Monday May 04, 2009

California housing market : No buyers, new homes get demolished instead

peakoil.com :

1. BREAKING NEWS on the Housing Front: SHOCKING! Part 1
2. BREAKING NEWS on the Housing Front: SHOCKING Part 2
3. SHOCKING: EXTREME HOME MAKEOVER-DEPRESSION EDITION PART 3
4. SHOCKING: EXTREME HOME MAKEOVER-DEPRESSION EDITION PART 4
5. VICTORVILLE MODEL HOMES DEMOLISHED - SHOCKING VIDEO: Part 5

- This posting just came in on the peakoil.com forums. Apparently the banks couldn't find any buyers in the depressed California housing market, and got fed up with having to continue paying taxes, maintenance and upkeep for these brand-new homes, so they resorted to destroying them instead.

Talk about literally destroying excess inventory. Truth be told, the peakoiler community is not too surprised, since we did discuss the possibility that this kind of thing might come to pass. But looking at the real-life videos of it actually taking place is really something else. Like a fellow forumer put it, "Anyone else here get the feeling that we're witnessing history - of the scariest kind?"

In the earlier forum threads years ago, we also discussed the possibility that, even destroying the supply of new houses might not be of much help to stabilize housing prices, if the demand is falling faster than the rate at which the houses are being destroyed, all things being relative to each other. After all, if all the new houses were destroyed and prices still kept falling, what could be done next, destroy homes where people are living in?

We also did discuss one more possibility. That, over time to come, everyone would get their money back. After an outright crash (at that time we were still arguing "fast crash" vs "slow crash" - guess which one it turned out to be?), we raised the possibility that everyone who lost money in the markets would get their money back, and then some - when hyperinflation starts to kick in. So while people would get their money back in nominal terms (eg $500K houses falling to $200K and then reverting to $500K, ditto for the stock markets and so on), what that money would buy in real terms would be something else altogether (eg $20 loaf of bread). In this kind of scenario, nobody wins, everybody loses. Let's hope that doesn't happen - but it wouldn't hurt to be prepared.

See also :

1. The housing bubble has burst
2. US 'spending binge' to end as housing market slows
3. Housing sales drop in 40 states
4. Property market collapse : California housing prices drop record 41% amid defaults

(2009-05-04 23:29:11 SGT) [Biz] Permalink

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