Reply #7: Cracks in the Ceiling [View All]

[ozymandius]

Foreclosures, Builder Stocks, 'Flip This House'
May Warn of Deflating Housing Market

Mark Gongloff: If you're trying to find a slow leak in a tire, you can submerge it in water and look for tiny bubbles of escaping air. That may be the best way to look for signs of a deflating housing market, too.

After all, just going by the big indicators, the housing market still looks plump. Sales of pre-owned homes, the bulk of the housing, hit record pace in June, with prices posting their biggest gain since the Carter administration. But there are tiny bubbles escaping, which shouldn't make you feel happy or fine (apologies to Don Ho) about the boom.

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David Gaffen: At least three television shows today -- one on the A&E channel, no less -- extol the virtues of buying, renovating and selling houses for a quick profit. TV shows about "flipping" is the real-estate equivalent of what JFK's dad, Joseph Kennedy Sr., said about the 1929 stock scene: It's time to sell when the shoeshine boy starts talking about the market.

The Learning Channel has "Property Ladder," hosted by "veteran real-estate investor and flipper Kirsten Kemp"; its sister network, Discovery Home, has "Flip That House." That competes with the just-as-imaginatively named "Flip This House" on A&E (we could spend all day arguing whether flipping is an art, entertainment or both). All three premiered within the last two months. And why not? Housing has been a terrific investment -- Freddie Mac says the annualized five-year rate of home price appreciation was 8.38% as of first quarter, the best it has been nationwide since 1982. Still, the idea of several TV shows explaining how Joe Sixpack can make easy money in real estate through what amounts to speculation should trip an alarm or two.

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