December 14, 2004
YOU'LL NEVER EXPLAIN TO A BEAR HOW THE TWO ARE CONNECTED:
Debt moves up at fast clip, but household assets also rise (VINCENT DEL GIUDICE, 12/14/04, Bloomberg News)
Household net worth, a category that also tracks nonprofit organizations, advanced to a record $46.7 trillion in the third quarter from $46.2 trillion as real estate values accelerated, the Fed said.
Buildings to go up like never before (Haya El Nasser, 12/12/04, USA TODAY)
Residential and commercial development in the next quarter-century will eclipse anything seen in previous generations as the nation moves to accommodate rapid population growth, according to a Brookings Institution report Monday.
About half the homes, office buildings, stores and factories that will be needed by 2030 don't exist today, says Arthur C. Nelson, author of the report for the think tank in Washington, D.C.
The U.S. population is expected to increase 33% to 376 million by 2030, according to Nelson's analysis. That's 94 million more people than in 2000.
To serve that population, almost 60 million housing units will have to be built. About 20 million of these units will replace destroyed or aging homes. In addition, half of the largest metropolitan areas will have to add as much or more commercial and industrial space as existed in 2000, the report says.
The "housing bubble" is undervalued.
The houses will only be sold at prices that people can afford. That will depend on the rate of income growth and interest rates. Housing prices can rise faster than income only when rates are falling. Rates are rising now.
Posted by: Robert Duquette at December 14, 2004 9:56 PMNot for mortgages.
Posted by: oj at December 14, 2004 11:12 PMThere have been many innovations in mortage finance. You'd be surprised.
For example, I have 2 trusts on my townhome. The first trust is 75% of the total price and the second is 15%.
By breaking it up like that, I got better rate on the two halves than I would with the whole.
Posted by: at December 14, 2004 11:51 PMAnd w/the Euro so high, Brits are buying up property around the Mouse House.
Posted by: Sandy P at December 15, 2004 1:25 AMPeople buy housing based upon how large a loan they can carry, as determined by monthly payments. As long as interest rates remain low, there shouldn't be a problem with sustained growth in housing prices.
However, one must keep in mind that home prices in Hawaii are lower today than they were a decade ago during the boom of Japan, Inc and that Japanese real estate values have sunk like a rock in the last 15 years, despite low interest rates.
Posted by: Bart at December 15, 2004 9:28 AM