housing crash

ptunic · Aug 31, 2005

Quote from pepper_john:

The house market today is very similar to the nifty-fifty in the 70s.
Both occurred after a major stock market collapse (1969-70 and 2001-2002), and amid secular bear markets. Both were considered safe heaven when other assets became too volatile.
And, unfortunately, both will be taken out and shot one-by-one.

I must admit, while during the stock bubble I researched prior bubbles and correctly identified it, I was caught wrong-footed on the real-estate bubble. I had really just assumed that once stocks drop substantially, it would mean people would have less money and would have to sell their houses more often, starting about 1-4 years after the equity pop. Boy was I wrong!

-Taric

pepper_john · Aug 31, 2005

Quote from ptunic:

I must admit, while during the stock bubble I researched prior bubbles and correctly identified it, I was caught wrong-footed on the real-estate bubble. I had really just assumed that once stocks drop substantially, it would mean people would have less money and would have to sell their houses more often, starting about 1-4 years after the equity pop. Boy was I wrong!

-Taric

Well, after the dot.com collapse, people began to realize that we should invest in real stuff, and guess what is more real than the real-estate? So people poured money into real-estate.

similarly, in 1972-73, after the collapse in 1969-70 of the high growth concepts, people began to circle around the blue chips-and the bluest of them, the nifty-fifty, became everyone's dream.

mhashe · Aug 31, 2005

Quote from ptunic:

I must admit, while during the stock bubble I researched prior bubbles and correctly identified it, I was caught wrong-footed on the real-estate bubble. I had really just assumed that once stocks drop substantially, it would mean people would have less money and would have to sell their houses more often, starting about 1-4 years after the equity pop. Boy was I wrong!

-Taric

imho Smart Money exits early and flows elsewhere. It's the retail dumb money caught at the top that gets hurt. I suspect commodities and some foreign markets will rally after real estate collapses. Brazil and Japan will definitely see influx of funds. China related Hong Kong listings probably a good bet too. Commodities, probably grains and metals best bets right now.

lilboy716 · Aug 31, 2005

"
David Lereah, chief economist of the National Association of Realtors and author of "Are You Missing the Real Estate Boom?" "
"

this is his bias. i can see your bias. it doesn't matter, the market will decide. there are only so many suckers (left).

i am really really looking forward to that bankruptcy law to take effect in october(i believe) then... when the popping begins, these folks would owe money of the difference between the mortgage and the prices of house sold by the bank.

i was just asking my parents if they wanna buy houses in costal lousiana & mississippi. become the market makers. a 100k house there before katrina would probably go for half of the value even if they're in good shape.

i am not trying to be mean and heartless. but this is what market makers do. i have family in gulfport MS just in case if you want to question my intentions.

i will do the same for the california market when banks are willing to sell it at any price. (we'll see if this happens)

Quote from killATwill:

i cannot believe this man calls himself an economist.

ptunic · Aug 31, 2005

Quote from lilboy716:

i was just asking my parents if they wanna buy houses in costal lousiana & mississippi. become the market makers. a 100k house there before katrina would probably go for half of the value even if they're in good shape. [/B]

Would this really happen though? When Florida got hit with natural distasters the last few years, house prices haven't slowed down.

That said the scope and markets are very different. I have no experience in this.. but just curious. I agree if prices do in fact go 50% lower it would most likely make a good buying opportunity over the long term, at least in areas where employment is expected to return to close to pre-katrina levels.

-Taric

Covertibility · Aug 31, 2005

What happened to rising rates were going to bring down housing? Anyone, anyone?

I still can't believe Robert Shiller isn't selling his 2 homes..wtf, he should be buying bottle water, guns, gold and foreign curriencies (LOL).

We still in that rising rate environment?

drsteph · Aug 31, 2005

Quote from lilboy716:

"
David Lereah, chief economist of the National Association of Realtors and author of "Are You Missing the Real Estate Boom?" "
"

this is his bias. i can see your bias. it doesn't matter, the market will decide. there are only so many suckers (left).

i am really really looking forward to that bankruptcy law to take effect in october(i believe) then... when the popping begins, these folks would owe money of the difference between the mortgage and the prices of house sold by the bank.

i was just asking my parents if they wanna buy houses in costal lousiana & mississippi. become the market makers. a 100k house there before katrina would probably go for half of the value even if they're in good shape.

i am not trying to be mean and heartless. but this is what market makers do. i have family in gulfport MS just in case if you want to question my intentions.

i will do the same for the california market when banks are willing to sell it at any price. (we'll see if this happens)

Yours, sir. Your amount.

Don't forget the lesson of Homestead, FL. Rebuilding money dried up after about 2 years and the town was basically dead thereafter.

You can rebuild the buildings, but without the jobs there provided by local businesses (many of which will probably relocate out of fear of a similar event) you just don't get anything beyond a local basic service/retail economy.

lilboy716 · Sep 1, 2005

Katrina was the bubble-popping-pin I was looking for to pop the housing bubble.

Gas prices stays in the $3 range. People spend less, go shopping less... retail earnings down..

The Kin · Sep 1, 2005

Quote from lilboy716:

Katrina was the bubble-popping-pin I was looking for to pop the housing bubble.

Gas prices stays in the $3 range. People spend less, go shopping less... retail earnings down..

Single Family homes in the middle of fucking nowhere with 100 mile commutes to work go down.
Condos (close to work) go up up up.

I've seen this coming for years.

lilboy716 · Sep 2, 2005

quote
He called it "very unsophisticated."

Anthony Hsieh, chief executive of LendingTree Loans, an Internet-based mortgage company, used a more disparaging term. "If you own your own home free and clear, people will often refer to you as a fool. All that money sitting there, doing nothing."

unquote

i saw mr hsieh on cnbc the other day. i'll bet he drives a SL600... a bunch of people doing business with his company drives a 2nd hand car.

quote

Federal guidelines recommend homeowners devote less than $30 of every $100 in pretax income to housing. But 40% of Californians exceed that, according to a new report by the Public Policy Institute of California.

That's higher than in 1990, when the previous real estate boom was cresting after several years in which housing-price rises outpaced salary gains. The figure then was 36%.

unquote

quote

CMG Financial Services, a mortgage company in San Ramon, Calif., introduced another tool this summer: a combination checking account and mortgage.

It works like this: Your paycheck is deposited into your account and immediately applied to your mortgage principal. Over the course of the month, as you spend money on food, gas and other necessities, the principal creeps back up. But the result is that your mortgage debt gets paid off more quickly.

That's the theory, at least. Of course, if you're indulgent, you can pay much less of your mortgage â like none. Any shortfall is added on to the principal.

unquote

really mean mortgages are coming back

Quote from onewaypockets:

Another brilliant statement from the head "Realtor" (cheerleader)....

"If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years," said David Lereah, chief economist of the National Association of Realtors and author of "Are You Missing the Real Estate Boom?" "It's as if you had 500,000 dollar bills stuffed in your mattress."

He called it "very unsophisticated."

http://www.latimes.com/business/la-fi-homedebt28aug28,0,6044251.story?coll=la-home-headlines