Movies, you may or may not know, all follow the same three act structure.
The first act introduces the major characters, including a hero and villain, and sets up what the major conflict will be. In the second act, the conflict, and tension, builds and builds and builds, to a breaking point, and the hero appears defeated at the end of the act.
Then in the third act, POW, the conflict is resolved, and we learn about the hero and villain through their dealings with the conflict.
That's essentially every movie.
So, for Housing Bubble - The Movie:
1) Who is the hero?
2) Who is the villain?
3) What is the major conflict?
4) Where are we now in the Three Act Structure?
5) How will it end?
My answers:
1) Robert Shiller (Irrational Exuberance)
2) David Lereah of the evil NAR
3) Will the truth about the housing bubble get out?
4) Act 2 ended with the publication of the Fortune series last week
5) Badly. Very badly. But those who heard the truth were better off than those who refused to listen.
May 14, 2006
Housing Bubble - The Movie
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12 comments:
1) villian - realtors and the nar
2) hero - the bubble blogs, the economist and fortune
3) conflict - will the little guys conquer the NAR's bs
4) denial is over and panic has started to set in. dollar meltdown the first step
5) how end? a complete and total financial meltdown, recession and panic
A LONG slow grinding down in values. . .unlike stocks, home sales are one at a time, and don't drop overnight. It took Japan over 14 years for its real estate bubble to reach bottom. . .I see it everyday - someone takes their house off the market because it didn't sell at the high price, they rent it out (at a loss of course). . .we are in the denial state still. . .only a few are in panic. . .that will happen by October when the summer housing selling season didn't happen.
BTW - this mornings Contra Costa Times (SF Bay ARea) has a full page ad from for Los Ranchos's Homes - giving away a Ford Mustang or $35K in upgrades at closing. . .The picture of the Mustang is larger than that of the home. . .In a year, they will be giving a HOME away with every Mustang!
1) Villian - housing industrial comnplex (NAR, mortgage industry, some appraisers, developers etc)
2) Economist, housing bubble bloggers, other
3) Conflict - end the speculative episode or continue it?
What is the truth of the housing bubble?
Population increased 4 million per year. The homebuilder got orders before building a house. Orders canceled and housing starts slowed down until people ordered again. How much speculative buying is going on as investor loan interest rates are near 8%? The mortgage broker tried to work one over for points and loan origination fees for a bigger commission. The home inspection cannot reveal all that will break down in the coming years. Renters were usually short term and a few of them skipped paying rent. The Fed may be near the end of its interest rate hikes as of this past week. Maybe one more?
If people will get 5.5% on CD's and more for corporate bonds, then will they head for secure cash? Would they rather hoarde yellow metal that is hard to employ? The world was wearing out mining truck tires crushing mountains of rock for a few specks of gold. The stuff was heavy and decreased gas mileage.
Central American birthrates were out of control and poverty did not stop its long journey northward. Lust undid Haiti. China was growing an economy at spectacular rates with a one child rule more enforceable in the cities than in rural areas. Japan had declining birth rates and better standards of living. The Russian economy was growing faster than the US although its birth rate was declining. More people does not always make for more wealth or economic growth. Irresposible lust did alot of damage.
It's a combination of The Matrix and Day After Tomorrow.
From personal experience. When we had a condo to sell, and had two mortgages to pay, it took us a year to not care how much money we made or lost. We just wanted "out". It was only then, that we started dropping the price significantly. I wouldn't consider renting the place out, because in Albuquerque, you could end up with a "meth lab" there, or your renters could skip town, after taking all your appliances and light fixtures. Some friends of mine are building a house, and it's already been broken into THREE times, and all the husband's tools and supplies stolen. Being a landlord in a sketchy place is worse, than being a looser in absolute real estate numbers. You have to factor in, how much the stress is costing you. It's going to take some time for all the "investors" to realize this. That's when the prices will really go down. And we owned properties in "very good" areas. Even there, your lawn furniture and baby strollers, would be stolen off your front porch.
I guy I know is a custom builder. he has a RE broker buddie. They are really optimistic about the RE market (locally here in HSV, AL). The broker has made as many sales (and money) so far this year as all of last year. He is supposedly pulling in $25K per weekend.
Wow. And BTW, they think RE is hot, hot, hot. Maybe we will escape a RE bubble here but the national problem may come into play (recession).
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