HP'ers - have you changed your way of speaking to friends, neighbors and relatives when it comes to housing? When Cousin Vinny says he's gonna put $50,000 down on a Naples condo to flip, do you scream at the top of your lungs "DON'T DO IT!", or are you still letting people dig their own graves?
When someone says "don't worry, this will pass - housing is the best investment you'll ever make" do you come up with a retort, or do you let them do their thing?
Me? I can't let a stranger in an airport go without correcting any pro-housing comment. "Oh, Spain, things are great now for investment" - and my response? "Oh, well you should really look at the fundamentals - what's the rental income vs. the ownership cost?"
Blank stare...
Tell your stories here.
June 15, 2006
The housing bubble popped, things are getting pretty ugly now... are you shouting at the top of your lungs?
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17 comments:
A buddy of mine was looking for a place to rent......
simple large 1BR downtown.......there was NOTHING available for less than $1500.
I just got back from a funeral in PA where at dinner one night my aunt (who lives in NJ suburbia) joked about how they were going to be "realestate tycoons" soon. She proceeded to tell me the story of how her and my uncle had been flying down to myrtle beach to look at investing in a condo there. They had been on "the list".
At this point I started gulping wine and I could hear my wife thinking "please please please honey don't crush your poor aunt with the real estate bubble mumbo jumbo!". So first I just listened.
As they are looking at the condo it seems "everyone wants the bottem ones" but the one condo they came to see was horrible for some reason. So they got on the list for one that they though was ok but they were "low down on the list". I think she said 1,200 sq feet.
A half hour before they head to the airport they get a call that a new condo just became open and if they hurry right then to see it they can move on it. They run and do so.
They get home and get a call that the condo they put their name on the list for first had suddenly put them first up. My Aunt says with a serious look that the sales lady told her they only cost 192k but she has to tell them they are selling for 240k. She says my uncle says something to the effect that "unless he is missing something it's a no brainer!".
They move to buy BOTH condos...
I just couldn't say anything!! It was already a deal in the works and what if I was wrong anyway. Not really knowing for sure what their longterm cash reserves were like. It sounded to me like the plan was to flip them though.
I asked how much they bought their current home for and if they owned it. Said it was worth like 385k and bought for 35k!
I feel like sending them annonymous clippings in the mail but I feel like it is probably too late anyway. Any involvent by me would just get me caught up in the drama. I literally feel like crying sometimes now reading the blogs though thinking about them. She sat there and said about every cliche warning sign there was.
My wife btw was VERY happy I kept my mouth shut. I wish them well but I have a feeling they just blew a good portion of their retirement.
I'm vocal as heck about it now. I would feel VERY guilty if I didn't at least share what I know.
I don't care if some are "kill the messenger" types. And I don't care if they'd rather not hear it.
At least I won't have to live with myself not saying a thing.
"SenX said...
My wife btw was VERY happy I kept my mouth shut. I wish them well but I have a feeling they just blew a good portion of their retirement."
My wife is the same way. Gives me a dirty look when we are out with friends if the topic of conversation even borders real estate(Mentally warning me not to open my mouth.) WHAT IS IT WITH PEOPLE! Or is it just with women.
Why would you NOT want to warn someone who is about to walk off a cliff. SHEEEEEEZ.
Well i told my parents to sell their home and rent. I was that sure of the bubble. They did, bought a convertabile audi and are now renting a 750,000 dollar home for 1,200. They are happy and have no debt and lots of cash.
In May last year I told my sister who owned a home in west LA to sell it. I predected that by the end of July the bubble would burst. I was right that it would be the top but I expected it to weaken a bit faster than it did. She did sell her house in mid July and took top dollar for it ($1.1 million). She didn't sell to capitalize on it. It was a necessity as she lives in NYC and wanted to consolidate her assets. For six months I told her not to purchase anything but to wait for a couple of years. She took my advise and now sees without a doubt that she made a great decision. I predict that in 24 months (or more) she will buy back her old house for a fraction of the selling price. Sometimes it just feels good to see that what you're seeing in the market helps someone you love. Whew.
Like Senx, I feel pressured to keep my mouth shut, especially when women are involved in the conversation. I started to notice that being blindgly stupidly optimistic became a great virtue around the Reagan era and think denial of negative outcomes is just part of the polite suburban way of life now. I get the feeling that if I make anybody uncomfortable by discussiong an "inconvenient truth" they'll just write me off as some fanatic.
Look, it's time to face facts, inventory is exploding, the stock market is predicting full recession in quater 4, tons of layoffs, all RE will be sold at fire sale prices for many years to come.
People wont listen to you, they are still in the Matrix, they have not been unplugged yet, your waisting your time, they will lose everything and more, and I will be enjoying every second of it, because housing is garbage.
Speaking of the Matrix and not being unplugged, here is a related article, "The Blue Pill People".
http://tinyurl.com/7yy5r
senx: If it was the wife's family, then you definitely did the right then to shut up.
People do dumb stuff. We will all do it ourselves at some point. You can't save people from themselves.
Rubble: Yep, women like to avoid social disruption. But what an amazing connection to make that somehow women have realized that 'negative outcomes' of any kind are verboten! How was this accomplished?
Sure, blame the women!
For the record - as one woman who warned another woman last summer, who was bragging and counting her $300K in unhatched chickens/future profits (from all out leveraging), that the bubble was popping and someone would be holding the bag - she got pretty mad at me, hasn't spoken to me since. She is still holding the property too.
-Stardust
I am also a woman, who has lost friends over "bubbletalk". People think I'm crazy and paranoid, when I say "sell, sell, sell". They tell me about their wonderful flippin' plans, and say I am not supportive. In a group, I definately have to be quiet, because I am outnumbered. My grandmother yesterday told me that I don't know what I'm talking about, and don't have any experience in real estate. Well, we sold our house at the top, and rent now, so time will tell who is going to get rich next. I was explaining, that I'm not spending more than 300k for a fixerupper, when I can rent in the same neighborhood, for 825 per month- trash, water, and landscaping included. She just told me, things aren't going to go down, so BUY NOW!
My brother in law, lives in Stuart Fla. He was telling me about his neighbor "Joe". Well it appears Joe, bought 2 pre-construction homes in a nearby development and excitedly was telling my brother in law about the great deal. He went on to imply, it would be smart for my brother in law to get one or maybe go in on one together. My brother in law and I have had various "bubble" conversaions before and discussed the impossible price increases we were seeing, so he was aware of the crazyness. While talking with Joe, he said something along the lines of a bubble and how it may be a little risky to be expecting much higher prices. Joe got mad, shut up and just walked back into his house. Well 2 years have slipped by and Joe had to do something, one of his new homes was ready to be closed on, and he had no buyers. He dropped 50k from the price of his current home, sold it and moved into the new home. Now he has to close on a 2nd new home in the same development. Now we have heard, Joe's wife is not very happy in their new home, it's smaller and more expensive then the one they sold and horror of horrors they have too many renters in the new 'hood and too many vacant homes for sale!!!!
my brother in law does sleep well at night.
I am such a bubble fanatic/believer that I send out monthly 'bubble reports' to all my friends on my email chain with recent data pointing to a decline. Most of them are homeowneres and a couple are brokers. Muahahaha. Some respond and thank me and othes dont even bother. My ears are burning. heheehe.
bte..I just sold my house in SoCal and cashed in 200k. Pais off all my debt and renting.
sold my house last year and renting now. also advised my parents to sell their house two years ago and they did. they are living with my brother for a while until the price comes down. met a cousin of a friend who just bought a loft in downtown LA. i told him about the housing bubble and he just went crazy and start telling me how downtown LA is different, everyone wants to move there, it's hip!! he said the only thing that could bring the price down is an earthuqake or terrorist attack. I let it go cause i didn't want to argue. guess we'll see who's right.
He was part right. Terror or quake will have that effect, but they are not the only causes.
went to visit a friend in san jose a few weeks ago. he bought a condo last august and says it has gained 100k, that i should get in cuz its the best investment. his childhood friend was there also...happens to be his realtor. when my friend mentioned that it may be slowing down, the realtor "friend" said "dont believe the paper...just talk to me."
i bit my lip! my friend is on his way to iraq for a year and has a new baby. these are the innocents:^(
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