I knew it was time to sell my loft in Phoenix (that had gone up 100% in 24 months) when I could rent it out for $900 a month, or sell it for $320,000, where the new owner would be looking at a total monthly burden of $2,500 a month.
So in other words, the place would rent for 36 cents on the dollar, the new owner would lose $1,600 a month in pure hard cash flow if he tried to rent it out, and the only reason people were being so stupid was because they were betting on future price gains. How wrong they were.
Congrats to all the bubble sitters out there. You were mocked, now you're envied and written about.
Convinced home prices will fall? So are a lot of other Americans.
Some - known as bubble sitters - are acting on their conviction. They're cashing out by selling their homes and renting, figuring they'll return to the market after prices have fallen.
Bubble sitting has contributed to softening in housing markets, especially in new homes. Builders have reported slowing sales and they're offering numerous incentives, rebates and discounts in order to move inventory. Just this week, builder Toll Brothers announced they expected sales to decline substantially for the year.
Dean Baker, an economist and co-director of the Center for Economic and Policy Research, is a bubble sitter himself, having sold his home a couple of years ago. "It is a very bad time to buy. Prices are heading down," he said.
Baker also predicts that the markets that have run up the most will suffer the worst turndowns. He compares it to the tech bubble when Nasdaq stocks rang up the biggest gains before the pop and fell the farthest from their highs after it.
August 13, 2006
Bubble sitting hits the MSM: Maybe some other folks will (finally) start doing the math too
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9 comments:
I recall Fresno California having 200% run up in price last from 2000 to 2006.
As I read a story like this
http://www.fresnobee.com/local/story/12564707p-13275303c.html
it makes me wonder if Fresno will follow the path of Florida, Phenix, San Diego, Sacramento, etc
Seems like Tampa Bay not doing much better then Phoenix.
http://www.sptimes.com/2006/08/08/Business/Home_glut_brings_pric.shtml
Why are New homes median price falling in Santa Clara County, but not Re-sale homes median price?
http://www.viewfromsiliconvalley.com/id125.html
How do you do it? Bubble sitter. You are amazing at getting pictures!!!!!!
Proud Bubble Sitter Here!
In Clark County Washington, the Columbian newspaper reported on Friday that home sales were off 26% compared to last year and that Realtors were having to work a lot harder to move homes. It featured one realtor that sold an average of one home every month last year but was only selling one home every two months this year. No surprise there. It's going to get worse for the Realtors and sellers here. Prices are droping and few takers. Then Friday people in Clark County got their tax notices. Their properties were reassesed an average increase of 30%(!) for tax purposes. Gotcha. That's why I will keep renting until there is a reasonably priced property to buy and maybe not even then. I am a bubble sitter and can afford to wait. The yuppies and flippers here are going to go bonkers.
Inflation is on the way and we'll see a repeat of the 70s stagflation style and twenty years from now our kids will be saying, "Gosh, remember when Mom and Dad earned only $100,000 a year and bought a McMansion for only $400,000? Now we make a Million a year and can't afford the the four million for a starter home."
Laugh, but in Zimbabwee that is a reality with their hyperinflation now at what, over 1,000% a year? Look at Weimar Germany or France after their Revolution, or Rome when they debased their currency and it was silver, gold and copper! Metal based!
This bubble sitter is proudly taking credit where credit is due... does the fact that I perservered the persecution and mockery mean that I am now freely licensed to gloat, point, and laugh?
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