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Lennar Corporation Message Board

  • investment_wanker investment_wanker May 23, 2008 11:21 AM Flag

    Single digits within 1 month

    Here is why:
    WAKEUP CALL: The housing market is 50% or MORE away from a BOTTOM.
    If you can honestly say you are long housing,
    please explain this to me:
    mortgage rates are very close to all time lows.
    Do you really expect the FED to hold the discount rate at 2% or lower for the next 10 or 20 years? Propping up the dollar price of stocks and real estate means NOTHING if your currency is falling on the global markets against more responsible nations. The FED will be FORCED to raise rates and raise them FAST To save the currency - otherwise you will be left with a situation similar to Germany right before WW2, where a loaf of bread will cost $1,000 and the entire currency will eventually get devalued and replaced.

    SO - taking it as a given that mortgage rates rise, to even let us say a more historically average 9%, that would be almost DOUBLE where
    they are now, and almost DOUBLE the average monthly mortgage payment. Interest rates could easily go even higher, especially since extremes in one direction tend to get corrected by extremes in the opposite direction. THERE IS NO WAY REAL ESTATE APPRECIATES IF MORTGAGE RATES RISE. DUH.
    People already need TWO full time paychecks just to pay their bills NOW, and they still are going deeper into debt just to maintain their current lifestyles. So how exactly do you expect the average schmuck to meet monthly payments 2 to 3 times HIGHER? Wake up and smell the guano the real estate industry is shoveling.

    Then factor in current inflation.
    Today's mortgage rates may LOOK LOW, but when you add in 10% annual inflation - the effective interest rate you are paying is more like 15 or 16%, not 5 or 6%. So even at current prices real estate is FAR OVERPRICED.
    I welcome any hollow heads with opposing viewpoints...

43.99+0.72(+1.64%)May 23 4:01 PMEDT