Weekend Topic Suggestions Here
Post ideas for weekend topics here. If you’ve suggested a relevant topic previously and it wasn’t used, please feel free to recycle it.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
May 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
I just wanted to put this link where ya’ll would see it. Very apropos to the state of things in Phoenix and around the country now. LOL
http://phoenix.craigslist.org/rfs/134617367.html
For that price, I would want the memorial to be gold.
Looks like the burial bubble busted: down 42%!
What a great flipping opportunity. Afterall, all those baby-boomers will need a final resting place. Finally, I’m able to get in on the ground floor with the next great bubble opportunity.
I think having a topic that trolling is allowed would be fun just to get an unfiltered experience.
I would suggest a ridicule/humor thread. I will start something with this one. Check out http://www.fantasylandmortgage.com/pages/944526/index.htm
http://thereisnohousingbubble.blogspot.com/
Also best hits of Auction Heaven in 2007 and Surfer-X from the Bay Area Housing Crash blog would get the humor line up started.
I second this. Those sites are hillarious.
Renting vs. Buying. Are rents going up because people are getting out of the homeowning market? Where are they going up fastest?
http://www.dcbubble.blogspot.com
Will rents necessarily go explode up? During another housing bust, it wasn’t so.
Check where it says Chart I
The nation’s factories are close to capacity. Productivity, with the exception of last quarter has been excellent. Consumer confidence is high. All these things point to a bright economic future….and yet…
The current account deficit hit a record, the budget deficit is near record highs for an expanding economy. The housing bubble shows signs of deflating.
Question: If the average, NATIONWIDE price of homes in America drops 10%, is the general economy growing sufficiently to prevent broad economic meltdown.
Umm, about the factory capacity. You’re forgetting that we used to produce more than we consumed, which is not true anymore. Yes, as of now, we might be at near-full-capacity in factories, but capacity of what? Of the equipment we have today, or compared to 30-40 years ago, when there were a LOT more factories open then?
Another thing is, check it out -
I don’t think the economy is growing enough to prevent the meltdown. There are other things involved, like inflation, losing faith in the US dollar, geopolitical tensions, lowering real wages and job characteristics, costs of building materials rising, rising interest rates, regulators starting to work on lenders in being more responsible in lending practices, resetting of creative financing, ad nauseum. This year, we have about $80 billion in loans that reset to a higher level, such as the ones with less-than-full-interest payments, interest-only payments, whatnot. Next year, $300 billion of loans are estimated to reset, then in 2008, $1.2 TRILLION (10%!) in these loans will reset. My former rentor (not a landlord, since she couldn’t afford to keep proper maintenance on the house) was forced to sell the house I rented from her. She got one of these loans. She had two houses, and she was a school administrator… I think she ended up having to get both houses off her hands.
I see a comment about a concern about people being here because they’re looking to buy a house after the real estate collapse. I’ll let you know that for as long as I can’t buy a house with cash, I won’t buy one. It could mean that I will die houseless after all, but who cares? I can’t take it with me anyway, and I have seen too much happen in just a few years time, LOOONGGG before you’re even half-way through paying for the house.
Stepanie
Don’t forget the yeild curve inversions…
Nursery Rhymes and no fair, pop goes the weasel is too easy.
Robert was nimble, Robert was slick. He got out of his own TOL but quick.
Housing assets falling down, falling down…
Blogger, Blogger quite contrary how does the bubble blow?
“With scream and yells, a few oh hells! and FBs fall down in a row.”
Hickory, dickory, dock,
The FB ran out of luck.
The HELOC struck back,
The FB fell smack!
Hickory, dickory, dock.
Alternate:
Replace the line
“The mouse ran down!”
With
“And down he run”
ROGLMAO!
Good morning from snowy Michigan Ben. I would like to see a general discussion on how these posters here think the housing bust will affect THEIR jobs. In my opinion, there is too much excitement about this housing downturn on this blog with the intent picking up houses for less money. If your laid off in a recession you probably won’t be buying.
Topic suggestion:
Internet morality lectures vs. schadenfreude
My position is there is no shame left in the world and that is a bad thing.
A person getting a pounded and trapped by RE and then being publicly humiliated is a lesson that will never be forgotten.
I will gladly take a career reorganization to have housing be in line with incomes. It has happened before it will happen again both housing and career corrections.
The only people hurt will be those that don’t update their skills and are less employable. Part of the point of this blog is how to position yourself defensively so as to not be in that position.
If you know a storm is coming and prepare the odds are in your favor than people basing the decisions on the weather for the last couple of days.
“I will gladly take a career reorganization to have housing be in line with incomes.”
And you could do this now by moving to an area where housing is in line with incomes. The point I was trying to make is that the correction in housing prices will not occur in a vacuum and there will be residual fallout. I just think that this is somewhat overlooked on this blog because the general focus is on picking up lower priced RE. As far as being educated and keeping your skills updated to protect yourself, I couldn’t agree with you more. But if things get really bad, as in a depression, you could see 100 people applying for every one job opening even at the higher skill level. At that point your playing a numbers game and the odds aren’t in your favor.
I don’t predict a depression. But even in a depression I would welcome whatever happened. It would be pointless and frustrating to give internet morality lectures.
If you look at it from and evolutionary biology point of view the population and relative health of the population is what matters not the individual. If I die or am unemployable (i doubt it) in a depression the genetic hand that I was dealt was insufficient it is better for the species that I stop consuming resources. The same is true for you.
http://thereisnohousingbubble.blogspot.com/
This is mean to be a joke, right? For humor, right? Right?!
Stephanie
For a full explaination pick up 1984 or some other Orwell book.
excellent point indy. I recall hiring for a mid-level planning position here in SCal during the last crash. Ad on Sunday. By Wed, had over 200 resumes, many VERY well qual’d. Guaranteed that we’ll have a lot of collateral damage.
The high cost of housing is speeding up the export of jobs out of America. Why hire someone that has a 500,000 mortgage, when you can hire someone with a 30,000 mortgage in India?
The cost of housing is bad for Americas ability to compete.
It’s gonna be phat for my old job. LOL. Maybe I’ll go back.
How about a topic on whether “flipping” houses is a thing of the past?
Just when I thought it was nearly over, this new neighbor of mine bought his condo to “flip”. I find out he is a local realtor and he’s gutting the entire place…new kitchen, baths, etc. to sell in a couple of months for 650k. Keep in mind that most of our condos in our Irvine tract are about 10-12 yrs old and the biggest models (1200 sq. ft.)sell for maybe 550k (last comp). I almost laughed in his face. I almost laughed even harder when he told me he bought the biggest place in the tract and I had to correct him and tell him he didn’t. What a maroon!
It seems we have reached general
consensus that the housing bubble
has peaked and prices are declining
or are poised to decline.
Question to my fellow bloggers:
Will the coming price declines be
slow or rapid? In other words
how far, how fast and why?
What specific areas (ie. San Diego
or Orange County, Ca.) will lead
or lag the general trend?
The acceleration of the housing market in either direction happens very slowly. It will take 3-5 years for the market to bottom out. Look for the first year (After the big drop) where the prices have flattenned out for a while and government starts giving more incentives to businesses and individuals to jump back into the market. That will probably mark the bottom.
I’m reading a book right now that suggests an initial scary dip in 2006, some mild to shaky recovery in 2007-2008, then major decline starting in 2009. The author’s analysis heavily rests on economic cycles (120 years on down), which he does not show in detail. Although I think cycles do have some merit I think there are too many other factors that could mute the effect of the cycles (like, a terrific amount of liquidity and leverage in the system).
On the other hand I could see where the dip buyers would be out in 2007 scooping up those foreclosure “bargains”.
Bearmaster -
That seems more in line with the likely scenario and is pretty much how the last downturn went. We saw an initial “pause” then a year of stabilization, slight recovery, then a six year downturn. May I ask title/author?
Sure - the book I am reading is America’s Housing Bubble 2006-2012 by Clif Droke.
Like I said, he mentions cycles and shows some charts of cycles but doesn’t particularly lay out in great detail how exactly the cycles will drive this scenario. And of course he is not insistent upon it.
It’s a pretty short book and a quick read.
Does he account for the ARM resets? I would think 2006 would have a mild downturn in comparison to 2007 and 2008. 2009 might decrease less, and 2010 might be lucky to remain flat.
Guessing solely on cycles is going to be cause for some error even if you have the right trend.
here’s my ‘beef’ with this version. youare comparing this real estate bubble to previous real estate booms.I think this is the wrong way to look at it. I think it should be compared to previous “societal financial bubbles” i.e. late 90’s stocks, tulip mania, south sea bubble, 1920’s stocks, 1989 Japan, etc.
under that view, the initial decline is super hard,followed by little trickles until a final depressing bottom
How about a page for my generation (Gen. X / 35 and under) got screwed by the bubble. We could even rant about the smuggness of the older generations as they wonder why we don’t have a decent house yet, even as we pay their damned social security.
If you bought a big fat mortgage, you got screwed. That’s a big if.
How about if you’re renting a small apartment, with kids, and are priced out totally? Has happened to many friends of mine.
How about a thread for homeowners telling how their house value has faired according to Zillow? I am one of those 35 or under Gen X’ers who was lucky enough to buy a house back in ‘98. Purchase price was $132K, Zillow now shows it worth $74K. Strangely enough, I’m happy about this because I believe a housing pullback will be healthy for the economy.
EXTRA, EXTRA, READ ALL ABOUT IT!
SD Union Tribune Headline News:
Leveling off seen for housing appreciation
Flat prices will linger, UCLA economist says
By Roger M. Showley
STAFF WRITER
February 17, 2006
(The above was the front page headline. But if you turn to the inside pages of the lengthy article, you will find what would have been a more appropriate headline:
“It looks like the beginning of the end, folks”)
http://www.signonsandiego.com/uniontrib/20060217/news_1n17housing.html
Will administration of Plunge Protection under the Bernanke Fed be limited to congressional testimony days?
http://tinyurl.com/c47e9
We are seeing more days when the HB stock charts move consistently with what I term the administration of PPT methadone:
http://tinyurl.com/8cqwt
What you see is a steep plunge at the open caught by a safety net which limits the loss for the day to less than 2%. This makes the crash gradual and unworthy of a news item in the WSJ.
Mark Hulbert is confused about whether now is the time to buy housing stocks:
http://tinyurl.com/bhssb
1. Will the condo crash be worse than the SFH crash? Can you really separate the two?
2. Comment: I think people here have been getting too mean-spirited over the last 2-3 months. Sure, there are a lot of greedy SOBs out there (some of them in my family) who may deserve what’s coming, but careful what you wish for — if things get really bad, a lot of innocent bystanders will suffer too. As a hypothetical example, if my dad decides to help bail my older sister out and pay for her kids’ college tuition, that could leave my kid out in the cold if for some reason we needed help (unemployment, or whatever). (Some of you will feel impelled to argue that we could take out a student loan, but just let go of that and think of this just as an example of diminishing resources affecting those who had nothing to do with the decisions to participate in the bubble.)
I agree. Readers don’t realize that a crash may be a disaster for them, too. Greed is greed at 100 K or 1 million. Also, with all those flippers losing everything, there are going to be a lot of innocent children and pets suffering.
Keep in mind that many flippers are just young people with big dreams of wealth. Think of past gold rushes. What’s the difference? Humans will ALWAYS make the same mistakes.
As a dog rescuer of a popular and expensive breed, I can attest that they are being turned over to us in rapidly accelerating numbers. Impulse purchases at 2K per dog. Makes me sick.
Second comment. Young people with big dreams of wealth need to be achieving it the old fashinoned way, though productive work and not trying to be millionaires at 30 through something that benefits noone but themselves. Check out the 27 year old flipper with three money losers with $1.5 million in debt on the flip-this blog. That is just trying to game the system to live large without putting in your time and sweat to do it. Sorry, I have no sympathy or empathy for any of them.
I agree. Not everyone who owns a home is a greedy flipper. These are relatives, friends and neighbors we are talking about. What happens to them is going to affect us very negatively no matter how well we’ve tried to protect ourselves. Same goes for those in the realty business. Practicing kindness and refraining from the “I told you sos” can go a long way.
I have a friend who is a perma-bull here in South Florida. I had him give me his Top 10 reasons why there is no bubble in Florida. Also, I would like to see discussions on tax incentives, government policy and capital gains laws and see if there is much of a correlation between those and high RE prices. My friend seems to think that if the Democrats win the upcoming election, RE is really screwed. I am not a political expert, which is why I am asking for input. These issues aren’t brought up as much as speculation and suicide financing. Below are his 10 reasons. Enjoy.
1. China continues to dump its trade surplus into U.S. bonds, helping
to lower interest rates for U.S. home buyers. I did not come up with this idea, but I do like it. As the fed raises rates, they squeeze out the ARM markets and short term mortgages, which we both agree is a good thing. But the long term rates are connected to bonds, right? We have a large deficit
with China, and they realize there are political sensitivities to this. They have no interest in loosing their biggest market for their goods, especially while their currency is pegged to our dollar. The Chinese gobble up our debt quicker than we can create it! Whether this is smart or not is not the subject of this point. What is the subject is that it happens, it will continue to happen, and this will keep rates under 7%. This is positive for real estate.
2. Even at today’s higher prices, thanks to low mortgage rates, real
estate is still much more affordable today than it was in 1980. We both agree that interest rates play a huge role in home prices. Globalization will continue to put pressures on these long term rates to stay low and attractive for investment purposes. The problem is that the USA is very ahead of the bell curve in investment if you measure us against the rest of the world, hence the constant talk of hedging against inflation. But in my opinion, investment is what fuels are capitalist country, and this will only continue in the future. Investment is stifled with higher rates, and the fed knows this quite well. These low mortgage rates are here to stay,
and property increases are now reflecting these lower rates.
3.Over the last 40 years, the only times that new home prices have
fallen are in or around recessions. I did not know this before, but it appears to be true. Government policy is the #1 criteria which causes and prevents recessions, and this is a fear of mine. If the democrats come to power, they will let tax cuts expire, which along with rising interest rates and a future war with Iran could be an uppercut to the gut of the economy. God dam socialists. If the republicans gain seats this year, it will be good for real estate market. If the socialists win, then all bets
are off. Here comes the recession, the terrorists and the decline of the country. It was nice knowing you.
4. Compared to California and the northeast, Florida real estate is super cheap. You have to be from those areas to appreciate it, but anyone form the northeast (like me) sees a positive cost of living adjustment when coming to Florida. No state income tax….homestead deductions…3% caps on real estate tax raises….Florida is heaven! Its about the jobs. And wages. Florida’s policies attract jobs. We have the lowest
unemployment rate in the nation. This is not by accident, its because we say no to socialism, no to labor unions, and we are a business friendly state, unlike our east and west coast breatheran. When they get tired of the high cost of living there, they come here! When is the last time you bumped into someone from
Arkansas….Colorado…..Idaho….Mississippi…Iowa…..Kansas…Kentucky….Minnesota….Montana…the
Dakota’s….probably not to much. Why? Because we are to expensive for them. But to the northeast and California? Florida is like a Wal-Mart of value. As long as those folks keep coming here, we are in no danger of a bubble. If they crash up there, that’s a different story all together.
5. This one is short but sweat: There is but one south Florida. One
percent of the USA is in the tropics. I will bet more than one percent of Americas desire to live in this environment. Seeing blizzards in the northeast where people loose their power confirm my belief that for some, they will get tired of that.
6. I believe people are over-reacting. We have been on record pace for years now. This was bound to slow down, yes, but a slow down is not synonymous with bubble! Repeat: slow down is not synonymous with bubble! The only way prices drop is if sellers must sell. If sellers blink before buyers, then some prices could drop, this is true. There is some risk with this, mainly with condos. I am less concerned with the SFH market, my points reflect my view of the housing market, i.e., houses. But as long as
people can and continue to make their mortgage payments without defaulting, how can anyone say their is a bubble? Real estate is worth as much as someone is willing to pay for it. Until the time comes that one decides to sell, it is all speculation anyway, right? For better or worse. Bubble to me means drop, drop happens if sellers must sell and it is a buyers market due to supply and demand. I am uncomfortable with all of these new listings, yes, and it has turned into a buyers market. But the prices are what they are, and they will remain that way, unless someone increases a
sellers desire to sell. What would increase a sellers desire to sell?
Lets move to #7…
7. Tax Incentives. A government created incentive to own real estate. Republicans and homeowners love it, socialists and unions hate it. Quick lesson. a single man makes the median income of $50,000. He takes the
standard deduction, which is $5,000, lowering his tax liability to $45,000. His income tax due is 7,921 (2005 tax tables). This same man though, if he owns real estate, can subtract his mortgage interest and real estate taxes. Say the average home price is $350,000 and a man PROPERLY puts down
20%. How mortgage is $280,000. Say he has an interest rate of 6.5%, this means he pays $18,200 in interest. Add his property taxes of $4,000, he gets to deduct $22,200 from his taxes! Thus, his tax liability is $27,800
and he would owe $3,809 in federal taxes, a savings of over $4,000!
Each year. Not to mention it opens the door for him to take other
deductions, like HELOC (which can also be used to lower taxes, lesson for another email though). Savvy people use real estate in their cash management strategy, as a result of good sound government policy. However, these laws are man made, and can be taken away just as quickly as
they are given, right? If these laws are taken away, this can really hurt real estate, because part of my anti bubble theory is that tax law is on our side.
8. Baby boomers! Relocations will begin, states will compete for their business, and people moving only contributes to the stability of home sales. I think this year will overall be a good year to buy a home because inventory is in your favor. But this will evaporate over time, as people will retire in areas that are not where they held their jobs. My prediction, no more, no less.
9. Capital gains. Put simply, as long as capital gains taxes on real
estate are TAX FREE, people will continue to use real estate to park their investment money, and use it with their tax strategy. Again, this is policy, and policy can change. So please, fight socialism wherever it sticks out its ugly head. Only socialist want to find ways to raise taxes, and removing tax incentives from real estate is a way to crush the market (if this is your goal). But until that day comes….its good to own a home, and will continue to be.
10. Marriage. This is my own invented idea, but it goes like this:
Individualism took off in the 1970’s, and as a result, people became more self sufficient. This in turn led to less marriages and a feeling of invincibility that every ONE can do it by themselves. Well, rising home prices has shattered this reality. While the median home price is $350,000, this may seem out of reach for some, if they make the median salary of $50,000. But if two medians get together, there salary jumps to $100,000 and then the house becomes affordable. Conclusion: homes will be the stomping grounds of families, and families require a husband and wife.
To the feminazis and playboys of the world, they won’t be future
homeowners. Man and woman must come together if they want to own a home, and I think the government has an agenda to strengthen families in the USA. If real estate can be used as a tool to achieve this goal, then high prices of real estate are not a problem; the problem is those solo warriors in the world who are crying because this may be something they can’t do by themselves.
It is different here and trees grow to the sky…
Dear Mr. Notorious,
The problem you have with your post is that halfway through a reader forgets that you are reciting someone else’s ideas and not your own. For every reader that gets this far, please note that Mr. Notorious is only the messenger.
I can only say that the mega-bull talking points for Florida real estate go a long way toward explaining why the USA is in the mess its in, on many fronts. I wonder if people like that will ever learn from hard experience (some is coming). I fear that somehow Hillary will get the blame.
This blog has been a haven for information, and has been free of political partisanship, for the most part. The dynamics of the market dont notice whether the participants are red or blue, and both sides have their shares of wisdom and cupidity. Can preserve a nonpartisan atmosphere?
Sorry. Maybe I didn’t do a good job of explaining I was just a messanger. IMO, politics has really nothing to do with this mess. I was just wondering what others thought and if there was a potential correlation. FWIW, I think the bubble has been caused by speculation and suicide financing. No more no less. Politics has nothing to do with the “herd mentality” that fuels bubbles.
WHat a tool that guy is.
Wow, where does someone start here. I will just point out one fallacy. The capital gains benefit he mentions was put into place when Clinton was in office. There, I feel better!
I think the vacancy rates in these highrise condo complexes are the real news right now! We need to start quanitifying these things.
How about some discussion on lifestyle and borrowing and spending. We very quickly lay out moral judgements on people we read about here. Of late the stories are coming in about FB and with some glee we are taking the “I told you so” line. How about we all try to provide some consensus on what are some prudent guidelines for a fiscally healthy lifestyle (Live within your means), borrowing (do you really want to take 10 - 30 years to pay off that Humvee? and stay away from those IO, NegAm loans), and spending (Do you really need that Humvee when a used Jeep Grand Cherokee will do?). It is easy to belittle. It is classier to instruct or lead.
Here are some of my general rules of personal finance:
1) Remember that you do not actually “make money” on anything until you have given up the asset in exchange for cash. An appreciating home has only made you money if you’ve actually sold it.
2) Save for your retirement. There are calculators out there to help you figure out how much to set aside.
3) Save for your kids’ education.
4) Figure out what major purchases you need/want to make in the next few years (car, appliances) and how much you’ll need to set aside to purchase them.
5) All of this assumes that one has learned not to carry a credit card balance. Paying down credit card debt is almost always better than putting extra cash into your savings account. Eventually, though, you should build at least 6 months’ savings in your accounts.
6) Once you’ve covered the necessary savings for all of the items above, then you can think about expensive dinners, travel, and fancy tech toys.
I am sure we all would love to see your favorite comments from loyal bloggers (even if none of mine are included =).
Every few articles I find myself highly amused or gleaning insight I consider very valuable from a few posts.
We all greatly appreciate your effort and congratulate you on your success in the blogesphire. Your mostly (rightfully) restrained opinions are of great import to us and this might be a non liable way for you to express yourself.
A simple compilation of your favorites with commentary at your discretion might serve to put you in real print.
I for one would gladly fork over $15.95 for such a work in print, as I am sure a vast majority of your bloggers would. About the outer market I have no educated guess, but I believe you must have given them some thought.
Thanks Ben……
Sincerely,
Rich
Why is American financial journalism so lousy? While Marketplace is citing which they believe rules out the possibility of a bubble, the Financial Times seems to have quite another interpretation of the current situation:
http://news.ft.com/cms/s/86d9b05e-9e52-11da-b641-0000779e2340.html
I am 27 years old and married. My wife and I bought a 3br/2ba house 3 yrs ago in central San Diego. We can sell it today and walk away with 200k+. My immediate family owns quite a few apartment buildings in the North Park area and plans to buy a number of buildings when the market tanks. Do you think we should sell and rent for a while, to free up this cash for future investments. Has anyone done this? What has your experience been?
Try listing it and see if you can walk away with 200K. You’ll be lucky if anyone will even look at it in that market.
Ben, your blog is awesome. As for FL, does everyone want to deal with a continual fear of hurricanes. I for one don’t. And California has become the sewer of the country. Can’t wait to hear about it blowing up big time there.
What effect will the housing crash have on financial institutions in relatively non-bubbly areas such as the midwest.
In particular:
I live in a rural midwest farm and ranch region where you can still buy a very nice house in a small town for under $100K.
Three years ago I sold an acreage and a house to a couple, and took back a note and am receiving monthly payments from them (thru escrow). They bought a huge old house and moved it onto the property and are slowly remodeling it. They have at least $100K invested in the house now with most of the remodeling still to be done.
They have a line of credit with a small town bank which is lending them the money to remodel the house. In 4 years, they must make a balloon payment to me for the rest of what they owe me. This payment also will be borrowed from the bank. Only one of them works (I think their income is around $40-50K-yr.)
Now, if the housing industry tanks, I figure there’s a good chance repurcussions will be felt thruout the banking industry and their bank will decide to turn off their money spigot and I won’t get my balloon payment. (But I’ll get the property back). Do you feel that this is the likely scenario?
At least my present house is paid for!!
This is a classic example of innocent bystanders like you and also me being affected by events that are occuring outside of our non bubbly areas. As the bubble deflates, more than likely a recession will follow and that will, of course, result in a decline of consumer spending. When this happens, it doesn’t take a rocket scientist to figure out that many workers will be affected as a result, and it certainly won’t be limited to just those in the financial fields. That’s why I am sometimes puzzled when I see folks on this blog cheerleading for a downturn. Yes, houses will come down in price, but it may have other consequences that will
overshadow the lower RE prices.
I for one would like to end my tenure as a renter some day. Sorry if you would rather I cheer for never-ending astronomical price appreciation instead of a return to affordability. And sorry that the economy has to suffer collateral damage in order for a mania to end.
I would rather a bullet was put in each specuvestor over the last 6 years than the collateral damage that we will all have to suffer. And for how long? I have read projections from Eliot Wave Theory that say 25 years. That is a lot of misery.
Indiana Jones is right, the housing bubbles in the megabubbly areas have sloshed over into the non-bubbly areas. Some economists might label what has happened that misallocation of resources or distortion of values.
Last year when I relaunched my web site, I half jokingly wrote this “intro” page. But I do think we could see some aspects of it. I honestly can’t predict the “hobo” aspect of things but if people turned their keys over to banks in the 1980’s and 1990’s, they can do it again in the 2000’s.
I would support a discussion of “turning over the keys.” This happened in the early 80’s in Colorado. Some of my neighbors left in the middle of the night and weren’t heard from again.
Thios was posted at another blog. It raises the interesting question: What pressures do developers have to keep building in the face of a glutted market?
I had dinner a week ago with a 75 year old condo developer in Florida. This guy is a survivor and has seen it all. He put his latest hotel/retail/condo project on hold because of oversupply. But, what is interesting is the comment he made about the construction pipeline. Once you start getting airborne with the project you just can’t stop. You have to finish it to completion because if you do not you will have weather-related structural damage, angry pre-sale clients, an inability to get fixed rate financing and a host of other problems.
Any words on Albuquerque’s positioning?
How long have people been aware of a housing bubble? I know a similar topic was presented recently, but I’m talking about actually seeing it in media. I know that 2 years ago, in the October(?) 2003 issue of Fortune magazine, the cover story featured a house on a precipice, with the headline “Americans are counting on their homes increasing in value; here’s why they won’t” and I think this article corresponded with 30 year mortgages being at their lowpoint. I also recall someone on a business talk radio program in L.A. in September 2001 (before 9/11) remarking about home prices “cooling off” and how that would not be considered a “depression, and not much of a recession considering the runup we’ve seen in the last couple of years.” And I recall an article in the Investors Business Daily in May 2001 about home sales continuing to be “its own bubbly self” heading into the “sweet spot” of summer sales.
How about this (LOL!) - bridge loans?!? (LOL!!) This is a loan that allows them to buy ANOTHER house while they have their house waiting to be sold! First of all, they can’t even sell their house quickly enough in a downturn! And(!), they sometimes get a bridge loan (without checking to see if there is a contigency clause should their house sales not go through). This seems to be even more unreal than the I/O loans, in that not only do they have to worry about their loan resets, they could be responsible for both houses at much higher amounts PER HOUSE! LOL!! This is really, really unbelievable (LOL hysterically!). This is probably it, a modern version of the Roman Empire in its final years (maybe weeks or months depending on how you look at it). Anybody want to entertain this one, so I can stop laughing?!?
Stephanie