The "official" housing bubble thread
#481
Originally Posted by Silver™
Lose $30K on my old house when prices go down 10% and make $60K when my new house appreciates 12% over the next few years. And end up with $30K in the bank or...
Take my $30K in equity from my first house and apply it towards my new house and if that goes up 12% over the next few years I end up with $90K in equity.
Take my $30K in equity from my first house and apply it towards my new house and if that goes up 12% over the next few years I end up with $90K in equity.
There also the issue of interest rates. I for one have a 5% fixed interest rate right now, but in my new loan I would probably be looking at what? 6.5 or 7%...
#482
Moderator Alumnus
Originally Posted by mamboking
There also the issue of interest rates. I for one have a 5% fixed interest rate right now, but in my new loan I would probably be looking at what? 6.5 or 7%...
And if the housing market falls 10% for a sustained time, it probably means your regional or even the national economy is not doing so good, so it likely isn't the best time to make the biggest purchase of your life.
#483
Senior Moderator
Originally Posted by Silver™
Again, the goal of every homeowner is to build up equity, not lose it.
Lose $30K on my old house when prices go down 10% and make $60K when my new house appreciates 12% over the next few years. And end up with $30K in the bank or...
Take my $30K in equity from my first house and apply it towards my new house and if that goes up 12% over the next few years I end up with $90K in equity.
Take my $30K in equity from my first house and apply it towards my new house and if that goes up 12% over the next few years I end up with $90K in equity.
Again I'm not saying its better to have real estate values fall indefinately, but a dip can be an opportunity when upgrading.
#484
Moderator Alumnus
Originally Posted by fdl
But in the first scenario housing prices are more likely to jump higher than %12 over a given period of time. Since real estate is largly cyclical, yet trending higher, one needs to play the dips into ones favour. So if we assume that ultimately the second house will be worth $1,000,000 when you "cash out", is it not better to buy in at $540k than $600k.
Only if the market goes up faster due to the downturn in the market that occurred when you bought that second house. Which more often than not probably doesn't occur because if house values go down then there is usually a fundamental economic reason for that (regional recession, major industry going through bad times, etc..).
All things being equal, you are going to reach that $1 million though quicker if you are at $600K than at $540K. Plus you are going to have that equity built up if you didn't lose it during the downturn in your scenario.
The advantage seems to more than offset the loss taken in the first home. The other things to consider are savings in real estate fee's and property taxes.
Only if the market somehow appreciates at a significantly faster rate for an extended period of time due to the downturn, which doesn't seem likely.
Again I'm not saying its better to have real estate values fall indefinately, but a dip can be an opportunity when upgrading.
Only if you were somehow able to sell at the peak and buy at the bottom, which most of are not luck enough/good enough to pull off
#485
Senior Moderator
Originally Posted by Silver™
Only if the market goes up faster due to the downturn in the market that occurred when you bought that second house. Which more often than not probably doesn't occur because if house values go down then there is usually a fundamental economic reason for that (regional recession, major industry going through bad times, etc..).
Only if the market somehow appreciates at a significantly faster rate for an extended period of time due to the downturn, which doesn't seem likely.
Anyways, I understand what you are saying Silver. I guess we are both working on certain assumptions about the general market trend that we dont agree on. I believe that long term housing will rise to point x regardless of fluctuation, but there will be dips along the way which you can "play". i.e. To me a bad market for a few years does not change the ultimate value of housing 30 years down the road.
#486
is learning to moonwalk i
Originally Posted by Whiskers
Hey housing nerds..... If we sell our house and don't buy another property for a few years, is there something called a asset tax or something like that?
If you're lived in the house for at least 2 of the past 5 years, you are allowed upto $250k per person (so $500k per couple) as tax free gains. Anything over that would be taxed as capital gains. I'm not sure if there are even any benefits to rolling gains into new properties any more. I asked somewhere on here before, but never got an answer (at least that I saw)
#487
Go Giants
Originally Posted by moeronn
I think your question might have gotten overlooked between the Mega Mod discussion.
If you're lived in the house for at least 2 of the past 5 years, you are allowed upto $250k per person (so $500k per couple) as tax free gains. Anything over that would be taxed as capital gains. I'm not sure if there are even any benefits to rolling gains into new properties any more. I asked somewhere on here before, but never got an answer (at least that I saw)
If you're lived in the house for at least 2 of the past 5 years, you are allowed upto $250k per person (so $500k per couple) as tax free gains. Anything over that would be taxed as capital gains. I'm not sure if there are even any benefits to rolling gains into new properties any more. I asked somewhere on here before, but never got an answer (at least that I saw)
#489
Go Giants
Originally Posted by SpeedyV6
sale price - cost basis
#490
is learning to moonwalk i
Originally Posted by SpeedyV6
sale price - cost basis
Let's say the house was $400k when you bought it, but are selling it for $950k. That would be $550k. But then deduct your listing/agent fees (say 6% of $950k) of $57k, and you're in the clear. There are other things you can deduct, also, but I can't think of them right now.
#491
Go Giants
Originally Posted by moeronn
- any selling related costs.
Let's say the house was $400k when you bought it, but are selling it for $950k. That would be $550k. But then deduct your listing/agent fees (say 6% of $950k) of $57k, and you're in the clear. There are other things you can deduct, also, but I can't think of them right now.
Let's say the house was $400k when you bought it, but are selling it for $950k. That would be $550k. But then deduct your listing/agent fees (say 6% of $950k) of $57k, and you're in the clear. There are other things you can deduct, also, but I can't think of them right now.
#492
I feel the need...
Originally Posted by moeronn
There are other things you can deduct, also, but I can't think of them right now.
#493
I feel the need...
Originally Posted by Silver™
Yes, but this is not the equivalent of the dot-com bubble that so many want to make it out to be.
Virginia, Georgia - "rust belt" states??? Hardly.
http://www.nomura.com/research/s16/r...0605167410.pdf
#494
Senior Moderator
Originally Posted by PistonFan
Foreclosures up 72% nationwide in the first quarter of 2006
Virginia, Georgia - "rust belt" states??? Hardly.
http://www.nomura.com/research/s16/r...0605167410.pdf
Virginia, Georgia - "rust belt" states??? Hardly.
http://www.nomura.com/research/s16/r...0605167410.pdf
Hardly a bubble bursting though. 72% of nothing isnt very much anyways
The slowdown should be no surprise to anyone. The jury is still out on whether its a soft landing or a hard one.
#495
misanthropist
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Originally Posted by PistonFan
Foreclosures up 72% nationwide in the first quarter of 2006
Virginia, Georgia - "rust belt" states??? Hardly.
http://www.nomura.com/research/s16/r...0605167410.pdf
Virginia, Georgia - "rust belt" states??? Hardly.
http://www.nomura.com/research/s16/r...0605167410.pdf
Man, I sure am glad I can still eat, especially with thousands of foreclosures out of MILLIONS of homeowners especially here in virginia
that sky sure has been falling for a long time...
07-03-2005, 10:45 AM
Post #159
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08-01-2005, 6:02 PM
PistonFan
Post #207
Greenspan Housing View Seen Hazardous by Wall Street Economists
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PistonFan
Post #278
Homeowners: Upside-down is no way to be
11-22-2005, 6:49 PM
PistonFan
machiavelli illuminati
Post #358
Real-Estate Speculators, Pulling Back, Help Fed Remove `Froth'
05-04-2006, 9:06 PM
PistonFan
Post #468
Welcome to the dead zone
--------------------------------------------------------------------------------
Real estate survival guide: The great housing bubble has finally started to deflate, and the fall will be harder in some markets than others.
#497
I feel the need...
Originally Posted by 03typeS6spd
that sky sure has been falling for a long time...
Who said homeownership is a bad thing? Not me
Just that one should be careful to assume skyrocketing asset prices will continue indefinitely and that your primary home shouldn't necessarily be viewed as a great investment, especially if you're leveraging yourself to the hilt with interest only/or other exotic forms of financing.
Paying rent to a landlord, paying rent to the bank - little difference, unless of course you find yourself underwater.
#498
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hmmm, i agree with what you just posted wholeheartedly, but that's not the tone of the articles you have been posting imo...
either way, anyone who is assuming skyrocketing prices is crazy, but interest only has its place for the adept investor, not the average consumer
i don't think any national article can apply on a nationwide scale with actual localized markets, so reading them and the large sweeping generalizations they make creeps me out, and there have been a lot of those over the past year
either way, anyone who is assuming skyrocketing prices is crazy, but interest only has its place for the adept investor, not the average consumer
i don't think any national article can apply on a nationwide scale with actual localized markets, so reading them and the large sweeping generalizations they make creeps me out, and there have been a lot of those over the past year
#499
Presently surfing the downside in most markets.
Single family detatched homeownership at median price in good labor markets with good schools is a primary wealth accumulation device. Long term, it may be forced savings via mortgage amortization, even in a horrific labor market. Choose your metro area well.
I have seen people actually exit the housing market with cash out gains that exceed mortgage payments plus real estate taxes. Some have lived rent-free for 5 or 10 or 20 or 50 years.
Homeownership is the key to American wealth. The appreciation portion of the return is based upon when you buy, more than when you sell.
Might be some renters with huge money, but guess the percentage of owners is much higher
Single family detatched homeownership at median price in good labor markets with good schools is a primary wealth accumulation device. Long term, it may be forced savings via mortgage amortization, even in a horrific labor market. Choose your metro area well.
I have seen people actually exit the housing market with cash out gains that exceed mortgage payments plus real estate taxes. Some have lived rent-free for 5 or 10 or 20 or 50 years.
Homeownership is the key to American wealth. The appreciation portion of the return is based upon when you buy, more than when you sell.
Might be some renters with huge money, but guess the percentage of owners is much higher
#500
Moderator Alumnus
The market is slowing, but it seems more like a controlled slow down versus a pop.
Sales of new homes rose unexpectedly in April to the fastest pace this year as the housing sector showed resilience in the face of rising mortgage rates. But the price of homes sold last month edged up only slightly.
http://www.msnbc.msn.com/id/12951777/
Sales of new homes rose unexpectedly in April to the fastest pace this year as the housing sector showed resilience in the face of rising mortgage rates. But the price of homes sold last month edged up only slightly.
http://www.msnbc.msn.com/id/12951777/
#502
Bubble? nah...get ready for housing boom #2
http://money.cnn.com/2006/06/13/real...owth/index.htm?
Housing boom 2.0
Harvard study says there may be bumps along the way, but that the long-term health of the housing market is intact.
By Les Christie, CNNMoney.com staff writer
June 13, 2006: 3:18 PM EDT
NEW YORK (CNNMoney.com) - The housing market is entering a down cycle, according to a report from Harvard's Joint Center for Housing Studies, but is unlikely to undergo a severe reversal.
The market may face risks as interest rates rise, decreasing affordability and expanding inventories, according to the study, but the market will suffer only a modest downturn unless the broader economy collapses and jobs dry up.
"There may be tough times ahead," says Nicholas Retsinas, director of the Joint Center for Housing Studies at Harvard, "but housing will emerge stronger than ever." Demographic changes and population expansion will help keep home demand - and prices - healthy. The number of homes needed to meet demand in the next 10 years will likely exceed the 18.1 million units built from 1995 to 2004.
Several factors are at work.
Booming household growth.
The nation will add 1.37 million new households this year. Part of this is natural population increase but this has also been bolstered by foreign migrants.
Graying boomers.
As boomers have aged and prospered, they have begun to buy vacation or second homes in increasing numbers. This trend will widen as they near retirement.
Changing household composition.
Social and cultural changes add to the number of households. There are more single-person households than in the past. Fewer adult children live with their parents; they establish their own homes. Increases in divorce rates result in the division of multi-person households into smaller ones. Family sizes have shrunk; a community may have about the same population but more households.
Minority gains. Ownership among formerly under-represented minorities has increased. Black and Latin home ownership has always trailed that of whites but the past 10 years has seen minorities making great progress.
Downplaying the risks
The Harvard researchers downplay the risk in mortgages with adjustable rates and easy downpayment requirements. Those loans introduce uncertainty, some worry: if interest rates rise, owners could find themselves with much higher monthly payments and that could result in a big jump in foreclosures and forced sales, adding to home inventory and hurting prices.
The Harvard researchers don't expect that to happen, though. Most owners with risky loans have already seen their home values grow substantially. "Having significant home equity is the best protection against foreclosure because homeowners can sell at a profit if they cannot cover their mortgage payments." Home equity accounted for a healthy 56 percent of the total value of primary residences in 2004, the most recent equity data available, according to the study. Ninety-four percent of homeowners had equity of 10 percent or more and 87 percent had equity of 20 percent or more. Only three percent of homeowners had equity stakes of less than five percent.
Even if home prices fall in the next few years, the drops are unlikely to erase all the equity of the great majority of homeowners, the Harvard researchers predict. And the interest rate declines that usually accompany such price drops would enable many borrowers to refinance their homes at favorable terms. All this should help prevent large price drops.
Government influence
Government regulations, by limiting supply, also make it unlikely that housing prices will fall greatly. Land use restrictions, zoning laws and building codes make building housing difficult and expensive.
As Lawrence Yun, managing director of quantitative research for the National Association of Realtors, points out, in general, places with expensive housing are often the hardest places to build. "Builders tell me that getting paper work through in places like Atlanta, Indianapolis or Dallas is a fairly easy process. In other places, such as San Francisco, it's a horrifying experience," he says. "In many areas," says Retsinas, "we see such an anti-development bias. And the trend is to more restrictions, not less, even though markets are softening."
The study's bottom line is that the U.S. economy is sound and that any softening in housing markets should firm up before long. As Retsinas says, however, it's a big country; a lot of different areas have their own characteristics and it's hard to generalize.
"Long term fundamentals are still positive," he says, "but some areas may be more susceptible to a slide."
Housing boom 2.0
Harvard study says there may be bumps along the way, but that the long-term health of the housing market is intact.
By Les Christie, CNNMoney.com staff writer
June 13, 2006: 3:18 PM EDT
NEW YORK (CNNMoney.com) - The housing market is entering a down cycle, according to a report from Harvard's Joint Center for Housing Studies, but is unlikely to undergo a severe reversal.
The market may face risks as interest rates rise, decreasing affordability and expanding inventories, according to the study, but the market will suffer only a modest downturn unless the broader economy collapses and jobs dry up.
"There may be tough times ahead," says Nicholas Retsinas, director of the Joint Center for Housing Studies at Harvard, "but housing will emerge stronger than ever." Demographic changes and population expansion will help keep home demand - and prices - healthy. The number of homes needed to meet demand in the next 10 years will likely exceed the 18.1 million units built from 1995 to 2004.
Several factors are at work.
Booming household growth.
The nation will add 1.37 million new households this year. Part of this is natural population increase but this has also been bolstered by foreign migrants.
Graying boomers.
As boomers have aged and prospered, they have begun to buy vacation or second homes in increasing numbers. This trend will widen as they near retirement.
Changing household composition.
Social and cultural changes add to the number of households. There are more single-person households than in the past. Fewer adult children live with their parents; they establish their own homes. Increases in divorce rates result in the division of multi-person households into smaller ones. Family sizes have shrunk; a community may have about the same population but more households.
Minority gains. Ownership among formerly under-represented minorities has increased. Black and Latin home ownership has always trailed that of whites but the past 10 years has seen minorities making great progress.
Downplaying the risks
The Harvard researchers downplay the risk in mortgages with adjustable rates and easy downpayment requirements. Those loans introduce uncertainty, some worry: if interest rates rise, owners could find themselves with much higher monthly payments and that could result in a big jump in foreclosures and forced sales, adding to home inventory and hurting prices.
The Harvard researchers don't expect that to happen, though. Most owners with risky loans have already seen their home values grow substantially. "Having significant home equity is the best protection against foreclosure because homeowners can sell at a profit if they cannot cover their mortgage payments." Home equity accounted for a healthy 56 percent of the total value of primary residences in 2004, the most recent equity data available, according to the study. Ninety-four percent of homeowners had equity of 10 percent or more and 87 percent had equity of 20 percent or more. Only three percent of homeowners had equity stakes of less than five percent.
Even if home prices fall in the next few years, the drops are unlikely to erase all the equity of the great majority of homeowners, the Harvard researchers predict. And the interest rate declines that usually accompany such price drops would enable many borrowers to refinance their homes at favorable terms. All this should help prevent large price drops.
Government influence
Government regulations, by limiting supply, also make it unlikely that housing prices will fall greatly. Land use restrictions, zoning laws and building codes make building housing difficult and expensive.
As Lawrence Yun, managing director of quantitative research for the National Association of Realtors, points out, in general, places with expensive housing are often the hardest places to build. "Builders tell me that getting paper work through in places like Atlanta, Indianapolis or Dallas is a fairly easy process. In other places, such as San Francisco, it's a horrifying experience," he says. "In many areas," says Retsinas, "we see such an anti-development bias. And the trend is to more restrictions, not less, even though markets are softening."
The study's bottom line is that the U.S. economy is sound and that any softening in housing markets should firm up before long. As Retsinas says, however, it's a big country; a lot of different areas have their own characteristics and it's hard to generalize.
"Long term fundamentals are still positive," he says, "but some areas may be more susceptible to a slide."
Last edited by zeroday; 06-13-2006 at 03:12 PM.
#504
My only question at this point is: Will my markets be rotten for four years or ten?
It has become critical to pick the right labor markets. Some "overpriced" markets will do fine, others won't.
It has become critical to pick the right labor markets. Some "overpriced" markets will do fine, others won't.
#506
I feel the need...
Originally Posted by zeroday
Booming household growth.
The nation will add 1.37 million new households this year. Part of this is natural population increase but this has also been bolstered by foreign migrants.
Graying boomers.
As boomers have aged and prospered, they have begun to buy vacation or second homes in increasing numbers. This trend will widen as they near retirement.
The nation will add 1.37 million new households this year. Part of this is natural population increase but this has also been bolstered by foreign migrants.
Graying boomers.
As boomers have aged and prospered, they have begun to buy vacation or second homes in increasing numbers. This trend will widen as they near retirement.
However, given the balance sheets of most boomers who are leveraged to the hilt and don't have a pot to piss in for retirement, I seriously doubt that they will be a reason the boom will continue.
Bottom line is the feeding frenzy was pumped up by speculative, easy money and those days are behind us.
#507
Originally Posted by PistonFan
bottom line is the feeding frenzy was pumped up by speculative, easy money and those days are behind us.
#509
I feel the need...
Originally Posted by zeroday
i swear so many people have been brainwashed about this whole bubble thing for so long they forgot about basic rules of supply and demand.
For sure, and if the Bank is gonna give you 100% financing and easy payment terms, you'd 'invest' all your money in fancy cars, women and caviar
U.S. Homebuyers Choose Riskier Loans to `Stretch'
By Kathleen M. Howley
June 13 (Bloomberg) -- Almost a third of U.S. homebuyers
chose risky ``interest-only'' mortgages in 2005 as a record jump
in prices drove affordability to a two-decade low, according to
a Harvard University study.
The average mortgage payment in 2005 rose to 24 percent of
the U.S. median income after taxes, the highest since it was
25 percent in 1984, adjusted for inflation, according to the
report issued today by Harvard's Joint Center for Housing
Studies in Cambridge, Massachusetts.
Home prices rose 9.4 percent in 2005, the biggest annual
gain in more than 40 years of record-keeping, the report said.
Thirty percent of new mortgages last year were products that
allow buyers to skip paying money toward principal, and some
allowed deferred interest payments that could result in people
owing more than they borrowed, the report said.
``Stretching to afford ever-more expensive homes, borrowers
increasingly turned to mortgage products other than fixed-rate
loans to lower their monthly payments,'' the report stated.
So-called interest-only adjustable-rate mortgages that
defer principal payments in the early years of the loan rose to
20 percent of the dollar value of all mortgages last year, the
report said. Payment-option adjustable mortgages, often called
option-ARMs, rose to 10 percent of the total, the report said.
Payment-option mortgages have introductory rates as low as
1.25 percent and allow buyers to pay a minimal amount that can
result in them being ``upside down'' in the mortgage, or owing
more than they borrowed. Interest-only mortgages, with rates
currently at about 4.25 percent, allow borrowers to defer paying
principal. Both types of 30-year loans were rare two years ago,
the study said.
The average U.S. rate for a 30-year fixed mortgage was 6.22
percent last year, and the median home price was a record
$219,000. In 1982 rates reached an all-time high of 15 percent,
and the median home price was $131,305, the report said.
The most expensive housing market last year was San Jose,
California, where the median single-family house price was
$744,500, the report said, citing prices issued by the National
Association of Realtors. Second was San Francisco, at $715,700,
followed by Los Angeles, at $691,900. New York was No. 7 at
$446,500, Washington was No. 8, at $424,700 and Boston was No.
9, at $414,000.
source: bloomberg
By Kathleen M. Howley
June 13 (Bloomberg) -- Almost a third of U.S. homebuyers
chose risky ``interest-only'' mortgages in 2005 as a record jump
in prices drove affordability to a two-decade low, according to
a Harvard University study.
The average mortgage payment in 2005 rose to 24 percent of
the U.S. median income after taxes, the highest since it was
25 percent in 1984, adjusted for inflation, according to the
report issued today by Harvard's Joint Center for Housing
Studies in Cambridge, Massachusetts.
Home prices rose 9.4 percent in 2005, the biggest annual
gain in more than 40 years of record-keeping, the report said.
Thirty percent of new mortgages last year were products that
allow buyers to skip paying money toward principal, and some
allowed deferred interest payments that could result in people
owing more than they borrowed, the report said.
``Stretching to afford ever-more expensive homes, borrowers
increasingly turned to mortgage products other than fixed-rate
loans to lower their monthly payments,'' the report stated.
So-called interest-only adjustable-rate mortgages that
defer principal payments in the early years of the loan rose to
20 percent of the dollar value of all mortgages last year, the
report said. Payment-option adjustable mortgages, often called
option-ARMs, rose to 10 percent of the total, the report said.
Payment-option mortgages have introductory rates as low as
1.25 percent and allow buyers to pay a minimal amount that can
result in them being ``upside down'' in the mortgage, or owing
more than they borrowed. Interest-only mortgages, with rates
currently at about 4.25 percent, allow borrowers to defer paying
principal. Both types of 30-year loans were rare two years ago,
the study said.
The average U.S. rate for a 30-year fixed mortgage was 6.22
percent last year, and the median home price was a record
$219,000. In 1982 rates reached an all-time high of 15 percent,
and the median home price was $131,305, the report said.
The most expensive housing market last year was San Jose,
California, where the median single-family house price was
$744,500, the report said, citing prices issued by the National
Association of Realtors. Second was San Francisco, at $715,700,
followed by Los Angeles, at $691,900. New York was No. 7 at
$446,500, Washington was No. 8, at $424,700 and Boston was No.
9, at $414,000.
source: bloomberg
#511
I feel the need...
Originally Posted by zeroday
did you not read the article i posted? equity? hello?? according to the harvard study i posted most people have enough equity in their home so that this won't be a big issue.
#512
Originally Posted by PistonFan
Home equity is not a fixed asset. It can decrease as well as increase. It's not like you're gonna run out and sell your home just to capture your equity. And if you take out a HELOC, guess what, you actually have to pay that money back with interest.
Ninety-four percent of homeowners had equity of 10 percent or more and 87 percent had equity of 20 percent or more. Only three percent of homeowners had equity stakes of less than five percent.
#514
I feel the need...
I read the article, you don't need to restate the obvious. But if you think that 10 year treasuries are going back to 3.07% anytime soon, I'll sell you a bridge to nowhere in Alaska.
If you are a student of economics and have a passing interest in history, you'd quickly discover that the easy money days of the last few years are what fed the real estate boom, and to say that the boom will continue indefinitely is doing a great disservice to those who want to make intelligent investment decisions.
If you are a student of economics and have a passing interest in history, you'd quickly discover that the easy money days of the last few years are what fed the real estate boom, and to say that the boom will continue indefinitely is doing a great disservice to those who want to make intelligent investment decisions.
#515
Suzuka Master
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equity doesn't mean shit when their mortgages rise and they can't make the payments. and then what, tap into their equity to help pay their current mortgage...only to increase their monthly dues, and decrease their equity? of course they'll be forced to sell...
and, this isn't even talking about the shithole our economy is headed. we're already poorer from the last few weeks resulting for the stock market, and there won't be any ease from the bear anytime soon.
and, this isn't even talking about the shithole our economy is headed. we're already poorer from the last few weeks resulting for the stock market, and there won't be any ease from the bear anytime soon.