Predict the adjective business school students in 2020 will read the most when this housing crash is discussed - as in "The _________ Housing Crash of 2006-2008"
Here's some for starters:
"Devastating"
"Spectacular"
"Crushing"
"Predictable"
"Record"
"Worldwide"
"Greenspan"
"Speculative"
March 03, 2006
More word fun - pick your adjective
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Speculative Housing Interest Temptation Storm (SH*TS). Sorry.
Greenspan Housing "Crush"
Republican
Worldwide: Because of the total breath of the easy money.
Spectacular: Because of the deep change in behavior that will occur.
Greenspan: Because finger pointing is our favorite game.
Devastating: Because of the emotional feeling of loss.
Crushing: Because of some families will not recover.
Record: Because it will be a record.
Speculative: Because never before have so many average "Joe/Jane" jumped in to the Real Estate Market.
Predictable: Attributed to the early warning by Robert Shiller. ‘There will always be bubbles’.
I am not selling Robert's book but here is a note from Newsweek.
Jan. 27 - Robert Shiller will publish the second edition of his book “Irrational Exuberance” (Princeton University Press) this spring. Noted as a rare voice who predicted the stock market crash in 2000, the Yale economist has become a sort of bubble guru and was part of panel discussing bubbles at the World Economic Forum meeting in Davos on Thursday. He has now added a chapter on real estate to his book and is also launching a company that will sell futures allowing people to hedge against movements in housing prices in a given city.
41cadillac
Phoenician.
The graph is indeed terrifying but before jumping off a cliff remember the median house today is more than twice as large with a lot more features than the house of 1950.
Don't get me wrong falling off a 100 ft cliff instead of a 200 ft cliff is still a bad thing.
but to that "houses are bigger" argument - I don't believe it. I don't have data (too lazy to look) but I believe the median size is likely declining in many countries, including us, as condos and smaller houses have to be built in landlocked areas
on features, I'd argue that our manufacturing skills and methods are so far superior to 50 years ago that the features may be nicer, but the cost is identical or cheaper overall.
kind of like computers.
but hey, the NAR brings up this argument all the time, so it must be a good one eh?
Soft Landing*
*Disclaimer: The word soft is a relative term. All matter is essentially soft as all matter comprise of atoms surrounded by electrons in what is basically empty space. In addition, insects are known to fall from tall buildings and land without any harm to them, thus soft landing. Please also note each of our regional associations also point out their "differences" and why they will not be affected. As each region is truly different and unique, none of them will be affected by the so-called "bubble bursting." This has been a public service announcement brought to you by the NAR.
Dr. Shillers' book came out in April 2005 so your Newsweek article is a year old.
I own it and have read it - it's a very interesting read.
Today's discussion - the feedback effect. Hold a microphone by a speaker and interference takes over unless the microphone is moved. The microphone is the easy, cheap credit and the interference is the housing market. Remove easy credit and the housing party ends. LESSON 1.
Keith,
The change in quality of modern homes is indeed a two edged sword. I've no doubt that we build less expensively and there isn't a lot to recommend the "craftmanship" of previous eras. FI there's nothing good about an 8" cast iron plumbing waste tree with cork and lead seals. Give me 4" black ABS any day. I just bought a new water heater. The 1992 40 gallon model started leaking and 15 years is about the max for our water quality and usage anyway. In my neighborhood houses cost about $500/sq ft. And natural gas is very expensive so I got an equivalent instant heater for $500 versus traditional $320 replacements. I freed up 6 square feet of house and energy ROI is about 3 years. My house is (theoretically) worth much more for these efforts. These incremental improvements have been happening for 50 years. Not all of the rise is a bubble phenomena, some is case of lowering operating costs in exchange for higher capital costs. In a world of very low capital borrowing this makes even more sense.
There is a bubble, it has popped, prices will at the least revert to the mean and there will be opportunites to buy assets for less than replacement value but it isn't all bubble. That's all.
shtupped
The implications of that chart are numbing. A simple pullback to the long term uptrend could take a decade.
And prices *could* puncture the long term trend, given enough economic doomsday scenarios.
Cool chart, what is the source?
The WORD you need here has to describe the gravity, magnitude and "once in a lifetime" nature of the coming event. That word is EPIC. What happens in the coming months to the housing market will be an event of epic proportions. And, that event, will be overshadowed by the mess that is Social Security. There is no "trust fund". It's nothing but a box of IOU's - worthless. I've bought gold and shorted the US dollar. That south asia tsunami will be nothing compared to the coming tsunami. ... weeping and gnashing of teeth ...
http://www.firsttimebuyerhelp.co.uk/ for the image and info...
Jiggy.
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