CNBC real estate bubble

Based on posts and anecdotal evidence, it appears the housing bubble is dependent on low(and getting lower!) interest rates.

From what I can see, there does NOT seem to be any danger of rising interest rates. The interest rate trends still appear to be down as far as I can tell.

Any dissenters???
 
All these discussions about house prices are really only about one thing, and thats the cost of money.

For the last decade we've had interest rates moving down to levels that nobody expected and the net result is that where $100 bought you X amount of credit in the past it now buys 2X or even 3X.

All the comments about sustainable prices and "no evidence" of a bubble etc. are crap. The same garbage was touted about the hi tech shares a couple of years back [anybody remember "its different this time round" and " its a new economic paradigm" ?]

AAAintheBeltway reckons we have nothing to fear in real estate for a while. Maybe he's right but if you're highly leveraged its time to reduce your borrowings and if anyone follows AAA's advice to "buy the biggest house you can afford in a strong market before you are priced out of it entirely" he's crazy. The only time to do what AAA suggests is when you got no money and there's no downside.

A couple of postings discussed inflation, I live in England where our inflation target is 2.5% and actual inflation is under 2% at the moment and yet my grocery bill is probably 50% higher than it was 5 years ago,,,,,,,,same bullshit different country!
 
Following from Jim Cramer's column:
Wells Fargo (WFC:NYSE - news - commentary - research - analysis) rocks. That's what I thought after interviewing Richard Kovacevich, the gritty CEO of the California bank. It reminded me why I owned WFC before -- I sold it in the $50s for my Action Alerts PLUS portfolio -- and why I can't wait to get back into it.

Wells Fargo is a true double-digit growth story, in part because of its mortgage operations and in part because it is taking such huge share away from competitors in California.


Kovacevich scoffed at the idea of a housing bubble, talking about how mid-single-digit growth in home prices makes sense in an environment where other alternatives aren't so hot


Apparently a savvy banker in the middle of a hot real estate market does not think there is a bubble. I know, bankers are idiots, etc, but WFC has managed to avoid many of the disasters other banks plunged into and their CEO just might know what he's talking about.
 
Originally posted by daniel_m
All the housing 'bubble' talk makes a lot of sense, and for the near term I'm of the opinion we could expect a mild to nasty 'correction'. In the long term, I think the prospects for real estate, especially in the Southwest and Florida, are pretty bright. USA population is slated to increase by about 200-250 million in the next 50 or so years; a combination of baby boom II (their kids) and immigration. (where do you think those mexicans are gonna wanna live?)
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Mexican's, Where?? You must mean us Cubans......But we've already taken over South Florida....moving north to a town near you.......the Mexicans are in Texas.....But its good to hear you have a positive outlook in the housing industry down in Florida..I was thinking of selling....My house has almost doubled in the last 2 years....with very little money put in to fix-it up...oops i see u also mentioned the southwest....my bad
 
Originally posted by AAAintheBeltway
Apparently a savvy banker in the middle of a hot real estate market does not think there is a bubble. I know, bankers are idiots, etc
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I don't know if bankers are idiots, but that banker has a profit motive in persuading the public against a 'bubble,' requiring skepticism, if not disregard, for his gratuitous opinion.

Adding to that the support of someone like Cramer, with his history of blatant hyping and manipulating, only generates more doubt.
 
Why would you look at housing differently than any other investment ? If you only have one - the house you live in - then you should assume the obligation that you can afford.
For a portfolio of real estate you enter a position with an exit in mind and a stop loss point in mind. After you have made a large profit there is nothing wrong with taking it: Trying to call the top in a particular real estate market is no different than trying to call the top in other markets .... very difficult.
 
Originally posted by Madison


I don't know if bankers are idiots, but that banker has a profit motive in persuading the public against a 'bubble,' requiring skepticism, if not disregard, for his gratuitous opinion.
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Bankers are definitely greedy.....

The major players I always hear touting that a bubble doesn't exist are the organizations directly tied to the industry. Nat Assoc of Realtor, etc. Since when would it be of advantage to tell your potential purchasing clients that it may be a bad time to buy and that prices may fall dramatically in the future. No 'salesperson' is going to do that.

Reminds me of the "milk does a body good" commercials brought to you by the California Dairy Farmers. You think they're going to tell you about the negatives.... heck no.

Greenspan has provided the country with a bubble in another area. No inflation...... I call Bullsh!t!!!! At what F'ing store does big Al shop? He likely doesn't and has a housekeeper does his bloody shopping. Even the 99 cent store is $1.25 now. Let's try to save an overvalued market by cutting rates only to blow the hot air into another area. Brilliant!!! Housing is keeping the entire economy afloat because if the cost of credit. I'd hate to see what the real numbers would look like ex-housing. Al should have retired a few years back and he'd been a hero, now he's going to be a scapegoat

Later,

Cracked
 
Originally posted by Madison


I don't know if bankers are idiots, but that banker has a profit motive in persuading the public against a 'bubble,' requiring skepticism, if not disregard, for his gratuitous opinion.

Adding to that the support of someone like Cramer, with his history of blatant hyping and manipulating, only generates more doubt.
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Bankers are deemed idiots only when they have too many bad loans on the books.

When the housing bubble bursts, the bankers will look like idiots, but I suspect the smart ones will have retired by then, or sold their stocks near the top, just like the Dot.com insiders did.
 
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