

This whole thing isn't in the hands of the President. People need to remember there is no free lunch. They had some good years by using their homes like ATMs and it turns out that was a bubble that allowed them to overspend. So they just need to get back to basics and producing things, whether it be goods or services, and pay back the good times. Eventually, time and continued production will work out the pain of the irrational exuberance and the spending beyond ones means and things can get back to normal.

Except, of course, that the rest of the world is now getting an education and Americans can no longer bank on the successes of previous generations. Other than that, things can be normal. ;-)

It's not like all contractors are sitting on the sidelines doing nothing, there are alot that have more work than they can handle, you need to look inward not outward.

Posted By toddm on 11 Jul 2012 10:34 AM
Not to turn this political but to avoid same: What would you propose the president would do to turn things around by next spring? 23 percent of all US mortgages sport a higher balance owed that the house is worth.You could give the lenders a haircut but that would be the end of private mortgage financing in the US for the foreseeable future.

I wouldn't crow too loudly about Toronto cranes. http://www.montrealgazette.com/business/Condo+bump+Toronto+could+signal+overbuilding/6444877/story.html

Not that anything like our housing bust could happen in Canada. One of the advantages of having roughly 20 banks in the entire country is that lenders are very conservative about handing out loans. Of course, one of the disadvantages of having roughly 20 banks in the entire country is that lenders are very conservative about handing out loans.

Our banks are also not allowed to lend beyond 80% of the appraised value, buyers must have 20% down now and amortization can be no more than 25 years. Yes, our banks are conservative but the real reason we didn't have the same problems as in the States is that they are not allowed to sell the mortgages to other investors. Get a mortgage with TD Canada Trust and they will still have it in 5 years.

Originally the people in the current govt wanted rules like yours (when they were not in power) but the Liberals said no way. Live and learn.

Our condo bubble will burst too......half of the purchases are by overseas (Chinese) investor who don't even care if they are occupied or made of leaky glass.

In this area(Charlotte, NC), the Parade of Homes 4-5 yrs ago had a 60-70 page magazine. This year it was a 2 page pamplet!!

National average home prices have now dropped below fair value (measured against other countries using purchasing power parity). Multi-family is becoming overbuilt and inventories of single family homes is low. Shale gas and shale oil are about to fuel a significant boom in heavy manufacturing and every other industry that requires large amounts of energy. $30 billion in new investment already. Try to find a concrete contractor in Central PA not already busy. New steel fab plants planned and under development in Ohio. The boom is underway in the Dakotas. Fasten your seatbelts, kiddies, this economy is going to bust out regardless of who wins in November. Remember, you heard it here first.

inventories of single family homes is low

Don't count the profits, yet. There is still excess inventory and a huge number of homes that aren't even on the market because the prices were so low. That will keep it soft for quite some time.

I'll just point out that there is nothing green about shale gas and shale oil. Once again, we attempt to to go the wrong direction for immediate gratification.

Kind of hard to determine fair market value when the bank won't let you inside foreclosed homes to see if the copper is still in the walls. Banks are recovering about 50 percent of loan balances. In areas where foreclosures dominate sales, recovery won't happen until distress sales wind down.

Ultimately, the housing market and the job market are joined at the hip. Sad to say, the booms in Pa and the Dakotas don't mean much. The jobless rate in Pa is 7.4 percent despite the Marcellus shale boom because the population in central Pa wouldn't add up to a decent sized suburb in Philly.

The booms in PA and the Dakotas are providing low-cost energy a very, very basic driver of our entire economy. Shale gas/oil will provide low cost energy for many decades. It will re-shape the economy. It will give manufacturers confidence in a long-term stable energy economy -- something we haven't had in 50 years. Alternative energy's recent blip is just that, a blip, and now -- poof! It's gone for another 75 years.

The booms in PA and the Dakotas are providing low-cost energy

Future generations will bear the real cost of burning hydrocarbons. Trying to get away with it now is just a form of greed.

Well, ICFHybrid. I can only say that if you don't want to burn hydrocarbons, you should choose to get your energy elsewhere. If you want to stop the rest of us from burning hydrocarbons, you should ask your congressman to raise a carbon tax and make it so expensive that solar makes sense -- that seems to be the current administration's policy.

I can only say that if you don't want to burn hydrocarbons, you should choose to get your energy elsewhere

I'm working on it. However, to be reasonable, it's not something our society can just do cold turkey. I will say that I am not buying any more gasoline engines. Ever.

If you want to stop the rest of us from burning hydrocarbons

I have no interest in stopping anyone from doing anything they want to do, however shortsighted and self-serving it might be. However, I have put quite a lot of effort into trying to make sure they will pay the real price of the energy they are hogging and will continue to do so.

Comparative advantage might encourage manufacturers corporations to spend some money in the US, but the rest of the world is not far behind. http://www.economist.com/node/21558457 "Of all the countries now looking for shale gas, China has the most potential."

Todd, what's it like in that negative world of blackness where you live? USA has 100 yrs of gas in the ground. Did you bother to read the cover story of that issue of the Economist? You must be Canadian.

I am not Canadian. Not that there is anything wrong with that, eh? Yes, I read about the PWC study predicting that cheap shale gas will create 1 million factory jobs by 2025. But that's not much help today, when analysts predict that there are 1.1 million discouraged workers who have stopped looking and thus aren't counted in the jobless rate. http://www.upjohn.org/node/725

Cheap gas will take pressure off household budgets, depending on where those houses are. My power company just sent me a half price through Oct deal-- 3.2 cents/kwh and 6.4 cents through 2014. That tells you that 6.4 cents is probably going to be paying too much in 2014.

Jobs will take care of themselves. Enough boomers will be retired by 2025 that the few plumbers left in the workforce will be treated like rock stars.

But I thought we were talking about housing here. In many, if not most local markets, we're at least a year away, maybe two. And when we turn the corner we won't be leaving any skid marks.