Monday, March 2, 2009

oh Bottoms! Where are the bottoms?!

Bottoms are usually a tricky thing to find. It's reflected on the market charts but not always in the broad range. What determines the bottom? It's all relative. Everything to market factors to psychology would determine this. Lately this market has been volatile because of a "lack of confidence". The markets can speak for themselves but on mainstreat it's because of a lack of funds. When people are insecure about their future source of income, their confidence drops too. People are buying less. This will be reflected in the markets later on. This sounds like a joke, but the bottoms of the markets is totally relative to politics if it's not by a miracle sector.

Now, Where is the Housing Bottom?

The Housing bottom will be determined when Gen Y can afford legitimate mortgages again. The age demographics are typically used for marketing purposes and it's not an absolute measure. The "bottom" can happen if a large number of people choose to be landlords to sustain demand for houses. Or it can "bottom out" with the help of other factors. Gen Y, the Boomer's children are a huge demographic who are in their early adult stages in life and have the numbers to build a "support" and a solid one because they're in it for the long haul with their "primary" residences vs. "secondary" residences (typically used for speculation). They're in the workforce, starting families and in need of a place to live.

The coined phrase "factor market" fits the description of the Gen Y market.
Unfortunately the economy can't support human capital at our current Cost of Living Index at the present time. So Gen Y isn't able to save for a down payment or the monthly payments on a mortgage. Which due to the falsely inflated housing market (courtesy of ARM loans, market price manipulation by industry insiders and the derivative markets) the homes were priced out of reach unless they wanted an ARM loan.

Real Estate is not a regulated investment. The volatility index is the Cost of Living Index, not the Consumer Price Index. The Case Shilling Index didn't work as a measure either. The younger market was infact nervous in the last few years, espcially in the states with the highest cost of living index. Something was amiss when the only people shopping were speculators, not us. It wasn't our imagination.

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