The Housing Bubble

1921 biggest price drop -gov did nothing= instant recovery
1930 here & 1990 japan did everything

2008 ? lots of bail = 10-15 year stagflation

Two great books on the Great Depression is Murray Rothbards’s book, and “The Forgotten Man” (forgot author’s name- current).

I also thought “Only Yesterday” was a good account of the roaring 20’s. I agree, what we learned in school was a disneyesque watered down story on what caused it.

I’ve picked up a few books on the 1930s Depression. Not that I’d consider myself an expert by any means but what I did find most interesting is how the obvious political leanings of the author changes the “reported” facts.

It’s good to look at a few sources and do your own Depression Redux.

J K Galbraith’s “The Great Crash” is a must. It reads like a running blog of the events leading up to and following the 1929 crash.

Scooters represent a hyper consumer’s answer to the increased price of fuel: buy something to fix a problem - spend money to save money. Anything to justify buying something, especially if it’s trendy. Is Vespa publicly traded?

So far it’s the best case scenario.

The rest of the world is continuing to grow despite the grinding adjustment of the U.S., and exports allow U.S. employment to stagnate rather than crash.

That adjustment is rolling out slowly. We’ve lost a lot of mortgage banking firms, but just one major financial institution so far.

The dollar has sunk rather than collapsed.

The best case scenario is two more years of this, with falling living standards (except for more affordable housing), higher taxes, and diminished public services, but no collapse.

The worst case scenario? Guns, ammo and canned goods I guess.

I’ve been scraping some bucks together for a tiny camcorder since the new year. My plan is to carry it everywhere, especially on bike rides, bus rides, and our weekend walks around town. A must have in a big city. Words can’t describe some of the crap out there.

Sorry alad:

I really disagree on that……Our criminal justice system is very discriminatory not against race but against the severely stupid.

He was driving at 100mph on the hwy, then 65 in residential zones eluding the police..

So maybe the solution is for black people to Man up and learn to speak English and to commit crimes on the same per capita basis as white people. But then what would we do with 100,000 useless police officers…lay them off?

Just something to think about.
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a black guy getting the crap beat out of him by policemen, coppers that then beat the rap, & sparks flew.

I remember watching on TV hundreds of middle aged folks waiting at the post office but it was closed, their kids burned down their own city. The joke was they were waiting for welfare checks. Just another bad joke in bad times. Plus Aerospace was laying off by the thousands and RE taking a dive. Bad times for S. CA and then the earthquake. That was probably the bottom for a bad decade. Money came in and work rebuilding got the area going again.

LMAO

ah…thanks Ex. I felt unsatisfied with the non-resolved status. Someone brought up the great point of surface area with the JT, however, I feel compelled to make a case for the Saguaro for 2 reasons: 1) Girth. Enough said. 2) Spines. All those sharp, pointy, painful spines all over the Saguaro. If I absolutely had to make a choice between the two, (gulp) I’d pick death by JT just for those two reasons.

Saguaro Cactus. You can even get it with an optional “reach around” tickler arm. Can’t beat that feature.

Are you talking again about bouncing off the bottom?

Just because the price of something rises does not mean it is a bubble. Also, when HeliBen dumps money, it goes everywhere. He doesn’t get to pick and choose what asset to inflate, so as long as you inflate you can expect some prices to rise.

Agree 100%, Polly.

if you see used packets of sugar or salt/pepper from Dennys strewn about the card tables then that is another good indicator of penny pinching from yer local cardplayers. (do you have Dennys casual diner down in OZ . . ) ?

The cost of feeding future food, combined with cost of getting it to market & add in a pinch of consumers switching from meat to cheaper foodstuffs, and that’s your recipe for disaster…

For the many dependent upon raising livestock for a living, in California’s Central Valley.

You should probably survey your/participants’ item purchases over the last several years. Then weight your index by how much of the total spending an item is. So if rent is 15% of the expenditures, it should be 15% of your cost of living index. It’s up to you to decide how discrete you want to get (ie do you want to aggrigate all chicken or separate out whole chicken/breasts/ thighs and broth. Make sure you track item sizes and I’d suggest looking into where they were purchased, so you can continue to reflect the same mix of retail options.

The one type of store that always seems busy to me, are the cell phone places.

Usually Borders and Barned & Noble are busy on weekends, but a few days ago they seemed a little quieter than usual. Macy’s is dead. I can’t gauge Best Buy because I don’t go there often enough.

Catalog stores are sending me sale emails every day of the week. (Probably because I broke down and bought a few things.) But at least the financial houses stopped trolling for IRA money. I guess they only do that around tax time.

I work with car dealerships and times are sure tough for them. One service department went from seeing 140 new cars everyday two months ago to an average of 70 new cars daily. This is a dealership that has four different GM brands. The sales department just can’t seem to get the suv’s and anything priced over 30k off the showroom floor. The traditional cliente of said dealership are 100k+ annual income types.

I haven’t really noticed any difference in most stores. From bulk stores (Sam’s, Costco, etc.) to the Target / Wal*Mart / Kmart-type stores to home improvement stores to the mall, etc. No real change in patronage (that I can see).

However, it seems car dealerships are struggling / some closing up in the area.

I’m seeing cars on the corner marked $500.

Used to be that’s what the dealer would give you when they were willing to take it off of your hands and get you out of the showroom. That’s what I was paid for a compact in 2006; apparently the “standard rate” either dropped or is not even available anymore.

I went to the local Kroger today around lunchtime. A year ago it was always pretty busy that time of day. Since then the store’s traffic has slowly declined. Today it was deserted. It was like being there in the middle of the night. When I went to checkout, I was the only person there, all of the lines including the self check out were empty.
This week I was also in one of the upscale northern burbs. A new ritsy non-anchored retail center called The Avenues had just opened. It looked to be about 90% leased. But within a 2 mile radius there are at least 5 brand new unanchored retail centers that are completed with no tenants. I’ve never seen even one new retail center in the Atlanta market that was not immediately leased up.
And scariest of all, there are now green & white government signs posted on Hwy. 9 in Roswell ( another upsacle area) to direct people to the North Fulton County Food Bank. I guess this is where all the former Kroger shoppers have gone.

We are stuck in something akin to the phoney war, or as the Germans called it, sitzkrieg…

All hell’s about to break loose, but on what front?

http://en.wikipedia.org/wiki/Phony_War

“…and prices stay flat or actually start rising again in your area-”

I know nothing about San Fran, but I do know quite a bit about Palm Beach County. Here the prices on existing homes were sticky until about 60 days ago when it became evident that the snowbirds weren’t going to scoop up the “deals” before going back home. The floor has fallen out from underneath prices. Anything that actually sells is doing so at 2002 prices at the high end. I’ve seen mid to late 1990’s prices come across my desk.

New construction is a little bit of a different story. Builders who had units on-line ready to sell absolutely blew them out (at least compared to boom prices). Now that those units are off line, pre-construction pricing has seemed to creep up at developments such as Porto Sol and Palm Beach Plantation. I even saw a builder’s closeout sign on condos go from $129,900 to $149,900 to $154,900 in a matter of 3 months. I think the builders are kidding themselves and soon the cold reality will hit…either sell for a lot less to compete with existing homes, or don’t sell anything. It’s that simple.

This is my convern as well. I haven’t seen much change at all in my area (north suburbs of Philly). And I do continuously think, “Is it possible that homes really will never be affordable to me again?”

I read about the houses getting cheaper by the minute in Florida and wonder if that can and will ever happen here. (Unfortunately, I don’t like Florida enough to consider moving there.)

At last count, there were something like 19 million vacant homes in the country. About half of those were vacant due to the housing crisis.
How can current prices be sustained when there’s so much excess inventory? They can’t.
There is another round of interest rate resets coming. Hoards of stretched buyers will default. More inventory will hit the market.

I’d estimate that another entire volume of inventory, equal to existing and potential REOs combined is waiting on the sideline.. hoping to eventually be sold.
Pressure is not subsiding.. it’s increasing.

What prevents the dam from bursting? I think it’s nothing more than the staying power of the lenders. They have deep pockets and can delay the sale of these REOs. They can artificially keep the excess inventory off the market and temporarily cheat the law of supply demand…
The longer they delay, the longer current prices are supported.

There are two ways this inventory might be released.. a little at a time or all at once. Everyone with skin in the game is hoping for and doing what they can to insure the pressure is released slowly. This is the less painful and least dangerous way, but it will take the longest time.
In addition to threatening the safety of the banking system, any large and sudden disruptions are likely to cause peripheral pain and damage to non-combatant civilians.. everyone…meaning everyone.. would suffer needlessly.

The dam is mortally damaged.. it cannot be repaired. The forces behind it will eventually escape and a balance will be reached. The laws of supply/demand will not be denied.

Maybe spring fever has tempered the gloom. Does that mean we’ve got to wait till Halloween for some progress here? I’ve got to move the clan in a few weeks and am seeing no decent rental deals, nothing but prices creeping further toward the stratosphere. How long can the bastards hold out, sitting on every decent apt. in NYC and slapping a wacko 4K or 5K label on it? Wonder what the math must be. Lots of empty windows, it seems to me, no matter what the urban legend about 1%-to 3%, or whatever, vacancy rate. Can’t hardly even glance at the sales listings, they’re still an absolute joke everywhere. Ah … vent over.

I think prices will be falling, but it takes a while due to bottlenecks and inefficiencies that exist. For example, we read about people trying to contact their lenders and they cannot speak to a real person. And, it is probably a good thing that 19 million properties are not selling all at once. While prices need to drop, I think it would cause undue harm to our economy if things happened all at once.

I have a friend who lives in Carmel Valley, San Diego in a rather new McMansion (less than 3 years old). This neighborhood is the white flight neighborhood for upper middle class and up types, and so prices have always been a little high there, but during the boom prices went sky high. Anyways I watch what’s happening on her relatively small street (perhaps 10 homes total). I saw on Yahoo that a house on that street was in foreclosure. Sure enough, a couple of weeks later a u-rent van was in the driveway of the house next door. At the same time (3 weeks ago), 2 other homes were for sale on the same street, with both asking over $400/sq foot (the larger one was $1.7 million). Yesterday I noticed both for sale signs were gone. This makes me think these two homes are in foreclosure as well, the owners’ attempts to sell unsuccessful. So I don’t see how these prices can hold up long term. The simple fact is that people just don’t have the income to support the loans in the long term. And the oil and food bubbles will impact people living on the edge.

Riding on the sidewalk is illegal in most places.

Privacy. Space, above and surrounding. Peaceful quiet in which to enjoy Nature’s Glory.

Oh, and no mortgage. That’s key.

Gardening space. Not too far from civilization, not too close. Strawbale or adobe walls. Solar cells, own well. Not a penny in mortgage.

There was a time when I lived that way, well, okay, mostly. One of those items was not in play. I couldn’t wait to leave, ah, what did I know.

But being in hurricane country, I am a bit glad I’m in a house up to current hurricane standards.

Given money and time, I’d recreate a hurricane-friendly version of the place with the gardening space. Not too far from civilization, not too close. Strawbale or adobe walls. Solar cells, own well. Not a penny in mortgage.

But we’re at the young kid$ $tage of our lives atm; we’ll see how and if I get that little space.

Alternatively, I’ll take a downtown - a realish downtown, in a functioning city, with access to a community garden. Out of hurricane country.

Schools are kind of important. To me it’s a place for some of the form nailing; but I help pour and harden the cement.

Do you think she will stick it out with a 350K loan on a 200K house? I wonder how long until its back to 350K? 10 years?

At least she got the bank back to 7% but of course they don’t want a 350K loan back on collateral worth 200K? I would say the bank came out ahead on this one.