May 30, 2006

Funny stuff from Charles Hugh Smith - How to overpay for real estate

I'd call it a perfect bubble storm:

"The cutting-edge secrets to buying real estate at 30% to 50% above market value:"

Appoint a Federal Reserve which flooded the nation with virtually unlimited money supply even as it lowered interest rates to historic lows

Lower lending standards to basically zero so even those with poor credit and no cash can buy a house with no money down and no documented history of financial discipline

Enable investors to buy new condos and houses with maximum leverage so that 40% of all new homes are purchased as investments

Lower lending reserves requirements to the lowest levels ever, so lenders need not be encumbered with onerous standards like having cash on hand to cover bad debts

Enter into an unspoken agreement with our Asian trading partners in which our homeowners can borrow 105% the value of their homes to buy Asian-made consumer goods, and our trading partners will buy all our depreciating long bonds at low rates of return so mortgage rates stay low

Keep wage increases down to basically zero so consumers count on re-financing their homes to pay for vacations, college, new cars and boats, etc.

Enable a 10-fold expansion of mortgage-backed derivatives and various exotic financial instruments so that trillions of dollars in mortgages can be tranched, sliced and hedged, giving the financial markets the false impression that the risks have been lowered, even as they've actually increased to unprecedented levels

Enlist an army of Wall Street and media cheerleaders to promote the notion that "this time it's different" and "housing never drops in value," lulling the unsuspecting into believing that the business cycle and the laws of supply and demand have been officially revoked

Encourage builders to build up to 10 times the number of units which sell annually, insuring massive overbuilding (over-supply).

Rig the inflation measurements (CPI, etc.) to


Anonymous said...

Shouldn't that read "How to Buy a $150,000 home for only $750,000" ??? That thing in the picture is certainly not worth $450,000.

Anonymous said...

Interesting take. But this housing bubble has more to do with human nature than conspiracies.

Not to discount the notion that there are plenty of folks who will take advantage of these events.

Bill said...

so when this bill running thru the house (no punt intended)
Passes where will housing be...? say $96500 please buy me.

Anonymous said...

quote from the Act "It is the obligation of every citizen of the United States, and every other person residing in the United States"

Interesting... does "every other person residing" mean non citizens and illegals?

here is an obscure possibility: "To illegals: you can get your American citizenship after you or the adults of serving age in your family have volentarily served 2 years"

they get sent to Iran.

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Anonymous said...

With the , you don't have strangers coming through your home, day after day, often week after week, at times which are not always convenient. Your home must look great ... truly great ... for one weekend only .

Anonymous said...

Hint #5 for . Loose knobs, sticking and squeaking doors and windows, warped cabinet drawers, and other minor flaws detract from home value. Fix them. Most buyers assume there will be ten hidden problems for every one they see.

Anonymous said...

Here's the home buying process into a single weekend. She does it by compressing the real estate marketing budget into a much tighter timeframe than normal .

Anonymous said...

The average home is currently on the for about 4 months before it goes to contract. Around 15% of initial real estate contracts never make it to a successful closing ... something goes wrong, and the frustrated seller puts the home back on the real estate market .

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