Fed Admission and Updates on Some Favorite Marin POSs
Apparently, one Fed member admits that the Fed caused the housing bubble. This is news-worthy to me only because back in August the Greenspan Fed published a very academic paper that they used to pull a Pontius Pilate on us -- to wash their hands of any responsibility of causing the housing bubble.
In an apparent and rare in-house critique, the president of the Federal Reserve Bank of Dallas said that because of faulty inflation data, the Fed kept interest rates too low for too long earlier this decade, fueling speculative housing activity.Greenspan was recently heard muttering these words which the NAR has made much ado about:
Mr. Fisher noted that subsequent revisions show PCE inflation was actually a half a percentage point higher than originally estimated. "In retrospect, the real Fed funds rate turned out to be lower than what was deemed appropriate at the time and was held lower longer than it should have been," Mr. Fisher said.
"In this case, poor data led to a policy action that amplified speculative activity in the housing and other markets. Today...the housing market is undergoing a substantial correction and inflicting real costs to millions of homeowners across the country. It is complicating the [Fed's] task of achieving...sustainable noninflationary growth."
"This is not the bottom, but the worst is behind us"He must be talking about the rest of the year. If so, I have to agree with him. But what happens when houses come back on the market early next year? Will buyers' opinions have changed? Will suicide loans look good again? Will those million dollar Mill Valley POSs look like a good deal again? I don't know; anything could happen. I do expect a "dead cat bounce" in Marin next Spring. But that's just me.
Later, this was dropped on us:
I don't know if Greenspan used the word "pinch" or if it was chosen by the writer of the article, but either way I don't think the people who are foreclosing on their homes would consider themselves "pinched" exactly. But I am sure he is right that there won't be much of an impact of these "pinched" buyers on the broader macroeconomic scene. Just MHO.
Greenspan also touched on the potential adjustment in loan costs for home buyers with nontraditional mortgage products.
While some individual buyers may feel the pinch as their payments rise, Greenspan said those changes were "very unlikely to have a macroeconomic effect."
Price Reduced: 06/06/06 -- $1,695,000 to $1,649,000That's a drop of 18% from the original asking price. Not much. I expect ultimately twice that. But anyway, sellers can ask whatever the heck they want. What it actually sells for is another matter. Buyers set the selling price, not the sellers.
Price Reduced: 07/06/06 -- $1,649,000 to $1,625,000
Price Reduced: 07/12/06 -- $1,625,000 to $1,575,000
Price Reduced: 07/27/06 -- $1,575,000 to $1,535,000
Price Reduced: 09/03/06 -- $1,535,000 to $1,499,000
Price Reduced: 10/02/06 -- $1,499,000 to $1,395,000
So Mr. Seller: what's it like fearing that you will never sell that piece of shister without taking a loss? Are you praying each and every night, making solemn deals with God (or in Mill Valley is it Buddha, Krishna, purple crystals, or whatever?) to be a better person and all that as long as He gets it sold? Are you doing the whole St. Joseph thing now? Inquiring minds want to know what it's like to be another Marin FB. After all, this is God's Country dontchya know. Not being able to sell overpriced housing is not supposed to happen here.
Mr. Seller: same questions to you as above.
Yep, I'm definitely in a belligerent, irreverent mood tonight.