Financial markets really hate uncertainty, don't they?

[randomness]

"That stampede you're hearing? It's folks running for the exits."

The biggest problem right now is that no one has any clue who all are holding the bag, or even how big the damn bag is. So while it doesn't hurt that the Fed and the ECB are opening the credit windows and throwing money at the banks, that doesn't make any of the banks less fearful and suspicious of each other.

And fear and suspicion? Bad for markets, just like they're bad for any other relationships.

Comments

[jojotbird.livejournal.com]

A great time to buy a house, right?

[dirque.livejournal.com]

No, keep waiting. This is the beginnings of a credit crunch. You want to wait perhaps another year or two. Depending on where you are located you want to look at several things:

1. people are defaulting on loans now, but remember that's only the people who picked up ARM loans in2001- 2002, what about all the people in 2003-2004? On average housing prices have only come down 2%.

2. credit markets are only beginning to tighten in the past 6 months with lack of qualified buyers, the market will soon be flooded with properties.

3. demographically, babyboomers were born from 1946 (post ww2) to 1950. The first year they qualify for social security is at age 62 with full benefits starting at 68. So the shift from work housing to retirement housing will begin at 2008 at the earliest with the shift going to full swing post 2014.

[outlawradio.livejournal.com]

Yeah -- the bulk of the ARMs currently outstanding are resetting between this October and next October. So the next year is going to be more of the same.

[orichalcum.livejournal.com]

All too true, but you need to weigh the likely decrease in cost against the likely increase in mortgage interest rates, especially if you expect to be taking on a large mortgage. Timing this market right, like timing any major market, will be very tricky.

Speaking only for myself, the instability would make me not want to buy in the shortrun if my time frame for ownership was short-- say, 3-5 years seemed likely. I would want to buy in the shortrun if I expected to be in place for 7+ years. But other conclusions are certainly reasonable.

--Adam

[outlawradio.livejournal.com]

Right, but it sort of doesn't matter when to buy if credit is not available, which is the big worry now; will money be lent? If it may be available in the future, but at a higher rate, when it is not available at all now, that is the time to buy; one can always refi down the road.