Don't Buy Housing Bubble Propaganda

No doubt I am talking my book.


But people talking bubbles are trying to get your money out of real estate and back into equities. Or looking to buy a pullback on nice house in a good area.
 
remember the kid who lived in a bubble?

Quote from trader99:

RealMoney by TheStreet.com
Don't Buy Housing Bubble Propaganda
Thursday May 26, 2:04 pm ET
By Barry Ritholtz, RealMoney.com Contributor

The old saw is true: Every general fights the previous battle. And after missing the tech and telecom bubbles, the generals of the financial media are now battling more bubbles than we can count:

There are bubbles in debt, credit and interest rates. There is the oil bubble, the import bubble, the China bubble and the current account deficit bubble. In short, we have a veritable bubble in bubbles. Indeed, it is astonishing how many people who failed to either acknowledge the tech bubble in the 90s -- or at least failed to act on it -- now have no hesitation to declare real estate to be a bubble. This despite their lack of expertise or past track record in spotting bubbles on a timely fashion.

The bubble du jour though is the housing bubble. From Greenspan's testimony to CNBC's Housing special to (uh-oh) this month's Fortune magazine cover, it seems to be all anyone wants to talk about.

But a 1999 dot-comlike bubble? I hardly think so.
More...
 
Caring only about the carrying cost, not the price?
That sounds like "I can buy a lot of stock on margin, no matter it is price inflated or not, as long as the margin rate is low".

Also, talking about the fundamentals:
The paper says that baby boomers kids are buying, the US population are increasing fast.
Well, how much can that support the housing and
at what price do they support? Missing.
One way to see the fundamentals in housing is to look at the
rent/mortgage ratio.
This paper conveniently omitted that part.
This paper just made a guess, which is worth less than the paper it used.
 
Quote from ProfitMania:

Caring only about the carrying cost, not the price?
That sounds like "I can buy a lot of stock on margin, no matter it is price inflated or not, as long as the margin rate is low".

Also, talking about the fundamentals:
The paper says that baby boomers kids are buying, the US population are increasing fast.
Well, how much can that support the housing and
at what price do they support? Missing.
One way to see the fundamentals in housing is to look at the
rent/mortgage ratio.
This paper conveniently omitted that part.
This paper just made a guess, which is worth less than the paper it used.
More...

Yep. Interesting point. Everyone in the nation is thinking about cost-of-carry. America is living in how-much-does-it-cost-per-month mentality... That's a really bad sign..
 
the one argument that always cracks me up is...

"...but a house is different because you can live in it..."

well shit.....when you can't make your payments any more because you lost your job along with the other 30 million Kali gov-drones....AND your home-value just fell 100K below your interest-only ARM balance; the banksters are NOT going to let you live in it. :p

.

The other really ludicrous RE argument is this one...

"purchase price isn't important...all that matters is the monthly payment".

Well hmmm....ya know, I tried that one out on various organizations, and it did NOT go over well a'tall ! :D

Fer instance, the county swore up and down that it did indeed matter what the PRICE was. Oh yes they did....$$$$$

And the insurance company....they rudely refused to listen to my "monthly payment" argument at all... :p

But ya know who pissed me off the most? Yup, the two-years-from-now buyer! When I tried to explain to him that price didn't matter, that bastid just laughed in my face! :eek:

well damn...now I'm 200K underwater and dropping daily, the specs are LONG gone from the market, the bank's calling every day, every house on my block is for sale, and I just got a pink-slip at work....and the damn buyers are saying that it matters what the silly PRICE is ! Can you believe it?

:mad:


note; this IS going to all end badly...and not just by 25% either...
 
Quote from trader99:

RealMoney by TheStreet.com
Don't Buy Housing Bubble Propaganda
Thursday May 26, 2:04 pm ET
By Barry Ritholtz, RealMoney.com Contributor



My position is that housing is not in a bubble -- yet. But it is an increasingly extended asset class that may be subject to a significant correction in the future. But a 25%-35% retracement is a very different situation than a bubble (recall that the Nasdaq dropped 80%), primarily because there are very different consequences for both homeowners and investors.
Not Your Grandson's Bubble
That said, comparing real estate with other true bubbles -- most especially the tech/telecom/dotcom bubble of the 1990s -- is imperfect, due to several factors.
More...

Maybe he is right, maybe the doom and gloomers are right. None of us will know until we are looking in the rear view mirror. I would like to point out though that a 35% retracement in housing could have a terrible effect on people, especially those getting negative ARM and intererst only loans. Most people dont buy stocks are margin, so they are paid for 100% in cash. Most people buy real estate at 5 to 1 margin.

Brandon
 
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