‘How To Communicate With Agents, Seller’s And Joes’?
A recent topic suggestion revolved around the housing bubble ‘camps.’ “How to constructively communicate with agents, sellers and Joe’s on the street about the issues. I’m no anger manager, and I’ve ranted at some possibly nice folks. Forgot they were people like me, with kids to feed, just with different abilities and tools.”
“Let’s all agree to live together. Some folks are gonna burn. Face it, but don’t push their faces in the pee just because they pissed on the rug.”
“A lot of people here are highly-educated, learned on the job or had very terrific mentors. There are regular people out there who didn’t have the same opportunities. Our schooling system has failed. They never even learned to balance a checkbook in school. Remember, they are getting their stock advice at the legion hall.”
A reply. “I think the backlash directed at many of these people is a result of their own arrogance and know-it-all attitude that they projected over the past five years. I think they brought it on themselves with all of the buy now, RE never goes down, etc. crap. They took the ARMs, HELOCs, etc. resulting in the massive price escalation, while we took normal mtges and did the what was right for us. Now, we are supposed to have sympathy/patience for/with them????”
“Sorry, I don’t think so…. They ‘rode’ the crest, they crash with the wave.”
Another said, “Not after I’ve listened to them tell ME how stupid I am for not buying a house - ‘real estate only goes up,’ ‘rent is just throwing your money away,’ ‘I’ve already made 200K’ or having to stomach the general bragging of how great they are at ‘investing.’ These morons deserve every bit of ridicule they’re getting.”
A letter to the editor. “Re: ‘High home prices, stagnant wages put squeeze on middle class’ (Business, Sept. 3): Finally the citizens are getting smart enough to not pay those ridiculous prices and getting nothing. I mean, a home in North Hollywood with two bedrooms for $1 million? Now those money grubbers who are fleecing people who long to get some of that so-called American dream can eat the debt themselves.”
A Motley Fool. “I’ve spent the past few months casting a hairy eyeball at a lot of the pro-housing hypesters out there, the folks I feel have cheered on a dangerous bubble with little regard to the potential dangers to consumers’ pocketbooks or the economy at large.”
“So I want to be sure to offer a golf clap to one of the outfits that’s been in my crosshairs, the National Association of Realtors. Yesterday, for the first time that I can remember, it appears to me that the NAR came clean on the housing bubble, right out in public.”
“David Lereah, the endlessly quoted chief economist for the organization, finally acknowledged openly that sales are tanking and prices going down. He used uncharacteristically firm language, tossing out lines such as,’…people who purchased last year with the intent of flipping are likely to get burned.’”
“Unfortunately, this may be too little, too late. But hey, baby steps. At least the NAR has snapped out of the Kevin-Bacon-in-Animal-House-squashed-flat-on-the-sidewalk mantra: ‘All is well!’”
When I first moved here and went to some new housing I was pushed aside for those who’d just come in a sign for a house to be built. RE agents wouldn’t give me the time of day even when I walked into their office; they told me to come back when I was ready to buy any house at any price and be prepared to out bid other bidders. I told them to screw themselves. Guess what? I’m getting phone calls from those same agents telling me to come in and talk as it’s a buyer’s market.
Guess what? I hope they end up out in the street eating hot dogs and beans for the next 5 years. In the world I grew up in you realized that your customer base is what got you through both good years and bad years, these yoyo’s are totally clueless.
Watch out and be careful, dont get hit with “Can you go higher to beat the other bids” nonsense. Oldest con in the book.
Tell them point blank if they cant give you a name of the other bidders, phone number(s) and other bid amounts then remind them ARE commiting fraud.
Then drop your bid by another 10% back at them!
The phantom bidding is so fake and so widly used it makes Enron look like childs play.
Larry can you please provide a link to said statute on fraud if they don’t provide the names of the bidders.
I think he’s saying that lying about the fact that there are other bidders is fraud. If there are actually other bids, I wouldn’t think it would be fraud not to give out the names and phone numbers. I haven’t actually looked up the statute, though.
Its called the Statute of Frauds and at its most basic provides that all contracts involving land must be in writing.
Recommend that you have a look at this atty’s site:
http://www.kinseylaw.com/clientserv2/civillitigationserv/realestate/breachrecontract
Read the section labeled: Fraud.
I dont think we have any statue / law requiring full disclosure of this nature regarding all bids. However, it human nature that realtors will pump the prices to the max thus reaping max commission. As such act like a prudent investor/consumer and get the best deal. Doesnt hurt if you underbid say 15% and then start to negotiate. This is how its been done for decades.
- “I hope they end up out in the street eating hot dogs”
Let us hope that those dogs are ‘all meat Oscar Meyer’s’
Nah… Let them eat the lips and a$$hole dogs.
Hey everyone: the final barrier to a full crash of the RE market is the price. right now it’s artificially propped up by incentives, upgrades, low interest rate guarantee etc. so the next step for the anti-bubble revolution is to bring down the price by spreading the gospels of artificial highpricing by both sellers and builders. long live the revolution!!!!!
Today I was driving down 41 north in north Fort Myers Florida and a PT Cruiser was parked in front of a mobil home park with a sign that said fee PT Cruiser with purchase of a home ! Now I don’t know how much a Dodge PT Cruiser cost but the mobile homes must have a hell of a markup to cover the cost, I will be sending the picture.
Upon closing, the buyer was overheard aking for the title to the vehicle at which time the seller replied “Uh, ehem, um, I will need to get the title from the finance company after paying it off.” It then occurred to the buyer that they paid for the car as well as the house.
Yep, just saw the “free PT Cruiser” add in the Home section today, here in Tampa. Small print reveals that its a “free” lease for 2 years. So, just when you realize you own a piece of property that is worth $50,000 less than what you paid for it back in 2006, they take your car back.
What a killer deal!
Centex is advertising in SLO County, Ca that they will LOWER your final price , if you happen to be in escrow in a tract, and they contract at a lower price to someone else before you close. Now if they would rebate $ to you if they EVER lower the price or close at a lower price than you paid. Now that’s what I would call a deal. Never happen. How would you inforce it? hehehehehehe
I just keep repeating to people that homes are unafordable due to high prices, rising property taxes, flat median incomes and general inflation in other living expenses. And I always mention that 30yr fixed rates are still reasonable by historic standards, so interest rates aren’t the problem, it’s that prices are unrealistic, given incomes and the cost of living.
As a side note, the last couple of weeks I’ve noticed that “For Sale by Owner” signs (the kind from the hardware store), have realy multiplied on Long Island. Just an eyeball guess, figuring in the FSBO’s, I’d say inventory here is probaly 20% higher than reported on MLS.
I noticed a few in my hood as well. It’s probably because the Reamtors refused to list at the high price.
I’ve used Realtwhores, but “Reamtors” is a new one.
Love it. Gonna use it.
why do they do that- ? just use your last name, especially if it’s a patrician or anglo surname
FSBO signs are forienor/lowballer magnets
the one FSBO condo I went to see…the seller was a young guy, and just talking with him for 15 minutes I had the feeling he thought he was a Real Estate Genius…anyway, I wasn’t interested. After a couple months of trying to sell his condo, he finally listed it with a realtor…for less than his original asking price. Just a word of caution: It’s not just the Realtors that know how to rack you…use due diligence even when dealing with a private party.
But that’s probably redundant advice on this blog.
Well, all I can say is that I agree with the arrogance factor. There are many out there who are clueless about micro/macro economics and I understand that. What I can’t stand is someone like my former landlord - an idiot - who quit his attorney job with the PTO in JANUARY to do the real estate/investment/buy properties to rent/ “job” and then ends up upside down on his “investments” crying that his payment on the dump we rented were 1k a month higher than our rent!! Not to mention, he had leveraged that place to the hilt to buy other properties in 2004 and 2005 and I’m sure he cashed out his federal retirement to live on!!! Then when we moved out, he tries to stick us with a bunch of “repairs” (which, by the way, hubby is a commercial contractor and knows more about fixing things and did several times for free, than his loser lackeys ever would) that didn’t exist all because I’m SURE he didn’t have our deposit to pay back and he wanted to add new carpet, etc. at our expense. He also needed to do several thousand dollars in plumbing repairs - toilet backed up into tub several times - to the extent that I contacted the city/health department and Fairfax County Consumers people due to the biohazard conditions. Then he never could rent the dump because it required too much work for any others to be interested. He ends up moving back in himself. I only tell this story because he’s not the only one out there doing this stuff with the arrogance factor! He quit his job at the peak/downward of the market because he’s so “smart” but he’s losing his butt and it will only get worse and even worse yet, he has tenants that have to endure the fact that he can’t afford to make proper repairs on old properties. May they all rest in peace…
Right on, the arrogance factor is probably one of the most horrific characteristics of this housing bubble, combined with the false public relations. But I feel the housing bubble is just one more symptom of a larger nasty, lying, cheating, stealing, bullying ethic established by an unholy alliance of the current administration and national main stream media. The twisting of truth and betrayal of trust that has already bogged us down overseas and at home comes from the top and sh*t flows downhill, right into this housing bust and the unethical activities of people at the everyday level. I, too, am in the process of leaving a very bad landlord situation, with the property badly in need of repairs. What I am seeing are people who would normally treat their fellow man with respect turn into absolute asshats.
arrogance and entitlement. Without both, it’d be different this time.
- Entitlement exactly defines these folks on the deepest level. I directly blame the media. Folks watch 60 hours per week and have NO ability to facilitate the information.
- To John Q Beerbelly, the media is true …
As long as you keep blaming anyone but the PARENTS who raised these morons, you’re missing a big part of the picture.
In the present day America, children to be adults are not the product of their environment or their PARENTS, but wholly products of a incompetent batch of underpaid and lazy public school teachers! I only wish that the people could actually realize that MORONS are most of the times raised by some other moronic parents.
Well, if you realized that someone else was raising your child to be a moron, wouldn’t you take your child back to raise them out of it?* And if you don’t care, doesn’t that make you moronic too?
If you’re going to raise a child, raise that child. Don’t hand it off and then blame others for the “moron” that is created.
*Public school is never the only alternative. True, some of the alternatives require hard work and sacrifice, but no one said raising children was easy…
Teachers? No way. It is not the tecahers job to teach morals to the kids. Those things are taught before most of the teachers even see them. It is parents, and parents only, who hold the blame.
What a sad existence, to view every negative thing in the world as the fault of Boogeyman Bush. Now FBs are not to blame for their own actions, but Bush is to blame? Do you hear yourself? What will you do in January 2009, when your boogeyman is no more?
Exactly! This housing bubble/bust is only a symptom of a widespread national breakdown in human decency affecting elected officials, businesspeople, and everyday consumers. Fortunately, I’ve been able to watch this circus from the sidelines as I’m not heavily invested in the System. But, I tell ya, I still have to get my groceries from the corner store and the sh*t is piling up on the sidewalks.
“This housing bubble/bust is only a symptom of a widespread national breakdown in human decency affecting elected officials, businesspeople, and everyday consumers. ”
Can you spell P-R-O-P-A-G-A-N-D-A? The whole system is run, or controlled, via propaganda, from birth, i.e., the population is bred to believe in serving the interests of those who control the propaganda organ.
Regrettably, the propagandists who control the American System make Nazis look like flower girls in the propaganda department. People can be made to believe anything.
Jas Jain
Right on!
Jas Jain
“Regrettably, the propagandists who control the American System make Nazis look like flower girls in the propaganda department. People can be made to believe anything.”
Man, I think you are not giving enough credit to the starving German public of the 1930s! How can we compare people who were up to the teeth unemployed, therefore, desperate to believe in a solulion, that came from the mouth of a madman and an American public of the present who spends more than they could ever afford, that live in the lap of luxury and consumerism? More than the “Propagandists” in our country being smart, I think they “dumb” down their discourse to the IQ of the public….because really sophisticated propaganda is so incredibly subtle and allegoric that actually required the public to have some brains.
BTW, I have spoken to someone who was a teen during the 1930s in Germany and even back in those days, HS students in Germany were reading books like “The Magic Mountain” by Thomas Mann, as well as philosophy by Friedrich Nietzsche etc…. They did not have to go through the bogus lies of “No Child Left Behind” and what not that the American public believes is actually progress. >:)
“This housing bubble/bust is only a symptom of a widespread national breakdown in human decency affecting elected officials, businesspeople, and everyday consumers. ”
“Can you spell P-R-O-P-A-G-A-N-D-A? The whole system is run, or controlled, via propaganda, from birth, i.e., the population is bred to believe in serving the interests of those who control the propaganda organ.”
I think that the vast majority of the public simply lacks a broad well-rounded education in Liberal arts, History and economics. If one knows their History one is aware of past Bubbles, and especially the 1929 crash. Actual life experience and making sound business decisions is also important.
As far as propaganda from the MSM, it has gotten to the point that I actually cannot stand watching TV news except as a brief diversionary Dinnertime break. Used to be a heavy LA times reader but i now just simply scan the LAtimes online along with 10 other online news sources. I have to Filter/ferret out what is significant news from the 95% BS propaganda MSM spin. I am also highly distrustful of Political spinning by both political parties, especially at the higher elite levels. Propaganda is a powerful tool in politics, commercial ads, teaching,ect., and properly applied will sway the vast majority of sheeple. This is why the eemergence of independent blogsites such as this are very important, as informational arenas which lampoon the spinmeisters.
I’ve said for years that we are the targets of the most sophisticated, if not the most pervasive progaganda effort that the world has ever seen. The central message: “Buying stuff will make you happy.”
I agree about the arrogance. I worked for a real estate agent who was one of the most arrogant people I have ever had the displeasure to meet. He was late with our paychecks because he didn’t have cash but he and his wife would come back from the mall with bags full of clothes and household crap. He had a bunch of properties that were all mortgaged to the maximum level. He’s probably going to be bankrupt after this crash. That is, if an angry client hasn’t already killed him.
I guess you’ll enjoy algore with higher taxes and a recession when it comes??. By the way, the glaciers in Greenland, Mt Shasta, and Antartica are growing. Where are the hurricanes? Sorry Ben, I couldn’t help it.
You know what Pismobear?
Just because you say or write something, it does not make it true.
And just because you read or heard something… it don’t make THAT none the truer, neither.
“Where are the hurricanes?”
Blowing out of your butt. Or your mouth. Same thing.
silence, dumb-ass republican.
Gret post.
“What I am seeing are people who would normally treat their fellow man with respect turn into absolute asshats.”
I think that’s the thing I hate the most about the last 5 years. I can deal with the natural born a-holes, but when normally decent folks get caught up in the mania, it really turns my stomach.
Amen Brother George. It’s the sad part of this whole affair. Normal people gone mad.
Money for nothin’ will do that to a body. Greed is a perverting emotion.
Liz,
Amen, Sister! My wife and I are going through the same thing - our issue is with a cop who jumped on the bandwagon last summer, spent about $100K more than the property was really worth, then couldn’t sell, finally rented it (to us, unfortunately). We are now getting ready to sue this idiot for withholding deposit for a “phantom carpet” issue. We’ve got a lawyer and have a very good case.
Unfortunately, this guy is up $hit-creek without a paddle, and I doubt we’ll be able to collect on any judgement we may get. Still, a judgement is a judgement, and this will follow this guy (and his “amateur realtor” lackey) for years to come.
No soup for you!
I think that the aftermath will be somewhat akin to walking out of the stadium at an away footbal game after your underdog team wiped the field with the opponents. You might be happy as all get-out, but it’s going to be very prudent to resist yelling that out as you pass drunken groups of fans for the other side.
Well said, Chip. At least we’ve got this blog on which to anonymously gloat
I hope some good comes out of all this, not so much in terms of government regulation, but in terms of personal responsibility and education. Sheep can’t be shorn unless they allow themselves to be herded into a pen. Perhaps sometimes it takes a certain amount of pain for some people to learn a lesson, like a kid who has been warned many times not to touch a hot stove, but does it anyway, and has to learn not to touch the stove by getting burned.
A case could be made that what is at the root of these financial manias needs to be openly pointed out, as the painful consequences become apparent. In the topics thread one reader asked, how could a country that had just gone through an internet bubble fall for another mania so soon after. Let’s hope that it is a long time before our fellow citizens start bidding up tulips again.
Exactly, Ben, I agree that the root of these manias should be emphasized ad nauseum, to the degree that people never forget what the root is. Only in this way can this sort of thing be eradicated.
I would recommend for anyone who is interested in The early history of SCal and Los angeles the book “Southern California:an island on the land” by Carey McWilliams. It has chapters on The numerous RE boom and bust cycles that Scal has gone thru, and all the RE/business frauds and scams which have occurred thruoughout LA’s history. Written from a leftist,socially conscious point of view but useful nonetheless.
Also anyone who has a knowlege of American History knows of the massive corruption and stock jobbery during the Gilded age from the 1860’s to the 1880’s, when the US government was in the pockets of the robber barons.
One thing that’s always interested me about the Gilded Age was that, corruption or not, STUFF GOT DONE. The first transcontinental railroad was absolutely riddled with fraud — but the railroad got built, to the massive benefit of the public, in far less time than it took for similar enterprises, where the government kept a closer eye on things, to be completed. The Russian government, for example, was absolutely obsessed with preventing fraud in building the Trans-Siberian. It wasn’t finished until about 1900.
My favorite Central Pacific scam was their infamous moving of the Sierra Nevadas all the way to the Sacramento River, to qualify for increased loan guarantees for mountain-railroad building. (They managed to convince the government oversight body, possibly by bribery, that the Sierras should be considered to start at the low point of the Central Valley, notwithstanding that the terrain there is flat as a pancake.)
It’s been about 400 years since the last tulip bubble. Maybe housing will follow the same path.
Very few know of the ‘Tulip Bubble’ . Total unfounded hysteria over a *ucking flower bulb! Unbelieveable!
ROOTS OF CURRENT BUBBLE : (That broke )
(1) low cost for money
(2) Easy money to finance speculation coupled with low down payment requirements
(3)Increasing demand by putting unqualified people on toxic ARM and IO loans with low downs
(4) One sided media coverage in favor of advertisers
(5) Low wages not keeping up with inflation causing people to tap equity,/gamble .
(6) Banks paying low interest to savers causing people to look for higher paying investments
(7) Flip that house programs /get rich quick seminars and all the other cheerleader pushing get rich quick .
(8) Creation of mass panic buying based on real estate always goes up/we are running out of land/ you will be priced out forever .
(9) Herd mentality-everybody else is doing it so it must be safe , I want in on the easy money etc.
(10) Avoisance of 2000 recession and perhaps a reaction to 911
(11) Human nature vunerable to greed ,lazyness ,looking for easy ways out .
(12) Babyboomer wanting to fund retirement that they have not saved for .
(13) Young people wanting money to fund retirement because they feel they won’t see any SS fund left .
(14) And just plain unrealistic people who want to party hardy with all the toys and have a easy way of paying the bill.
(15) Lack of bank/lending regulation and disregard for time tested prudent underwriting standards coupled with faulty appraisals .
(16) Refusal to stick to fundamentals in investing and blind faith that real estate goes up 15 to 30% per year .
(17) Recent change in real estate capital gain tax exclusion up to 500k every 2 years ,causing increased activity and shorter term investment turnover .
Now what are we going to do ?
Is that any dumber than mania over Beanie Babies?
The “root” of any financial mania is the issuance of credit. The US banks issue credit in a seemingly endless manner because the US dollar is the reserve currency of the WORLD. Oil producing nations sell their oil ONLY in US dollars (at least for the moment). As the demand for and the price of oil has increased over the last 5 years, so has the demand for the currency in which it is priced. This creates a pool of US dollars outside this country which need to be invested or traded for another product, service or currency.
These oil producing nations can receieve a nice return on US Treasury bonds or mortgage backed securities. Each of these instruments accelerates the liquidity injected into the housing market in the US. The Federal Reserve, Fannie Mae and the money center banks (JPM, C, BofA, etc) ensure that all of these instruments have buyers if the foreign entities demands slacks. As these instruments are sold to investors capital is returned to the US and with such low reserve ratio requirements significantly more $ are lent out.
Rinse and repeat.
Voila, a massive housing mania.
At least, until the lack of wage growth scares away the borrowing public (I am amazed this has not happened yet).
However, even if the American borrower is stupid enough to continue borrowing in the face of stagnant or falling wages, the mania’s continuance rests SOLELY on the US dollar remaining the world reserve currency. If a maverick oil producing nation like Iran, Venezula or Russia decided to price it’s oil in ANY other currency the game would end as dollar demand outside the US would fall.
This requires a stong military presence around the globe and a complicit media EVERYWHERE to lie about the real reason for military action in these potentially non-compliant oil producing states. Once either of these requirements is breached watch out for the deluge…the amount of lies being told by the media, is a clear indication that we are close to that scary point.
Wiz,
Excellent post. Agree very much with everything you said!
So the only thing preventing Venezuela or Russia from pricing oil in currency other than dollars is the threat of American military invasion?
Horsepucky. That’s not the restraint, because the “threat” isn’t credible. Hugo Chavez may rile up the ignorant masses with dark warnings of a potential American invasion, but he knows it would never happen. And Russia — well, anyone who actually thinks V. Putin stays up nights worrying the U.S. is going to invade Russia needs to adjust his tinfoil hat.
How ’bout this: The reasons for the invasion of Iraq were as stated. They may have been not particularly good reasons, in retrospect, but the “it’s a war for oil” argument just has too many holes.
Sorry, Ben, but the proof coin dealers are all over the LA Radio stations claiming millions to be made in coins, now that real estate is dead. Somebody must be buying the coins, cause the ads keep coming and coming.
It does make one wonder, however, most everyday people had little at stake in the dot.com crash. You had to have money to get in the game to begin with. So a lot of people paid little attention, if any. With the housing bubble, a large majority of the population is involved. Not only because they are homeowners, but also because they didn’t need cash to get in the game thanks to the zero down, stated income, etc. crap. This absolutely DWARFS that bubble because of these reasons.
We have nothing else to support ourselves with except to trade/gamble. Jobs are leaving in ever increasing numbers and it’s no longer just unskilled labor. White collar jobs are being outsourced, production jobs, credit and finance jobs, etc. Beanie babies, Baseball Cards, Internet stocks or real estate…or Indian Casinos… we just have to trade something for ever higher prices to sustain the ‘economy’. Or bet on something like poker, slots or the weather.
You gotta love this sudden turn in the market…
“…people who purchased last year with the intent of flipping are likely to get burned.’
‘Old Dave’ is loosing ground every day. So what happens to the ones that didnt flip… come on Dave dont hold back … they loose too.
Love this article!
What about the people who purchased this year with the intent of flipping?
My ex - March 2006 $156,000 for a West Palm Beach condo conversion ‘investment.’ Neg am 80/10 interest only payment is $556 (minimum payment resets next year), HOA $111, taxes $263, insurance $50. The management company rents it for $750.
County appraises it at $136,000.
The look on ex’s face opening next years ‘reset’ statement and knowing none of it is going to principal …… priceless.
David Learah only describes yesterday’s news, or more exactly six month old news. When he talks about prices turning down, it’s only because it now can’t be spun any other way. Of course he acts “surprised”, and “who’d da thunk”? He is still playing the old, “it’ll be OK after a few months of adjustment” clap trap. Four months from now he”ll have to rectify it again. He’s right out of 1984, literally like Winston working in the basement of the Ministry of Truth with his speakwrite machine.
http://www.orwelltoday.com/truth.shtml
his book was 6 months out of date- hope he gets lawyered to death
Yep, any housing bear familiar with the book 1984 must know what it felt like to be Winston Smith. We could all relate to him when he wrote, “being a minority of one does not mean you are crazy”. Anybody with common sense has been in that position. The flippers and fools have been busy sipping their Victory Gin and grinning like idiots. The whole time they’ve been chanting “two plus two equals five”. Long live Winston.
“I hope some good comes out of all this … in terms of personal responsibility and education. ”
palm, you’re clearly one of the most astute posters on this board. i am surprised to hear you say that universal human traits like greed and the desire for free lunch can be educated into peeps. as long as there have been markets — i.e. humans — there have been financial manias. always has been. always will be.
but ben’s blog is probably the first time in history a stadium was built just to watch the mania run its inevitable course.
i meant “educated OUT of peeps.”
“palm, you’re clearly one of the most astute posters on this board. i am surprised to hear you say that universal human traits like greed and the desire for free lunch can be educated into peeps.” i meant “educated OUT of peeps.”
manhattan, thanks for the compliment. On another note, I don’t recall saying any such thing about greed and desire for a free lunch being educated out of peeps. That’s an assumption you are making and clearly not what I said, if you read my post. Like any human being, I can feel greed and I can certainly have a desire for a free lunch. I can feel fear. But I like to think it is the education I’ve received, not just from school (although I had a great history teacher who used to say that if you don’t learn history you will be bound to repeat it) but from life, from friends, from family, from books, etc., that restrains me from giving in to psychological factors that might otherwise cause me to act in a way not in my best interests or the best interests of others. I also like to think that a decent education combined with experience can prevent people from believing the likes of David Lereah and W and other BS artists and snake oil salesman.
“But I like to think it is the education I’ve received, not just from school (although I had a great history teacher who used to say that if you don’t learn history you will be bound to repeat it) but from life, from friends, from family, from books, etc., that restrains me from giving in to psychological factors that might otherwise cause me to act in a way not in my best interests or the best interests of others.”
do you think that a sufficient percentage of the human population can ever attain such wisdom and education — and experience — to avert future financial manias? i think you are talking about the prospect of truly transforming the human animal. seems a bit utopian — i.e., impossible — to me.
i failed to mention the very human tendency to cheat, lie and steal when given more than ample opportunity…. it’s not just a matter of education, but of doing right and wrong….
whatever that is! doesn’t matter … prices only go up … it’s just ‘investing’ … it’s just bizness’… a, b, c and x, y, z … gonna make a million …
any way you look at it, it’s money chasing money. and it always ends the same. but it sure seems to an essential part of human behavior.
manhattan, you can call me an idealist or a utopian if you want (like it’s a bad thing?). I happen to believe that people are basically decent, although sometimes they do some very darstardly things. Sometimes they are driven to it. Yes, some very evil people do exist, but they are in the minority. But they do infect the people around them, who infect others, etc. We are looking at a massive infection in the US today. Part of that infection is believing that man is bad, or stupid or whatever. By marginalizing human beings, then one can “feel OK” about lying to them, cheating or stealing from them. And that is what a large part of this bubble is about. “They are sheeple and they are stupid so screw ‘em”.
Sometimes I feel that way myself, but there is a vast difference between feeling frustrated with your fellow man and acting on it.
I refer to myself as an “optimistic cynic.” That is, I have a somewhat jaundiced view of people. As Terry Pratchett had one of his characters say, “If you tell ten [people] to pull, four will push and two will say, “Pardon?” ”
In other words, people are going to keep doing the dumb things that they do. That’s the cynical part. The optimistic part of me says, “But it’s all going to work out okay, as long as you pay attention.”
I have yet to see anything that changes that view. Some people won’t learn, but that’s natural. Take that into account when planning— positively OR negatively.
Well said. I study markets and their behavior and appreciate this blog b/c it provides a real-time forum for us to discuss and explore human behavior during manias.
There will always be financial manias, but individuals can learn from experience, which I believe was his point, or hope.
Thanks, manray, that’s exactly what I meant. I do have that hope for people. This country, even the planet, is going through some very dark times financially and otherwise. Decent people have rights, too, but they need to assert those rights. I have no sympathy for those who make money or gain power by lying, cheating and stealing. The fraud and arrogance in this housing bubble is so over the top, and those involved need to be brought to justice.
“I have no sympathy for those who make money or gain power by lying, cheating and stealing. The fraud and arrogance in this housing bubble is so over the top, and those involved need to be brought to justice.”
To include those who bought in or HELOC’d out over their heads.
Until our society requires that people be accountable for their own actions things will never change.
Thankfully they recently changed the BK laws. But why don’t we have stocks or debters prison anymore?Liberal Candy a-ses. hehehehehehe
OTOH, the new bankrupcy laws amount to letting the banks off of their bad business decisions. Who’s the bigger idiot that deserves a smackdown more: the profligate fool who borrows money he can’t repay, or the idiot who continues to lend money to him?
quite true! many of us on this blog have learned from experience with previous manias. the fact that we all come to any particular mania with such different experience and education is part of the pathos and drama of its invariable unfolding. that’s what makes it so breathtaking to watch.
My first experience with a bubble was the early ’80’s ‘Cabbage Patch’ doll craze. I watched as idiotic parents scrambled and bid on the chunks of plastic and rags - paying up to $500 - more than most house payments at the time.
Then you had the pleasure of listening to them brag about what ‘great parents’ they were for getting one. Within a few weeks, when the doll invariably wound up forgotten in the back of the closet and the reality of just how stupid they were hit, the talk stopped.
The following Xmas, the dolls could be had for $25.
Just as shrewd as spending $1,200 for a Tickle-me-Elmo in 1996 and then seeing them on the shelves for $30 in early 1997. It’s not the kids that cause this madness. It’s the parents that are so starved for status that they just have to have those bragging rights, even for 15 minutes.
beanie babies, baseball cards - anybody remember al the news coverage when these markets collapsed?
People boast about making money, and shut up when they lose their shirts. So people think others are making out well, when they really are not. We get jealous of what success we think others are having, and then screw up the same way.
Yes, how much water cooler talk will there be about having to sell your “investment property” at a loss before it goes to tax sale or foreclosure?
Not so much, probably.
Folks will have to go back to chatting about American Idol
Great post. I anticipate we won’t hear first hand from many people about how they ruined themselves financially through their irresponsible real estate “investments.” It is easy to understand as nobody likes to brag about failure. But personally, I enjoy people who are not ashamed to admit they acted a little foolishly and learned from it. I hope to start hearing more stories of unsuccessful attempts at wealth during this bubble told by those people who are humble and able to laugh at themselves in hindsight. I know there are plenty of good people with families who were trying their luck at real estate with good intentions and whose hearts were in the right place.
“There will always be financial manias, but individuals can learn from experience, which I believe was his point, or hope.”
That’s true, but since many boomers got caught in the current RE bubble, and they are boomers, they did not learn from the previous bubble (1980s) in real estate. Maybe we will have a dot com bubble again with company stock going up with no earnings and everyone at the water cooler bragging about their latest “killings.” Or truck drivers who become day traders. Stupidity seems to repeat itself more and more because maybe a higher percentage of people lack the ability to read and comprehend these days.
I agree. There’s no guarantee everybody or even most people will learn from experience. Some do.
History will repeat itself for the same reason that lottery tickets continue to sell. Someone *does* end up getting rich during these manias. Sometimes a *lot* of someones. People will always take a risk if the potential payoff is riches beyond anything they could otherwise hope to attain.
MD renter,
Exactly! I was watching “Flip That House” last night and it was stunning how totally clueless people could make in six weeks what some doctors and lawyers make in a year.
It was obvious why people did it. Question is, “why were they enabled to do it?”
I blame the lenders/banks/regulators, etc. for allowing the mortgage market to run wild like it did.
Who’s on my Shit List Today?
http://www.xanga.com/home.aspx?user=russwinter&nextdate=9%2f10%2f2006+23%3a59%3a59.999
Russ, I am delighted to see you give some props to Orwell’s 1984. When I was a pup, it was required reading. It is something that made quite an impression on me and has stayed with me over the years. 1984 maybe came a bit late, but it is here, NOW. Bad is good, good is bad, etc.
I recall this author…
“The Great Depression of 1990 by Ravi Batra (Hardcover - Aug 1985)”
Not what I would call a good writer… Old Ravi should have been find a better job elsewhere. One of the worst books anyone could have written…
I haven’t met any arrogant real estate buyer in person. No one in person said I was throwing away my money renting. I do know some young people who sank a lot of money in real estate in the last year. They are nice young people and I did not know them before they bought. So I say nothing to disturb their decisions. One bought a townhouse in Irvine with her sister. She and her sister are in their early 20s. Going for her, she has relatives all over O.C. and will have to be there quite awhile to break even. She probably will not mind it. Another one bought a $500,000 house (being built) with his wife. He’s 30. This is in Goodyear, which is west of Phoenix.
I have met several people on line who ridiculed me for renting, telling me they “made a lot” of money in real estate, when actually they haven’t really sold. They are like 90% into real estate. Those message boards where I met them are quieter now. I think they are eating crow. For those greedy arrogant types, I laugh back!
$500k in Goodyear? OMG. Screwed, absolutely screwed.
As to the one in Irvine, wife & I were driving around today here(in Irvine) . WOW. Street corners in Northwood with 8, 9, a dozen open house/for sale signs. This is a very family oriented town, which since school started on Tues that it’s too late in the season for the family crowd. Frog says…..water’s getting hotter!
“Frog says…..water’s getting hotter!”
Ribit…ribit…ribiGEEEAARRRGGHHH!
lose the agent and you hae 5% to play with on either side of the trade- what’s simpler than that
Dont say anything until next year. Then laugh in their collective faces when they’re in foreclosure. They all thought you were stupid when you didnt sacrifice your future with a neg am i/o loan on a POS property in BFE. Now you get to prove that they’re the idiots.
It doesn’t matter if you have a college degree, or are an insider in the real estate game, or joe schmoe, doctor, lawyer, indian chief. It’s all about common sense. Never have I been tempted by cabbage patch dolls, beanie babies, etc. I don’t buy for a minute the people who claim they didn’t know what would happen with an ARM, IO, or any other of that nonsense. It’s not rocket science. They wanted to make easy money, thought they had it all figured out, and got burned. I am just “regular” people, work in a grocery store (to some peoples horror), but I had this figured from the get. How do you think I found this blog? Just typed in “housing bubble” about 2 years ago, and wahlah.
Jane Schmoe here. Just wanted to say that I agree with you, Patricia.
It’s all about GOOD sense - not common sense. If it were so common, we wouldn’t be in this mess.
Yes, I am also “regular people” and Yes I do want a home. Problem was/is that I could not see how I would ever afford to purchase one. I have a good job and make above the average down here in Florida. I just could not figure out for the life of me how people who, as i see the world, just don’t have a clue could do so. So I started looking (because if you really want to know something, you have to get up and actually look). And here I found a whole bunch of people who had the same notions and thoughts, and even better there are people actually posting real time data and analysis! I found this site, and others with the simple action of typing “housing bubble” on a google search. Unfortunately most people just didn’t care to look. Thing is most poeple just belive what they see/hear on TV. I have never thought that I was better than others only different. and I guess i was right.
Great post by Roubini today.
http://www.rgemonitor.com/blog/roubini/145489
I plan on avoiding any housing bubble discussion outside of Ben’s blog.
It was extremely painful talking to the sheeple I know during this bubble’s buildup and it will be equally painful to look them in the eye during its fallout.
As a result, I plan on referring the sheeple I know to Ben’s blog when they are intellectually and emotionally prepared to accept their own fallacies. IMO, anonymously learning about their fallacies from this blog might be easier on their egos and our relationship.
Where’s the fun in that?
You’re sick. But, then again, so am I!!!
Yea, I know what you mean. It’s actually a lose lose trying to warn people.
First they think your a nut job, then they are mad at you for not being more forceful, informative, or something!
I tried to warn my friends and family April ‘05. They couldn’t belive it and accused me of making predictions. Last month when I reminded them I called the top of Aug. ‘05. They had all forgotten the e-mail and accused me of making a blanket prediction. However, being one step ahead, I saved the e-mail from last year and resent it to them.
What did I get in return? Silence. No recognition. Not even ackowledgement.
Oh well. I did expect this (that’s why I saved the e-mails).
Best of Luck To Evryone!
From NAR: …under these conditions, we’ll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory…but home prices should return to positive territory within a few months…
We never heard anything parallel during the upswing: “Prices are only up temporarily, and should stabilize in a few months, with appreciation betting back to historical norms…”
Instead it was mass hysteria over prices, fanning the flames of speculative demand and “buy now or be priced out forever.” What a joke!
I can’t help but be pissed at the lenders for the way they were underwriting loans ,( they should of know better by time tested principals ,or even the example of the Great Depression ). It’s just not right to set people up for a possible big fall or put the retirement funds at risk or any funds for that matter . Also people have to admit that they were being greedy with dreams of future gains .
People are going to be in alot of pain and I don’t like to rub it in their face . I am more concerned about some weird ass reactions your going to get from some people when they find out they are in a jam ,…….. like going off the deep end .
People who are in a fix remember this …..Life goes on ,its only money ,it might be fun starting all over again .
They were playing on peoples greed, of course. But they knew what they were/are doing. They are setting people up!
Buyer Beware!
OK, I have to admit that I visited some open houses today and felt kind of sorry for realtors and developers.
This is in Montana, by the way. No one seems to have any idea that prices are out of whack and could crash here. Sometimes I doubt it myself. Money is still pretty easy, but they don’t seem to be pushing stupid loans (in fact, the realtor I talked to said to get a 30-year and pay it like a 15!). Everyone is friendly, not sleazy at all. A condo developer seems like just a good old guy trying to do something innovative. Even if his overpriced “urban living” condos are not that hot, and in a bad part of town. He talks about wanting to get this project done and then retire, but they aren’t selling. I don’t wish ill on these people after today, but I don’t like how the younger generation is being “priced out forever” either. Sometimes I read here about people using snappy lines at open houses to talk about the bubble. Those sound good in print, but in real life I didn’t even feel like asking if there was a chance of prices falling.
Am I just a big wuss?
Compassionate, yes. A big wuss, probably not. How many times during this run up did you encounter the arrogance, feel pressured to buy or use loans you knew were toxic, or had someone you knew spew their “wisdom” on playing the RE game? I have a sense that many on this blog had many of these experiences and because of that have little compassion for those folks. I knew they were doing something foolish then and I simply see this as a natural consquence of those foolish decisions. I do not plan to rub their faces in it, but I do get some level of satisfaction seeing this all unwind as I expected. Doubly so when so many told me I was wrong, misguided, old school, etc.
Next time you feel sorry for that poor, abused, real estate person, ask him how much money he made over the last 2 years selling his overpriced housing. They were all bragging it was the easiest money they ever made. Now, they want your sympathy.
It reminds me of the suckers who tip the blackjack dealer in Vegas when the win a big hand. I have never had a blackjack dealer offer me a dollar to play one more hand when I ran out of chips.
Tim, sorry to use your post like an open mike Fri, But wonder if anyone else has the same feeling on this…… Why are the biggest financial FUs in the sun states? S&L collapse? not one from Michigan or any Northern bank as far as my some-heimer memory severs me.
Dot Com bust, look at sunny south Cal, which will give you was launder though NYSM, a northern state.
Now comes this sorry mess on the horizon , and most of the blood letting will be in the FLA, CA, AZ states. is there something in the sun that make people so stupid?
I know folks say rust belt bah, bah this and that, but tell you, no one there would pay 600K for some 1000 sq ft shack. The Banks would laugh you out of the office.
You can’t price the younger generation out forever. It has to come back to a sense of reality
I know, it’s an economic impossibility. Just using NAR-speak.
A recent topic suggestion revolved around the housing bubble ‘camps.’ “How to constructively communicate with agents, sellers and Joe’s on the street about the issues.
I feel no need to “constructively communicate” with them. Reality is finally starting to impose itself; the situation speaks for itself. When I’m ready to make my move — in mid-2007 at the earliest — blood will be in the streets and the only language the FBs and sellers will need to understand is that I’m a credit-worthy, cash-flush BUYER with plenty of firesale properties to choose from. And in that position, I can and will treat all parties with dignity and respect, but also with a firm grasp of the realities of the situation.
Sammy, wonderful! My sentiments exactly!
Eloquently stated.
I agree. I think armed with a credit score of over 800, no debt, a good amount of ready cash, and an up-front statement for no BS should bring more than enough properties for consideration in your direction.
Agreed, only Mid 2007 is way too early to look for bargains.
Someone will have to pay for all this mess and I really feel it should be the people who chose to buy/invest/speculate in housing. My experience has with these people is that they could NOT be dissuaded on any level. If we take the risk to these people, out of the equation for these bad investments, it will just happen again.
The ignorance argument is just not valid. Case in point:
I went to the “Cracker Barrel” restaurant, I think at least a year ago, and in their little waiting area they had a little stand of booklets for sale entitled, “Remember When, 19XX”. Each little booklet has a different year and you can look up the prices of different things in those particular years. I picked up 1930, average price of home $7,100, I kept going through the little booklets and finally in 1949 the price went above $7,100. I picked out 1928 and the average price of a home was I think $22,000. The price did not get up to $22,000 until I think the late 1950’s.
So from a year after the 1929 stock market crash-bottom? The prices took 19 years to come back. From the peak of the bubble it took 30ish years!
One has to ask oneself, can I outlive this thing, if I bought at the peak?
You did not have to be an economist or math wiz to figure this out all you had to do was eat at the Cracker Barrell.
Wonder if someone will come up with a video parody of the funny Chick-fil-a commercials:
Eat Mo’ Crow
“For how long? That’s the key question. I’m not so sure the evidence in that NAR slide show supports the conclusions in yesterday’s NAR press release: that prices will dip temporarily.”
Seth –
Did you see the slide in Lereah’s presentation which shows how long the price decline phase of previous downturns lasted? If I recall correctly, the shortest period out of the examples he gave was a four-year period in San Francisco in the early 1990s, which implies the current downturn (which started in 8/05) will most likely take at least until the summer of 2009 to bottom out.
How Lereah can then turn around and inform the press that price appreciation will resume next year is rather astonishing to me, and it also astounds me that the press quotes him verbatim without bothering to check the facts.
I had been planning on 2010, can not remember how I came up with that date, but it was been my target.
Instead of trying to gauging the bottom I think I will start looking for a little upswing after 2009, provide it is not a govt manipulated upswing. I do not want in until after all the rubble has cleared away. I do not have the stomach for foreclosure buying.
This whole thing has been pretty comical to watch in the last few years from the sidelines.
It is going to be real hard to watch on the way down.
The best advice I have gotten on this blog was, “Don’t buy until even you don’t want to buy”. Sorry, I do not know who to give the credit to, but Thanks.
To follow up. I don’t talk about it anymore at all. It is not hard to do since no one else is talking about it and the silence is golden. I do not miss the days in the employee lounge where everyone was talking about how much money they were making and gloating. Invariably, I would get pulled into the conversation and it was never a win for me. For one I was outnumbered. If I argued that there was a bubble they would get upset and shake their heads at my ignorance, if I was diplomatic and said, “sounds like you are doing well, that’s great”, the response was usually along the lines of how they were sorry that not everyone had managed their credit well enough to buy and get in on the deals.
Or the dreaded, we are the “haves” and you will forever be a “have not”, discussion.
I always detected a mean spirit in these greedy people. And I think that if they were mean on the ride up they will be 10 times meaner on the way down.
Since these people so freely discussed their finances in the open I know that they are hurting. I found it jaw dropping in the good times. I know I have mentioned before, but I know 2 people who pulled out price appreciation “equity”? to make principal payments.
This blog and the Carnies saved my sanity during this time period.
I know I have mentioned it before, but I fell in with the Carnies 2 years ago because of the housing bubble. I was at a social function and I heard some people talking sensibly about this housing bubble. The first real live, in-person people, who knew what was going on. You guessed it the Carnival workers, they saw right through the whole thing. I cannot praise these people enough, incredibly down to earth, hardworking and nice people.
Janni, how great it is to hear you mention the Carnies. There are many of them in the Gibsonton/Riverview area. South Hillsborough county has always been a great place for rebels and individualists. I met a great Carnie lady a few weeks ago, with an incredible spread on the Alafaia River. One of those feisty, fantastic old ladies who was an aerialist (and also sold real estate in the off season). She was telling us about her circle of friends and the various life adventures they had experienced. Carnies are really fine folks.
jannifl: I can’t help but read your comment and wonder what the carnies thought when you walked up to them out of the blue and gave them a hug.
‘Cause that’s the mental image I got from that. “Thank God! People who understand!”
Probably because at some level this bubble is like the carnival games that “look” easy but are practically impossible to win, like shoot the star out of the card, or toss the softball in the sloping peach basket, or throw the rings over the top of the two-liter soda pop bottles.
Bingo! Snake charmer, you win the prize.
For those that think that people will learn, I guess I’d say that it’s unlikely. We just had a massive bubble pop 5 years ago and so we
immediately go to work on another.
Where I work, most are smart and bright people and know about the bubble. If you mention it in the office, it’s no big deal.
Actually, past bubbles tend to encourage participation in future bubbles. Like MLMs and pyramid schemes, people focus on the very few winners vs. the very many losers. The lure of easy money combined with their “I’m smarter” attitude steer them right to bubbles.
I read about a study conducted after the tech bubble crash wherein participants traded stocks virtually in a boom-bust scenario. The first time through everyone lost money. Emboldened by their newfound knowledge, they aggressively jumped in for a second try and promptly lost even bigger than the first time. Why? They were convinced they were smarter, yet every time were surprised.
Interesting information TJ.
Speaking of the circus, PT Barnum called the bubble better than anybody “There’s a sucker born every minute”
Listening to Bob Brinker on radio advising the sheep that SP 500 was a safe long term stock market index. Big Charts shows SP 500 at almost 1600 in March 2000 and today, it is at 1350. And call after call told Bob how much money they made following his market timing approach, and they were subscribers to his news letter.
People pay money to get this investment advice.
Greed…and entitlement
We have been bombarded with ads that we NEED those granite counters, that subzero stainless steel refrig, and at least 3500 sq feet to live in. And folks thought that they were absolutely entitled to live in houses with crown molding, spa tubs, exotic hardwood floors…. Don’t get me wrong, I’d like to have all of that. But for a lot of people the idea of living within their means just isn’t there. Wait until Christmas season starts (next week??) and we are told repeatedly we are responsible for spending all of our discretionary income to support the retail industry and rescue our economy.
Don’t get me wrong, I’d like to have all of that.
Me too, and near the ocean, please!