In It For The Investment
It’s Friday desk clearing time for this blogger. “Researchers with the Federal Reserve Bank of New York found that investors who used low-down-payment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. More than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house, according to the report. In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.”
“‘This may have allowed the bubble to inflate further, which caused millions of owner-occupants to pay more if they wanted to buy a home for their family,’ the researchers noted.”
“The researchers said their findings focused on an ‘undocumented’ dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.”
March 2005. “Real-estate investment is what has allowed the Ackermans to move from a modest $165,000 home, purchased in 1999, to the six-bedroom stunner they live in today. The Ackermans bought three of their houses the same way: They financed 80 percent of the purchase price with an interest-only loan. To avoid paying private mortgage insurance, they put 20 percent down on each home, but only 5 percent of that was out of pocket. The remaining 15 percent came from simultaneous second mortgages, called ‘piggyback’ loans.”
“The double loans have left them carrying eight mortgages. If interest rates go up, ‘we could be in trouble,’ admitted Gregg. ‘If that happens, our exit strategy is to start liquidating homes. Right now, I’m just playing the game,’ said Janey. ‘But we have an out. We can always sell.”‘
April 2005. “As prices continue, the Ahillens say they are forced to look at smaller homes and act more quickly. The Ahillens said they want to keep the home they now own in Tempe as an investment for their 3 1/2-month-old son’s college education, which means they need to finance 100 percent of the purchase price in Gilbert. ‘You find if you don’t act now, you’re going to get priced out of the market.’”
April 2005. “Three years ago Greg and Jessica Furr paid $230,000 for a single-family home. They recently sold it for $445,000, pocketing a $215,000 profit. The Furrs and their two young children moved into a new, four-bedroom, brick-and-vinyl-sided home. The couple bought the place for the pre-construction price of $380,000. ‘We plan on selling this in two or three years. They say we’ll get $750,000. It’s hard to believe. To make 80 or 100 grand on a house is one thing. To double the value is kind of absolutely mind-boggling.’”
“The couple also has a place on the Northern Neck, where they spend most weekends.”
May 2005. “Darryl Wortham says he’s not speculating. Wortham, a tech project manager in California, has bought three houses this year in Georgia. ‘So I bought all the properties really sight unseen. You see they have all the pictures up here, so it makes it real easy to make the buy,’ he says. ‘You come down and see the ‘purchase’ button. That’s all you have to do.’”
May 2005. “It’s clear that something big and basic in the way Americans think about housing has changed. For many of us a house has become a way to pay for retirement or the kids’ education, or simply a way to get rich. With no savings, and a college loan to repay, Kelly Pearson took out a mortgage for 100 percent of the price of the house. Closing costs were paid for by a $10,000 gift from her parents. Her plan: to borrow more soon and invest in a condo.”
“Jerry and Laura Satran’s Sunday open house is empty. (They) are asking $1.3 million. But here they are, the second week the house has been on the market, drumming their fingers. The previous Sunday, Jerry says, 40 visitors stopped by. No offers. Two weeks later the Satrans receive an offer: $1.2 million. Not the full asking price. No one seems more disappointed than the neighbors. One woman suggests the Satrans would be hurting the entire block if they settled for less than $1.25 million.”
“‘She says she was only going to be here for two years, so don’t screw up the comps,’ says Laura. ‘She’s not being cruel, everybody who lives here is in it for the investment.’”
“Dear Debt Adviser: I am emailing you in hopes of getting some honest advice. I recently owned a condo in Atlanta, and I financed it with two mortgages. I used a first mortgage and a home equity loan/line of credit. This was not my primary residence. I’m one of the many people who tried to rent out my condo because I couldn’t sell and break even. Long story short: The bank foreclosed three weeks ago. I continue to get threatening calls from the bank concerning my equity loan. So my question is: What should I do about the loan balance?”
“Dear Adam: If this wasn’t your primary residence, then I’ll assume you bought this condo as an investment hoping to make money. When an investor plunks down money on an asset, it is often said they are making a bet. In your case, you bet and lost. As a result, the rules that govern unpaid mortgage debts in your situation are different from those of a homeowner who buys and loses a home he or she bought as a primary residence.”
“Expect your lender to come after you for the deficiency balance after the property is sold.”
“It takes a leap of faith, not to mention a little investment in time and money, but the idea of renting your home to strangers is catching on. ‘We have had many great experiences renting our home for the summer months,’ said Michelle, a real estate agent who rents out her primary residence, located in Maine, every summer and lives with family and friends while her place is rented. ‘Believe me, it was not an easy decision to allow strangers to come in our home a week at a time. However, financially we had no other options. The (rental) money allowed us to pay the mortgage.’”
“Activists fought back against the foreclosure process in Martinez on Thursday. ‘For over 20 years, I made my payments on time,’ said Tony Amador of Oakley, who allowed demonstrators to use his home as a backdrop for their protest. ‘I’ve been double-crossed,’ Amador said. ‘Between the mortgage companies that I’ve been paying to all my life — between that, and the government letting them do it, they stabbed the knife into my heart and I’m bleeding.’”
“The U.S. Financial Crisis Inquiry Commission found in its report issued in January that the Federal Reserve – among other agencies – had failed to deal with irresponsible lending during the economic boom despite warnings that it wasn’t sustainable. ‘There were warning signs,’ the panel concluded in its report last year. ‘The prime example is the Federal Reserve’s pivotal failure to stem the flow of toxic mortgages, which it could have done by setting prudent mortgage-lending standards. The Federal Reserve was the one entity empowered to do so and it did not.’”
“Alan Greenspan, in a speech on Dec. 5, 1996, phrased it as a question: ‘How do we know when irrational exuberance has unduly escalated asset values?’ But he meant it as a signal that stock prices may have soared a bit too high.”
“The Fed chief cautioned that asset-price booms could be followed by a bust with harsh consequences even for people with no money in stocks. ‘We should not underestimate or become complacent about the complexity of the interactions of asset markets and the economy,’ he said. Greenspan’s words didn’t imply that the Fed would take any action designed to prevent or deflate a stock bubble. A hallmark of the Greenspan Fed, in fact, came to be the view that the central bank’s best role would be to do economic damage control if an asset-price bust occurred.”
“Stocks kept rising for three years, and the Fed found itself providing emergency support after a 2000 stock-market plunge, and again after a 2007 real estate bust.”
“President Barack Obama has argued, as recently as last Sunday on ‘60 Minutes,’ that what happened on Wall Street wasn’t criminal. ‘Some of the most damaging behavior on Wall Street,’ the president told Steve Kroft, ‘in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal. That’s exactly why we had to change the laws.’”
“Obama is wrong. Fraud was illegal before the crisis; it’s illegal now. The Servicemember Civil Relief Act was signed in 2003. So it was already on the books. During the savings and loan crisis, the George H.W. Bush administration sent about 3,000 white-collar criminals to jail. This administration has yet to send one.”
“And it is for lack of trying. Attorney General Eric Holder and his network of U.S. attorneys haven’t brought one criminal suit on illegal military foreclosures or foreclosure fraud. There have been enough books and investigations revealing rampant criminality in the housing bubble and now in foreclosure crisis. Yet Holder’s DOJ is still settling with banks to let them off the hook for illegal foreclosures on active duty troops.”
“The housing bubble was not just due to tragic herding behavior. It also involved the financial sector’s aggressive responses to democratic attempts to rein in creditor abuses. Turning our markets into playpens for predatory behavior didn’t happen overnight, and it will not be fixed overnight. But until we have public servants strongly focused on justice for all, we can expect the crime spree to go on.”
“‘This may have allowed the bubble to inflate further, which caused millions of owner-occupants to pay more if they wanted to buy a home for their family,’ the researchers noted.”
Who told the NY Federal Reserve Bank researchers that there was a housing bubble?
I love the cautious conclusions. That tells me that the truth is deeply politically controversial.
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” — Upton Sinclair.
Something else posted recently made me think “it’s even more difficult to get a man to understand something when his retirement depends on not understanding it”.
Just ask the 40 and 50 somethings who are still desperately clung to the false notion that their house(or any house) is a suitable replacement for a pension, savings and SS.
Yes. Always the demand side of the problem. Nobody ever wants to look at how they were able to supply all these loans.
The news reports are getting more and more unbelievable. It’s as if they assume people have no memory. For the heavily propagandized, this is sadly true: They only remember things that fit their propagandized ideology. Everything else is ditched into the memory hole.
Back when people were flipping houses, the Fed was at LEAST silent on it all, and the mainstream media was LOVING IT. According to them, it was all “wealth building”.
We bubble bloggers knew it was going to end badly, but we were called every name but “white male” by the time 2007 hit. (Apologies to AZ_slim who is by her own grace not male.) As a Libertarian voter I know all about lost causes, but in the last decade I’m surprised I wasn’t rounded up for internment, given all that I said against the Powers That Be.
“The researchers said their findings focused on an ‘undocumented’ dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.”
Accidental double-entendre?
“Dear Debt Adviser: I am emailing you in hopes of getting some honest advice. I recently owned a condo in Atlanta, and I financed it with two mortgages. I used a first mortgage and a home equity loan/line of credit. This was not my primary residence. I’m one of the many people who tried to rent out my condo because I couldn’t sell and break even. Long story short: The bank foreclosed three weeks ago. I continue to get threatening calls from the bank concerning my equity loan. So my question is: What should I do about the loan balance?”
Hi Eddie. Great to see you back on the HBB!
But the reply is so much sweeter…………….(hat’s off to Eddie)……., though here we’re talking to “Adam”:
“Dear Adam: If this wasn’t your primary residence, then I’ll assume you bought this condo as an investment hoping to make money. When an investor plunks down money on an asset, it is often said they are making a bet. In your case, you bet and lost. As a result, the rules that govern unpaid mortgage debts in your situation are different from those of a homeowner who buys and loses a home he or she bought as a primary residence.”
“Expect your lender to come after you for the deficiency balance after the property is sold.”
B, bb…but, I thought you could just “GIVE IT BACK To THE BANK”, the refrain we have heard so much, even by members of the is Blog.
That’s the misconception that made real estate Sooooo attractive.
People who gamble should pay the price when their bets go bad. That includes Banksters, and property speculators. I am just astounded that the “Fed experts” are finally seeing what many of us had been talking about 5 years ago…….rampant speculation, do to cheap lending and NO standards was driving up prices into a BUBBLE….. The fed’s response…..there has never been a national housing bubble and this is unlikely. The same moron who said that is the FED CHAIRMAN.
Methinks “Adam” might be making an appoitment with a BK lawyer in the near future.
They demand adulation when their bets win, but demand adulation AND bailouts when their bets lose.
And the bailouts they get are from the ones who didn’t want to play in the first place. A great heads I win, tails you lose system.
Except Eddie claimed he was buying low-end houses, not condos.
Because they had bottomed out and that part of the market could not possibly go any lower in Atlanta. Not at all.
Heh heh heh…the low end in Atlanta keeps going lower.
Atlanta Business News 7:05 p.m. Tuesday, November 29, 2011
Atlanta experiences largest plunge in home price index
By Christopher Quinn
The Atlanta Journal-Constitution
Metro Atlanta home prices fell sharply to a new low between August and September, moving against the national trend of a slight increase, according to the Standard & Poor’s Case-Shiller Home Price Indices.
Case-Shiller set a baseline home price index of 100 in 2000, so an increase to 125 would indicate a price increase of 25 percent.
Atlanta’s index fell to 95.99 for September, which means the average home sale price is 4 percent lower than it was in 2000. It was the largest decline for a major U.S. city and came at a time when the national index climbed 0.1 percent.
“I think what has happened is that we have a combination of the investors buying, coupled with short sales and foreclosures, coupled with a hugely disproportionate number of sales that are under $125,000,” said Daniel Forsman, the president and CEO of Prudential Georgia Realty.
Close to 30 percent of sales in metro Atlanta are foreclosures, Forsman said. Another significant share involves short sales, when a lender agrees to take less for a property than the value of its loan, and about 25 percent of sales are to investors, he said.
The short sales and foreclosures are putting downward pressure on the price of resales as well as new homes, said Brad Horner, the president of NRT Development Advisors in Atlanta, a residential brokerage company specializing in new homes sales.
The average sale price in 2010 was $188,524. So far in 2011, it has dropped to $156,922, his figures say.
…
“During the savings and loan crisis, the George H.W. Bush administration sent about 3,000 white-collar criminals to jail. This administration has yet to send one.”
Apparently the banksters learned a trick or two over the past couple of decades.
Is buying the place a trick? Or just good business?
From my post to God’s lips.
US charges ex-Fannie, Freddie CEOs with fraud
By DEREK KRAVITZ, AP Business Writer – 1 hour ago
WASHINGTON (AP) — Two former CEOs at mortgage giants Fannie Mae and Freddie Mac on Friday became the highest-profile individuals to be charged in connection with the 2008 financial crisis.
In a lawsuit filed in New York, the Securities and Exchange Commission brought civil fraud charges against six former executives at the two firms, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron.
The executives were accused of understating the level of high-risk subprime mortgages that Fannie and Freddie held just before the housing bubble burst.
“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” said Robert Khuzami, SEC’s enforcement director.
Khuzami noted that huge losses on their subprime loans eventually pushed the two companies to the brink of failure and forced the government to take them over.
The charges brought Friday follow widespread criticism of federal authorities for not holding top executives accountable for the recklessness that triggered the 2008 crisis.
…
I’d love to see a follow up on those Real Estate Titans with their 8 mortgages.
Tony Amador, what did you do with the money??
Good grief what a blast from the past. Insanity.
Days like today I really, really miss Casey Serin.
“The double loans have left them carrying eight mortgages. If interest rates go up, ‘we could be in trouble,’ admitted Gregg. ‘If that happens, our exit strategy is to start liquidating homes. Right now, I’m just playing the game,’ said Janey. ‘But we have an out. We can always sell.”‘
_______________________________/
Has Gregg realized that interest rates near zero only can go in one direction? Does Janey understand the difficulty of “liquidating” a fundamentally illiquid asset? Our culture in the last thirty years produced thousands of investors like this couple. Circumstances made them look much smarter than they are.
Whoops. Didn’t realize that was a retrospective look back. That couple probably has suffered badly, and I see from Palm Beach County records that (a) they’ve been sued by at least one homeowner’s association and (b) their assets are subject to an IRS lien for unpaid federal taxes.
As of a 2006 update to the article Ben quotes from, however, it was all good!
http://tinyurl.com/7jrwbhn
Of course the government realigned the tax code so that “investors” wouldn’t get stuck with a judgement either. If there’s a profit I’ll take it, and losses are reserved for the masses. What a country!
Tucson’s economy is still stuck in the mud. Story in our local fishwrap:
In bruised West, Tucson faring worse than most
Key points from the story:
1. The limits of eds, meds, and government spending.
Among the reasons for Tucson’s woes: “Its economy is heavily dependent on ‘eds and meds’ (education and health-care sectors) and now-stagnant federal spending in industries like defense - bulwarks in the early years of recession, now insufficient catalysts for recovery,” the report said.
2. So much for waiting for the housing fairy to come back and save us:
Hard-hit Tucson, Las Vegas, Boise and Phoenix will not see improved home prices in the foreseeable future, the researchers said.
“They have high foreclosures, they had massive real estate and construction employment that crashed and that kind of crack up has proven to be toxic to places,” said Mark Muro, policy director for the Brookings Metropolitan Policy Program.
“…and now-stagnant federal spending in industries like defense…”
What if Raytheon Missile Systems pulls out?
I remember going into Home Depot in 2005 on a tuesday for line for the weed wacker and it was swapped with people, every isle had someone in it discovering what they needed. I called an associate to relate how the front door must have had two drink minimum to enter. It reminded me of Gateway stores in 1999 or Apple stores today. The Fed engineered low interest rates and people took the bait, and now they are on the hook. Borrow like there is no tommorrow. Now that the hangover has been here, Bernanke is still trying to keep the party going. One of the few things the Fed is actually inflating is the price of food, and gas. Since the housing bubble was inflated by cheap credit, and since low wages are now the norm, the bubble will deflate. Human behavior is so interesting concerning these last 20 years. People it seems behave like they drive, 70 mph into a brick wall. No planning, no slowing down, just full speed ahead till it suddenly stops and kills you. Bankers are dope dealers but you don’t have to be the junkie. In 2005, an associate told me she got a $500k townhouse with a one page stated loan application. She clained she made $165,000 a year (truth was she made no more than $35k a year). Another associate in 2005(who is always bankrupt) told me how he had 4 homes, all on interest only arm, 125% loan. I was shocked and when I offered the slightest advice on how housing has corrections, like the late 1980’s, people would become hostile, so I shut up. I remember thinking it must be generational as my grandmother’s generation never had a balance on a credit card, and many of them never had an atm card, much less an ARM mort. Finally, we have a new presidential year. Should be interesting for housing. I wonder which Candyman (Elmer Gantry con-artist) we will elect. Ron Paul had a moment when he said that one side wants welfare and the other side wants warfare.
I remember the hostility when I suggested to a friend in Florida that she should not buy that top floor condo as an investment property. She was rabid about buying that condo (that was under construction at the time).
I quickly changed the topic.
The hostility to my common sense argument was just incredible. The attitude that she had discovered something that I was not able to grasp and that I was obviously stupid.
It was remarkable to see. I can’t say I enjoy what happened with that investment as it is ending very badly for her. I look at it now as a “fever” that was going around and my friend caught it.
I am very familiar with that attitude. The fever analogy is a good one, but it was me who was perceived as ill.
Where was the condo, if you don’t mind me asking?
Great post Richard and Snake.
West Palm Beach. I think it was called the Metropolitan
The hostility to my common sense argument was just incredible. The attitude that she had discovered something that I was not able to grasp and that I was obviously stupid.
I had a family member try to talk me into buying rental properties in Dallas just as the bubble was beginning to pop. When I declined she told me that “it was different in Dallas” and when I said Dallas would not be immune I was also told that I was stupid.
She eventually sold the rental property at a loss, after spending a bundle to repair it after the tenant trashed it.
She eventually sold the rental property at a loss, after spending a bundle to repair it after the tenant trashed it.
Which, IMHO, will be the same fate of many. Especially those current all-cash investors who are snapping up foreclosure bargains, then renting them out.
“Obama is wrong. Fraud was illegal before the crisis; it’s illegal now. The Servicemember Civil Relief Act was signed in 2003. So it was already on the books. During the savings and loan crisis, the George H.W. Bush administration sent about 3,000 white-collar criminals to jail. This administration has yet to send one.”……………………..
A position I have posted here numerous times. And yet, some of the leftist Obama supporters here defend him and his Administrations actions, saying all the Crimes were committed under Bush…..It’s all Bush’s fault.
The world is upside down because of Bush…..blah, blah, blah.
Well, HERE, someone else makes the same point. Maybe since it’s in print somewhere else, it will be “true”.
There is a PAPER TRAIL… Fraud can be discovered and prosecuted.
OBAMA is PROTECTING his cronies. Period. “It’s all in the past. It’s Bush’s fault. We need to move forward”…….Blah, blah, blah.
Well, Mr. President, how about some sense of LAW enforcement????
That being the case, how come the financial industry has turned against Obama and is now pumping money into the Republicans?
The reality is, the Obama administration (and Republican Bernanke) believe the financial sector has up by the balls. If they were truly made to pay for their crimes, they would end up paying with everyone’s bank deposits as the financial sector collapsed (or taxpayer money if they were again bailed out).
We can debate whether or not that is true. But in either case, how come that entire sector, and the entire top 1 percent, aren’t being made to pay at least a psychic price for what has gone on? The guillotine may be justified, but self-defeating. But we at least need a “truth and reconcilliation commission.” With Republicans backing finance, the congressional investigation of this mess was a massive sweep under the rug.
Interesting..Wall Street generally likes to buy off both parties as a hedge. Where/when did you read that they started pumping money at the R’s? When Obama went all Teddy Roosevelt in Kansas?
They started in the 2010 elections. They didn’t get what they wanted in Dodd Frank, and objected to the executive pay criticisms and reviews associated with TARP.
They’ve always contributed to both sides. But they were more for Obama in 2008, and are against him now. He may be doing them some favors, but evidently it isn’t enough favors.
Despite the 1929 debacle, Wall Street never liked Roosevelt either. Even though he saved their arse.
Good info.
I see a lot of libs who don’t like Obama because he’s in favor or Wall Street, but Dodd-Frank, watered down as it was, was a serious blow to banks. Credit Risk retention alone is a huge issue.
RE: Bank reform
Quick history: The justification for TARP was the too big to fail argument.
Why not make them smaller?
Answer: “We won’t be able to compete with the European behemouths, and America/NYC will lose clout and money.”
Financial institutions getting Federal Insurance on deposits shouldn’t be highly leveraged.
Glass Steagal? Dodd Frank? It’s like immigration reform. The economy is healing the problem to some extent on its own. The financial sectors everywhere are shrinking (except in Canada?), and illegal immigration into this country is, reportedly, a trickle.
Also, I would like to know the “rest of the story”. Another sob tale from the press, crying for people being “thrown out on the street”:
“Activists fought back against the foreclosure process in Martinez on Thursday. ‘For over 20 years, I made my payments on time,’ said Tony Amador of Oakley, who allowed demonstrators to use his home as a backdrop for their protest. ‘I’ve been double-crossed,’ Amador said. ‘Between the mortgage companies that I’ve been paying to all my life — between that, and the government letting them do it, they stabbed the knife into my heart and I’m bleeding.’”
If someone has been paying a mortgage for 20 years, I must assume he bought the house in the mid 80’s. He should have MASSIVE equity. The clue is in paying the “MORTGAGES”, note plural, he has been paying.
Let’s take a guess. In 2006, he decided he could have his house and spend it, too…………..Cash out Refi? I would bet on it.
Anyone could easily SELL a house with high equity, even in a down market. There is NO reason to be going into foreclosure, unless, the employment story is just a convenient excuse. He could have walked away with Cash, but decided to stay and not pay…..while a long-winding process began. I just don’t buy the message the press is sending here.
The Boston Globe in 2007-2008 used to regularly feature sob stores; I became a frequent letter writer to the author of the stories, including the property records, the number of refinances, etc. I don’t read the Globe as much as I used to, but by 2009 the stories were mostly dropped because every single one featured multiple cash-out-refinances.
I had the intro to the letter saved as it was the same every time. It was along the lines of “where did the money go?”
“Cash out Refi? I would bet on it.”
+1 Sucker took the bait.
In 2005, my cul-de-sac had several McMansions at a time under construction. It stopped very suddenly, leaving our little neighborhood with a split personality: just over half the homes are the original modest ranches, and the rest are 3-story behemoths.
I thought it was crazy even then. Glad it’s over.
3 stories? Were these walkout basements, or where they really 3 stories tall?
See below, I put my comment in the wrong place, d’oh!
I notice that in the mountains of North Carolina the ‘cabins’ are all McCabins. Though made out of logs or of all wood construction, they are monstrous.
My guess is that the folks that built this wanted one to show off to their “friends” and so they built them big. Hardly any utility to a mountain mansion though.
The third floor is more of an attic-type space with a couple of dormers. Even the lax building standards in my town won’t permit a full third floor.
It’s not just North Carolina, but almost everywhere.
A “getaway cabin in the woods” ain’t what it used to be.
I started talking about real estate as a bubble maybe around 2004 or so and encountered either hostility to my views or a sort of amused and indulgent contempt coupled with pronouncements that I was a “doom and gloomer” and was a spoilsport who always found fault with things and just had an all around “negative attitude”. Groupthink is potent and many who should have known better were taken in.
Some of the people who were most vehement in criticizing me back then are now telling me all about how things turned out exactly as I predicted and how we “should have known”. Not one of those friends can seem to remember that I told them so and treat the new reality as their own unique discovery…
Some of the people who were most vehement in criticizing me back then are now telling me all about how things turned out exactly as I predicted and how we “should have known”. Not one of those friends can seem to remember that I told them so and treat the new reality as their own unique discovery…
I generally avoid telling people things they don’t want to hear unnecessarily, but I probably couldn’t resist giving them an earful if they did that to me.
My sister (see Dallas post above) has never acknowledged that I was right.
My greatest vindication: My MIL credits me with correctly predicting the housing crash. She definitely lived it, as her home nearly tripled in value from what they paid, later to fall off by maybe half. She also has a few children who were wrong about it, including my SIL who is the co-owner w/ ex-hubbie of an underwater McMansion.
Nice to hear somebody got some credit.
Several years ago, I was on an airport shuttle ride from Phoenix Sky Harbor Airport. During the trip to Tucson, Arizona’s housing marketing was vigorously discussed. At the time, I’d been an HBB-er for at least a year. So, you know what kind of edumacation I had.
Anyway, my commentary really caught the attention of the other shuttle riders. In essence, I said that our state’s house prices had bubbled up and were headed down for the foreseeable future.
One of my fellow shuttle riders even asked, “Are you in real estate?
“Prices are headed down”…”are you in real estate?”
Talk about a disconnect. No you silly traveler, it’s a great time to buy!
I think that a lot of people fail to connect the dots and realize that realtors are no different than used car salesmen. The make money by closing a deal, and won’t forsake that commission just because your purchase might not be in your best interest.
“I think that a lot of people fail to connect the dots…”
Incomplete “formal operations” development. Wishful thinking prevents consideration possible outcomes and consequences of actions.
I was a couple years out of college when the boom started, 2002ish. I was working for an Engineering company in one of the main areas that started to really go up in price in Los Angeles. The South Bay in Southern California.
I was so into the boom, ready to have my Mom help me buy something, but slowly it wasn’t adding up. I was then told at my next job around 2005 from an older guy, be careful with booms. And then told me his story about when he was in Texas during the 80’s. I never forgot that and started to look at the boom for what it was.
That forced me to not buy, and instead short stocks. Everyone thought I was crazy, but I was also the only person making money in their 401k in the company when it all started to fall apart. A lot of people around me thought I was such a negative person. They still do. Because would you believe it, most of those same people think housing will still magically go up now, and we will be priced out forever. UGH!!
Not one of those friends can seem to remember that I told them so and treat the new reality as their own unique discovery
I never needed any dramatic apology about that situation. I just wanted a little humility when the subject again surfaced, and an acknowledgement that perhaps my sources did know a thing or two. Nope, they just plain need to be top dog in their mind, no matter the reality.
A well informed businessman and I discussed the economy last night. I said that Canadian real estate is going down and we will see it shortly and that this will cause unemployment and damage our so-called genius economy. He thought I was nuts.
A telephone repairman (Romanian immigrant) fixed our phones today and I asked him how he liked Canada. “Canadians don’t know how great this country is” he answered. I asked why ? “Resources” he said.
Yes, and if the world keeps slowly down who will buy these resources ?
Canada is no more prepared for a slowdown than the USA was in 2005 ! “It can’t happen here” yea right.
I was recently in South East Asia and had some drinks with some Canadians. They seemed to know what was going on. The guy was in the military and his girlfriend was an Engineer. Thankfully there are still people out there that can see different views going on.
What ever happened to the Ploesti Oil Fields (in Romania) that fueled the Nazi War Machine for five years?
A telephone repairman (Romanian immigrant) fixed our phones today and I asked him how he liked Canada. “Canadians don’t know how great this country is” he answered. I asked why ? “Resources” he said.
Banana… you are the biggest media junky I know.
From Wiki:
“Although oil production in the region is declining steadily, there is still a thriving processing industry through four operating oil refineries, linked by pipelines to Bucharest, the Black Sea port of Constanţa and the Danube port of Giurgiu”.
“In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.”
These dummies are only five years late compared to when our casual discussions covered the same ground.