I’ve devoted a fair amount of space on the this site since it’s launch a few months ago to the real estate bubble, though I have neglected the topic lately. I’ve done so intentionally, mainly because the mainstream media has done a fine job covering it. In fact, there has been so much ink spilled on the subject that I’m surprised the price of ink has not reached bubble proportions.
It’s probably time to revisit the topic now, however, as it seems the evidence of the bubble’s demise is mounting:
-Supply is growing. The inventory of unsold homes is also climbing from San Diego to Boston.
-Demand is waning. It seems that lenders and real estate agents, frustrated by not being able to find enough buyers, are now getting desperate. So desperate, in fact, that they are enabling illegal immigrants to buy into the bubble.
-Nationwide the trend of foreclosures is clearly upwards and momentum is gaining. In july, foreclosures across the country were up 10% from July, 2004. With all the no-money-down, adjustable-rate, interest-only mortgages out there can this come as a surprise to anyone?
Again the major media outlets are on top of these new developments and I am fascinated by the change in sentiment as reflected in the media.
Not very long ago, the focus of real estate articles was on the self-made millionaires and the sky-high prices. Today the focus has changed to sellers getting nervous and people losing their homes.
Although the transition from pollyanna to chicken little has been relatively swift it is not unusual. In fact, it is eerily reminiscent of the stories dedicated to day-trading stock-stars giving way to those profiling corporate criminals that we saw during the recent stock market boom and bust. The media merely reflects public sentiment.
Today, the public is beginning to worry. There is no escaping that hissing sound.
LIV