April 2005 – Jim Rogers Calls it a “Housing Bubble”
Posted on | December 19, 2008 | 6 Comments
In April of 2005, Jim Rogers made the statement that “we (America) are in a housing bubble in much of the United States and in some other countries partly because interest rates were driven too low and too much money has been printed.” The words uttered by Mr. Rogers on that April day in 2005 have been nothing but prophetic. Since then, the overall housing market in the United States is down over 30% and some cities are down well over 50%.
Most homebuilders, including Pulte, K Hovnanian, Beazer and Standard Pacific are down over 90% since April of 2005. There has been a freefall in home prices and interest rates have tumbled to a 37 year low. The major metropolitan areas to see steep drops include (these numbers are taken as of October 2008)
- San Francisco – down 51%
- Miami – down 58%
- New York – down 24%
- Washington, DC – down 40%
- Las Vegas – down 55%
- Phoenix – down 70%
This was all predicted by Jim Rogers over three years ago, yet it seemed no one would listen. Today Rogers feels that the economy is still in peril and that things are only going to get worse; are we going to listen this time?
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6 Responses to “April 2005 – Jim Rogers Calls it a “Housing Bubble””
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December 19th, 2008 @ 7:49 pm
It’s actually pretty amazing when you look at the number of “lone voices in the wilderness” offering warnings. If only we had paid more attention, rather than happily going about our consumerism…
December 20th, 2008 @ 12:10 am
I love Jim Rogers. One time a few years ago during Christmas season, he had his usual bow-tie on. But this one was different. It was a bow-tie with 3 Christmas trees. And the bow-tie was upsidedown!
December 20th, 2008 @ 6:49 am
The price of housing cannot exceed a reasonable amount above the cost of building it. Dseireability is a always a factor, but as with the job markets, globalization is starting to apply with homes. In Tennessee homes sell for 30.00 per sq. ft. less than it costs to build them, in Arizona it’s 25.00 more than the cost to build. LA is still around 300.00 more per sq ft than cost, and right now California has the cheapest labor in the country at 4.00 to 5.00 an hour for skilled illegal alien construction workers. Homes will never be worth what they were anytime soon. The average is 50% overvalued from whee we are now.
December 20th, 2008 @ 5:01 pm
The Problem is that the banks are not loaning money to the people that need it and if you are not late with your mortgage payment they won’t help. In other words I have to ruin my good credit to be able to get help. That is the most stupid thing the financial institutions have done yet and no one is doing anything about it.
This is just crazy
December 20th, 2008 @ 10:27 pm
Jim is always right. He was right on commodities as well.
As for the housing market, however, we still have a ways to go on the downside. The big issue for us right now is the lack of commitment from banks / lending institutions to lend money to the consumer. They are basically gun shy; and until they regain confidence, we will continue to see prices drop in real estate. About the same time that Jim predicted this real estate bubble, I predicted that we (U.S.) would end up like Japan’s market. It took Japan more than 10 years to partially recover, even with interest rates at near 0%. We are simply a repeat of the Japanese market — 10 years of sideways to down real estate market.
Notice that our Fed rate is currently at 0% to 0.25% as of the last rate cut — Hello Japan!!!
December 21st, 2008 @ 4:16 am
The problem was that our government, in it’s wisdom , decided that the poor folks without any decent credit history and with stated income, should have a piece of the American Dream, and forced the banks, under penalty of fines, to lend to these people. Now the banks are being demonized for fulfilling the government’s mandate.
Of course the problem was multiplied by dishonesty in certain individuals running multi billion-dollar Ponzi schemes. But then, we shouldn’t be so hard on them, either. After all, they modeled their behavior on our government’s Social Security system!!