After being mocked for so long, laughed at when you said there was a housing bubble, called "chicken littles", "flying monkeys", "bitter renters" and "polyannas", aren't you enjoying the housing crash a little?
Isn't it fun to see real estate clerks spinning for their lives? Isn't it a joy to see The Corrupt David Lereah being mocked now by the MSM? And isn't it a blast to see the soaring inventory numbers, the collapse of the homebuilding industry, the exposure of rampant mortgage fraud, and the obvious freefall in home prices?
Come on, HP'ers, admit it. Even though the debt-fueled world economy is about to crash, and you'll probably lose your job too, you're enjoying this aren't you?
Sickos!
February 02, 2007
Is everyone enjoying the housing panic?
Subscribe to:
Post Comments (Atom)
79 comments:
you'll like this keith:
http://www.flippernation.com
Okay, I'll admit it. I am enjoying major Schadenfruede here as the real estate bust continues to gain speed.
I lectured my Baby Boomer peers for years, not only on the housing bubble, but also on the stock market/401(k)/IRA scams and lies.
Not one, NOT ONE of them has sold one share of stock, or dumped their house and rented.
And now, they are ALL starting to squirm--especially those who are in HELOC-hell.
But it's still waaaay early for an end-zone dance. It will take nothing less than a full FIVE YEARS of falling prices, economic mayhem and financial pain to completely disabuse the sheeps of any fantasies that "housing always goes up" and "stocks always go up".
In the meantime, I sit and wait. I don't even bother to bring up these subjects anymore amongst the sheep. They now are telling ME how scared they are...
I'm enjoying the crash but waiting for the real fun to start
If the housing market crashes, the people who can least cope will be hurt the most.
This will at the very least cause them to vote for policies that will soak the rich and the middle class, ban ownership of gold?, impose property taxes on renters (do you not use council/state services?).
You will not be allowed to stand by and gloat whilst other people are in pain, they have votes and will use them.
If the housing market crashes 40, 50, or 60%, how many people on this blog could then buy a house using money you have in the bank? If you do not have that amount of money in the bank, you will have to borrow, and who will you borrow from?
Meanwhile, home builders still have lots of unsold homes that they will unload by further cutting prices and dangling such incentives as help with closing costs or kitchen upgrades. Discounts on new houses, in turn, will make it harder for some sellers of previously occupied homes to attract buyers.
Some of the biggest gluts of new homes are in Florida, Phoenix and the outer suburbs of Washington, D.C., says Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse Group. Many of the gluts are due to frantic building of condominiums over the past few years. The supply of condos listed by real-estate agents is up 86% from a year earlier in the Las Vegas metro area, 43% in Washington, D.C., and 21% in the Northern Virginia suburbs of Washington. In Florida's Miami-Dade and Broward counties, the listed condo supply has more than doubled from a year earlier.
In Miami-Dade, the number of existing condos on the market is enough to last 27 months at the current sales rate, says Jack McCabe, a real-estate consultant in Deerfield Beach, Fla. The oversupply will grow, he says, as about 8,000 condos are expected to be completed this year and 12,000 in 2008.
http://finance.yahoo.com/real-estate/article/102330/housing_glut_gives_buyers_upper_hand
It's not good. Fewer homes are selling at lower prices and that's a margin-crushing disaster for real estate developers like Pulte. For all of 2006, earnings fell to $2.67 per share. That's less than half of what Pulte earned in 2005.
As a telling sign that homebuilder vision isn't exactly 20/20, back in June, Pulte was looking to earn between $4.70 a share to $5.00 a share in 2006.
Maybe that's why I'm skeptical when I hear homebuilders call bottom. Earlier this week, lender Countrywide (NYSE: CFC) noted that 2007 "will likely be the trough year of the current housing cycle" with 2008 representing "the beginning of upward trends associated with the next cycle," but color me skeptical.
Backlogs are still diminishing at homebuilders, and cancellations continue. Over at Pulte, the company is closing out the period with a backlog of fewer homes -- and at home sale prices that are $5,000 lower -- than at this point last year.
How much more excess will need to be worked off this market? A lot. Will the slump create sector consolidation? Probably, and that's one thing that will make this bearable, as the remaining players will likely be stronger players on the next up cycle.
http://www.fool.com/investing/small-cap/2007/02/01/pulte-my-finger.aspx?source=eptyholnk303100&logvisit=y&npu=y
I'm feeling a little rattled. That must mean I'm enjoying it!
Loving every minute of it...
Small Hat
The real fun doesn't start for a few more months when the spring home sales numbers come out. If they're weak, which is a good possibility, then more attention will be paid to what is happening. It's nice being right but I don't enjoy watching people suffer, even if they suffer for their own greed. Especially since we'll all be asked to bail out the flippers. (no way!)
mocked for so long, laughed at when you said there was a housing bubble, called "chicken littles", "flying monkeys", "bitter renters" and "polyannas", aren't you enjoying the housing crash a little?
+++++++++
All in good fun, Keith. All in good fun.
iw
Pulte SUCKS! I wouldn't buy one of their s#%t boxes if the price were cut in half.
C'mon! How can you be enjoying this nightmare? No matter how you're positioned, we're ALL going to take a HUGE hit! There was no way to opt out of this game unless you were extremely wealthy. "Enjoying" Keith? How perverse.
I admit I'm enjoying it, because everyone else thought they were smart, and I wasn't. I'm up to my elbows in popcorn enjoying the show. Plus I have cash for the big country wide going out of biz sale ;)
From where I stand here in suburban NYC, the housing slow down is not as drastic as it should be. Prices are still overpriced and desirable houses are still selling fast for top dollar.
I don't live in Arizona or New Mexico or even Boston so I can't say whats going on there, but for the time being, I am not quite ready to break out the confetti.
No not really.
I found out the hard way about the negative affects of the bubble by buying into a bubble-ette in the backwater of Wilmington Dela$h!thole. If I had known about the behavior that established the price point I had paid relative to the local market I would not have purchased at that price and/or put in tons of contingencies to protect myself. Only after getting burned by the bubble mania did I come across the housing bubble blogs.
Now I am a renter in one of the bubble that's popping (Metro DC)and cooling my heels, looking from time to time just to see how things are going locally, waiting for a reasonable price point to present itself. I check out the blogs to see whats going on in general. It might be a long time before I own again, but this time it will be because I've broken all the brush & turned over every rock and ZERO reliance on the realtwhores. That way I can get an extra cushion of 3-6% off the price of the home.
There is something qualitatively different about owning over renting in terms of quality of life. But renting has its advantages of flexibility and lower costs. The possibility of renting to own might be the happy medium if I cannot get my price point and the F*ed Home-debtor just needs a life line to hang on. The only downside there is if s/he becomes insolvent before I pull the trigger and exercise the purchase option in the lease.
Enjoying yes
Worried yes
Getting ready yes
"If the housing market crashes 40, 50, or 60%, how many people on this blog could then buy a house using money you have in the bank? If you do not have that amount of money in the bank, you will have to borrow, and who will you borrow from?"
With a 50% trim from today's prices, I can buy the house I would like for cash. If I were married, I'd have to spring for a bigger place with a bigger price tag but that's not the case. Remember young man, wifey = pricey.
In heaven here in Phoenix metro as the gloom of a collapsing housing market is setting in.
Story today in the Arizona Republic on a planned mass housing auction targeted to sellers who can't sell their overpriced stucco cookie-cutters. Its only the beginning....Yes, even though I live here, honest enough to admit that Phoenix always was and always will be a backwater shithole for life's underachievers and dimwits.
I own a place, IMHO bought in a non bubble city at what I consider to be a bottom (not the bottom mind you ... a bottom). Also my payments are ~ same as rent including all taxes, insurance and what not, and I am on a 15 year which I'd have paid off in 10 or less. Done and dusted, hopefully. It was the first time in my life when it made sense to buy over rent. I'd have had to pay more in rent for a smaller place.
And yes the crash IMHo is happening in slo mo and its the equivalent of one of those slo mo's that they do on simpsons when its extra extra extra funny ... like when Homer drops a chain saw into a nuclear reactor type of thing.
Cool.
Cow_tipping.
ZERO reliance on the realtwhores
*(*(*(*(*(*(*
Gee, Ya think???????
i'm enjoying david lereah's lies and how desperate he is in trying to spin the issue.ha!ha!ha!
So, who was the adult in charge during this debacle?
oh yeah! It was George W. And what did he do about it? Well, nothing. He believes in free markets and regulation is bad. Too bad his legacy will be taking the place down from the inside.
OK, where is this "crash"? Prices here in zip 81502 are 10% higher than last year, unemployment is at 3%, and the banks are cold-calling trying to lend me money. If this is a crash, I'd hate to see a boom.
I think you HP fanboys are going to get whipsawed by inflation because no way in hell is the Fed going to let things get as ugly as you predict.
Remember young man, wifey = pricey.
Finally an HPer says something intelligent.
Aside from that...mmmm...not so good. Keep dreaming about 60% crashes boyz.
But even assuming you are right, you are even crazier than I thought if you think you won't be affected. A 60% housing crash = everyone gets hurt, renters, landlords doesn't matter. If a 60% crash happens, the 1930s will look like a party decade compared to the financial calamty that will follow. I don't care how much you have saved up, you will be ruined along with everyone else.
As a home owner a crash hurts me. No crash helps me, I have a 50/50. As renters you're fucked either way. So go on partying , it's your funeral as much as mine.
I'm thinking of making David Lereah's press releases into a drinking game at my next party.
Everbody has to take a drink whenever Lereah says the word "buy".
We'll be under the table in record time.
Trapped in Arizona? Why don't you leave? And don't say you can't, if you choose to stay, you are not trapped. Take some personal responsibility for choosing to live there.
And if you own a home, you are affected by price declines.
And if the Fed didn't think the economy was suffering from a "house deflation" do you think they'd not lower interest rates? They'd be like Japan and drop them to zero (and then wouldn't the world rush in to the "dollar trade" along with the "yen" trade and then what would happen to assets outside the USA? Bigger bubble out there).
Phoenix is bigger than one, over-built subdivision. Remember 1989-92, something called the RTC? Dispossing of Keatings and Symington's failed real estate holdings along with other builders like UDC? Denver, Phoenix, LA, SD, Boston etc didn't implode and we haven't quite gotten to 1990 yet.
And a lot of HPers are arrogant to think everyone is like foreclosure kid. All my friends own more than one home, bought them before the 2004-2006 bubble, all will experience a paper loss-maybe even 50% but all that will happen is they will loose their double digit gains and their properties will still be worth more than they owe on them.
Just because you bought a new car that lost value the moment you drove it off the lot doesn't mean that everyone out there is in your predictament if they bought their cars five years ago.
Who has panic written across their faces? Those who bought at the top, those who bought what they can't afford. Even if there were no asset bubble, even if homes were on average 2 1/2 times income, or 1 times income, those who spend more than they earn, loose a job, get divorced, will have housing panic on their faces if they can't sell, pay the payment etc.
The arrogance of renters have lots of money and are smart, homeowners are all over-extended and dumb. It will always be a case by case determination.
Oh, and Trapped in AZ? Move. Life is too short to be trapped in a house, a city, a state, a marriage, a relationship, a job you hate. Don't let "If only I had" be engraved on your tombstone. You do have choices. And yes, consequences come with those choices. So get some balls and choose.
What panic? Yes the market has deteriorated but nobody's jumping out the window just yet.
Personally, I hope there is no panic because I'd much rather pay too much for a house, than be forced to shoot Hippies over a sack of beans.
I agree with Thinker. I can't celebrate any housing crash yet because I don't see any price relief here in San Diego. Houses are still way overpriced. The unwinding I fear will take much much longer. So bitter renters like me become more bitter, first sitting and waiting for prices to peak, then having to wait for prices to bottom to a point where one is comfortable not buying on the way down.
I'm looking forward to owning a sensible, comfortable home and not ever hearing the word house, crash, bubble, mortgage rates, fraud, corruption, bitter renter, landlord, etc. ever again. BUT, buying for me means it has to be normal transaction, with a large downpayment and a standard, sensible mortgage and a fairly long time horizon. Didn't things used to be this way?
Unbelievable I just heard a commercial for Realtors! Not any specific company just realtors. "With interest rates down now its the perfect time to buy. Find yourself a REALTOR"
seriously!
The fin is only just beginning. Referring to the old graph, we are just getting past denial.
Well where I am a 3 bedroom house on .10 an acre is still selling for 400,000 + (Narberth, PA if anyone is interested).
So I await with breathless anticipation for the much vaunted crash.
I'm not trolling, I'd like it to happen, my lease is up in June and the LL wants to raise the rent by 200 a month.
I'm sorry I just don't see more days on the market as a crash. Yes I think in time this will cause some real problems for people trying to retire, or more, or whatever. But in the mean time I'm stuck wasting money renting. I'm the one with loud neighbors, I'm the one in the high crime area.
I hear that K. Hovnanian has been forclosed on for a 25+ million dollar project in West Virginia.
Nice attitude a-hole. Gloating about people losing money on the biggest purchases they will make in their lives.
It is one thing to gloat over investors, but a slowdown hurts everyday families as well dickhead.
Ahhhhhh charred to a crisp. The seet smell of success!
"Well where I am a 3 bedroom house on .10 an acre is still selling for 400,000 + (Narberth, PA if anyone is interested)."
======
Vacant real estate is rising. That means more rental properties will be hitting the market. $200 is a steep rent increase when the market's in the process of making a turn. I'd look around for alternatives.
Heck, if you're willing to move, why not try another city? Of course, family and work are big obstacles, but maybe that's not your situation? The rental market in south Florida is swelling, and that means prices will fall. Try a couple of calls to some ads and say your budget is 70% of their asking price and see what happens.
I have a friend who's an ER doc and he's getting a great deal in his new locale. Unlikely to have a shortage of work either. We both see hard times ahead.
Bitter Renter- Patience is for virgins. But patience will pay off big this time. That is if you live in AZ,CA Boston,Las Vegas. I think CA will bottom out in 2009 in CA. And yes it is fun to watch my smug ass friends who bought 2 houses in LA in 06 lose their ass, and try to refi their interest only loan.
It's always fun to sit back and watch the carnage.
To be in the, 'I told ya so' position!
When everyone told me i was an idiot for not getting in!
To watch 'them' squirm under an ever diminishing investment!
How sweet it is!
Payback's a bitch....priceless!
I have to agree that I am experiecing some sense of schadenfreude.
But ultimately, it is short lived. I have a few friends in somewhat dire predicaments and I cannot help but feel for them.
One friend in particular comes to mind. I had a conversation with him last year regarding his financial situation. He has three children all under the age of three. He recently purchased his home in 2003. With the subsequent birth of his children, he and his wife (both are working) are essentially living paycheck to paycheck. At the peak of the bubble in my area, which was around summer of 2006, I recommended to him that he should sell his home and rent. He could have been privy to over $200k in tax free profits had he listened. Furthermore, homes in this area were renting at substantial discounts which would have enabled his wife to stay at home to take care of the children thereby saving thousands on daycare.
But unfortunately, his "instinct" (more brainwashing) caused him to decide to stay put. Now, that $200k profit has rapidly turned into less than $80k in profit. Perhaps not even that. And now I have a friend in fidicuary crisis as bills loom.
HPers can bask in some sense of visible hubris being exhibited now in real estate. But remember that there are real people out there with families that are going to have a very difficult time moving forward.
I should also note that my friend never took any toxic mortgage. A standard 30 year fixed. And even he is beginning to feel the pinch. And this is a household with a likely combined income of around $145k.
"But in the mean time I'm stuck wasting money renting."
-----------------------------------
Seems the REIC has gotten to you...there's no way you're "wasting" money renting in todays' envronment and even in some cases during normal housing markets.
They are a lot of advantages of renting, too many to list here, but speaking for myself, the only way I gradually and painstakingly achieved financial independence for self and family was by renting for many, many years. After a couple of purchases and sales, NOW renting again at age 49 with financial freedom and flexibility enjoyed only by older retirees and wealthy elites.
Renting wisely, among a couple of other factors, is the major reason.
Watching millions of others my age, (boomers), having their entire net worth in housing, sweating it out, and tied to some physically wasting structure thinking its an economic gold mine, is both sad and comical.
I'm looking forward to owning a sensible, comfortable home
You renters are so two faced.
All I read here is how awful home ownership is. How nobody ever owns a home but rents it from the bank. How homes are a bad investment because they are a depreciating asset. How homes require maintenance. How taxes will kill you. How HOAs will take away your freedoms. How renting allows you more freedom and on and on.
Then you turn around and make statements like the above. Make up your minds already.
Heck, if you're willing to move, why not try another city?
Well we're here at UPenn, so there's no move in sight:) Leaving the Philadelphia metro area is out of the question. We plan to buy on the Main Line and live there for many many years.
$200 is a steep rent increase
It is, and I've found other areas to rent and I'm in the middle of negotiating with my LL trying to show her that losing renters right now isn't in her best interest. Still it is a pain to move, it is expensive to move, things break when we move.
Seems the REIC has gotten to you...there's no way you're "wasting" money
Sure if you're right and house prices drop by 20%. I'm paying 1800 a month in rent (2 parking spots drives up that cost) If prices don't drop and I'm paying out nearly a year 24,000 (that's nearly 70,000 since being here -- this is not a sound way to live. As it stands we would have been better off buying 2 years ago, taking the tax break and waiting for prices to drop by 20% -- the net would have been the same) a year in rent then no I'm not "saving" any more.
Particularity not in the long run. We're in the 34% tax bracket (even higher when you add in local taxes).
I absolutely believe that the fundamentals do not add up. I know that we make far more than the average family -- so if we can't afford to buy then neither can they. But in the lending environment as it is this bubble can afford to live for a long time. How long should we continue to rent? How long do we have to be at the mercy of our LL, how often do we have to open our place up to be viewed by potential renters will no guarantee of the security of our possessions?
Philadelphia is a dangerous city, one might argue that we should live somewhere that costs less -- here anywhere their is a reason for that lower rent, usually because there is a drug dealer on the corner and hookers at night. Oh and gun shots.
Hahah. Apparently I am bitter.
Like politics, real estate is local. But like politics, the television, and now the internet, ties localities together.
Sales are way down in Chicago. Condos, new-con, pre-exist, etc. All down. Open houses are empty. Sellers hop from agent to FSBO back to another agent with no avail. Prices are too high and many sellers are "chasing the train down the tracks" by inching their home prices down ~$5,000 every couple weeks or so.
Things got bad. With stupid TLC shows like Flip This Shack (tm) on the TV, everyone, no matter where they lived, tried to cash in on maple, marble, and granite. Prices got pushed way beyond median income ranges.
The big boys pumped and dumped and only the fools were left without a chair. Those guys have to adjust their prices if they want out.
The party is over. Now brings the pain.
Everbody has to take a drink whenever Lereah says the word "buy".
We'll be under the table in record time.
Friday, February 02, 2007 3:43:45 PM
-----------
Did you mean "we'll be Under Water" in record time??
We're in the 34% tax bracket
Really? That's interesting since no such tax bracket exists.
The analogy of the housing bubble hangover has been used ad infinitum.
And sure we are in the midst of a nasty one right now. We stayed out 'till 5am, drank way too much cheap tequilla and woke up next to a porker. We feel disgusted with ourselves. Our head hurts. We feel like we're going to puke and we swear we're never drinking again.
But like all hangovers they go away eventually. By about noon we'll start feeling better. By about 2 or 3 the headache will be gone. We'll still be a little out of it all day long. But my 8 or 9 at night, we'll be getting ready to go do it all over again.
It's about 10:30am right now.
Really? That's interesting since no such tax bracket exists.
I'll assume you don't pay all that much in taxes. I'm sorry, 33%. We pay a whole lot more once the state taxes, wage tax and city taxes are done with us.
Not Yet. David Liar has not been tarred and feathered ;^D
What housing panic?
Keith, single family homes are more expensive and in less supply than ever before in Orange County.
Help!
New Yorkers are in for a RUDE AWAKENING
Not partying yet.
Mid Hudson Valley RE situation is, a ton of inventory no significant price drop yet
"Well we're here at UPenn, so there's no move in sight:) Leaving the Philadelphia metro area is out of the question. We plan to buy on the Main Line and live there for many many years."
Well, take some of the down payment fund and buy some precious metals or mining company stocks. I believe we're going to see quite a surge in their value in the next couple of years. Similar to the early '70s when gold went from $32 an ounce to $350 in just a couple of years. Too much spending, foreign entanglements, etc., are going to take their toll.
"If the housing market crashes 40, 50, or 60%, how many people on this blog could then buy a house using money you have in the bank?"
(wave) :)
"no way in hell is the Fed going to let things get as ugly as you predict."
http://xroads.virginia.edu/~HYPER/ALLEN/ch13.html
'[The] Harvard Economic Society ... [on] October 19th [1929], after having explained that business was "facing another period of readjustment," ... predicted that "if recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that [the Federal] Reserve System would take steps to ease the money market so [as to] check the movement."'
How'd that one work out Skippy?
"I don't care how much you have saved up, you will be ruined along with everyone else."
Me: Prepared for inflation (gold) or deflation (cash)
You: Praying for inflation (debt)
"Also, based on the action in the homebuilders we are in for a major rebound this spring."
WS has all the money, so they use it to ramp stocks where sane people would expect to be short (i.e. homebubblers). Easy pickings. Those things will crash when the outsiders finally get sick of shorting them and go long.
HPers, bubblesitters, renters, here is how you'll know when we've reached total panic and RE is at the bottom:
It will be the day your landlord tries to sell you the box you're in with a "Make me an offer" line. Until that happens, you're just blowin' smoke.
C'mon! How can you be enjoying this nightmare? No matter how you're positioned, we're ALL going to take a HUGE hit! There was no way to opt out of this game unless you were extremely wealthy.
++++++
I agree. Probably 95% of America will get skewered when all is said and done....
grandinquisitor,
I agree.
DHI (D R HORTON). Up 3% today. On top of a 3% gain yesterday. Since July's bottom, up 55%.
KBH (KB HOMES) Up 2% today. Up 38% since July's bottom.
I suppose it could be the case that every investor buying up DHI is a desperate homedebtor/realtwhore. No that can't be. According to HP they don't have pot to piss in let alone invest in builder stocks. Maybe the NAR is buying up KBH. Yeah that's it, that's the explanation.
Or maybe, just maybe this is the explanation. Just as the huge plummet of housing stocks in early '06 predicted the downturn in housing throughout the year, the sharp jump in housing stocks in late '06 is predicting a rebound in 2007.
Nah...too crazy!! I'll stick with the NAR conspiracy for now.
I'm still waiting patiently for the crash, or at least a price adjustment in Los Angeles. Just a glut of overpriced stuff here.
GO BEARS!!! Ok, now that I got that out of the way...
I'm doubting that there'll be a housing crash if frontrunning Democrat John "Two Americas" Edwards gets elected. This man will do anything in his power to keep his brand new 10k sq ft mcmansion from depreciating in value. As a matter of fact all the big fat rich liberals will doing what they can to cover their (housing) ass while crying about housing crash and how it hurts the "little guy". Liberals sure are good at taking their hypocrisy to an extreme. Oh, and thank GOD for Fox News for breaking the story.
I'll assume you don't pay all that much in taxes. I'm sorry, 33%. We pay a whole lot more once the state taxes, wage tax and city taxes are done with us.
You assume quite wrong friend. You said 34% not including state tax, meaning 34% federal. Most people I know and myself included who pay such high taxes know to the penny what they pay and know the correct tax bracket they're in. It's the low income renting types in the 10 or 15% bracket that haven't a clue. The same people who think if they get a tax refund it means they paid no taxes and screwed the government...ie a regular HP contributor or a socialist, but I repeat myself.
Unless it was a typo you're full of shit.
Joe Logic said:
"This man will do anything in his power to keep his brand new 10k sq ft"
10K sq ft? Try 28K sq ft. Yep the champion of the little guy lives in a 28K sq ft monstrosity.
Yes indeed Go Bears.
Butch said:
"Okay, I'll admit it. I am enjoying major Schadenfruede"
I dated a woman who used to say that world all the time. She was a Haaavahhdd PhD student at the time. She was a very insecure person despite being damn hot and very smart. She used words like that all the time in order to prove herself.
You're among friends here, no ned to prove yourself. It's all good.
Eschew obfuscation
Markus Arelius,
Go to foreclosure.com and look for Orange County. I believe as of today there are 12,310 foreclosures in process. That number is up from 12,185 yesterday.
I am also certain those expensive homes will come down in value.
Is it 28K sq ft? Yep well like I said this man is the poster boy for hypocrite liberals. Between this guy and his mcmansion, Clinton the she-bot ball buster, and Biden "Obama is a clean black man" remarks, '08 democratic politics is starting to ramp up to be the circus show I thought it would be. No but seriously, we are all screwed. Sorry. Go BEARS!
"How'd that one work out Skippy? [an anon refering to the '29 crash & depression that followed]"
It's not 1929 dipstick. Today the Fed can create tens of billions and push it into the banking system with a few keystrokes. All of the central banks are networked and you only have to look at the BoJ's practices to see that they cover for each other on a regular basis. In '29 many currencies were tied to gold. Now that's all history and there is no limit whatever to the growth of money supplies, none.
The stock markets are so different from what existed in '29 there is literally no comparison. Again, the Fed controls settlements (through DTC) and can play all kinds of games if they need to. In 2004, Congress put both GSEs (Freddie and Fannie) are under the direct supervision of the Fed.
Put two and two together, connect the dots. There are no "free markets" where the invisible hand will take care of excesses. We now live in a global, managed economy. Can they screw up? Sure, but time and again the Fed has proven that a jolt of liquidity will cure many ills.
anonymous 11:22 am said...
"You assume quite wrong friend. You said 34% not including state tax, meaning 34% federal. Most people I know and myself included who pay such h taxes know to the penny what they pay and know the correct tax bracket they're in. It's the low income renting types in the 10 or 15% bracket that haven't a clue."
Bla bla bla, what a sad little snob. I don't think the poster you were responding to was trying to be full of shit or high & mighty like yourself. You must feel pretty rotten about your high tax paying self to be such a twit. Besides, if you are in such a high tax bracket, maybe you best go back to work at 11:22 am, earn your keep and quit being a troll on the company dime.
butch, I don't know anyone who's scared. What part of the country are you in? Would you say the panic is widespread in your area?
IMHO, it will be difficult in some areas where subprime loans were prevelant. These are already identified. SoCal is apparently especially vulnerable. It will not be as bad as the dot.com bust. The NASDAQ crash alone led to a $3 trillion "paper" loss in wealth. I think there is about $1.7 trillion in sub-prime loans out there that are backed by admitedly inflated assett values, but even a 50% crash in those assets will be less than a $1 trillion loss in an economy with a new worth of $50 trillion. Much of that paper is held overseas and by very wealthy people. If the crash is that large, I think it will be short lived. A less extreme crash in the bubble regions will probably be longer lived.
I've owned my rental houses in Colorado Springs for about 10 years and was not in the slightest tempted to sell "at the top". I plan to hold them another 10 years. Had to rerent two of them last fall and got rent increases on them both.
Currently in Omaha where housing is overbuilt but will unlikely fall a lot because it is so affordable. I'm in a 1500 up, 1500 basement for $230K where I can walk to work. Maybe it will go down in the next couple of years. I am making more here as a software consultant than I could in the Springs and probably SoCal because nobody wants to move here.
And while I won't gloat or enjoy it, we do need to squeeze out the speculators that are making housing unaffordable for working stiffs.
" 'If the housing market crashes 40, 50, or 60%, how many people on this blog could then buy a house using money you have in the bank? If you do not have that amount of money in the bank, you will have to borrow, and who will you borrow from?'
With a 50% trim from today's prices, I can buy the house I would like for cash."
With that kind of price decline, do you really think your bank is still going to be able to give you your cash? They lent it all out to Casey in 2005! Their doors will be long closed. Better have a back-up plan...
IMHO, it will not be too bad. Consider. The NASDAQ crash caused $3 trillion in wealth to evaporate. The major risks are in the bubble regions and sub-prime loans. There is about $1.7 trillion in sub-prime debt out there. Even if the underlying assets drop 50%, this is less than a $1 trillion loss in wealth in a country with a net wealth of $51 trillin (less than 30% in real estate) and that generate a $5 trillion increase in wealth in an admittedly good stock market year.
A lot of the sub-prime paper is held overseas and by very wealthy people. So their loss is not a tragedy. In fact, China is so dependent on a good exchange rate that they might as well be buying $US and burning them.
The sub-prime debt holders will be hurt badly, but consider this: there is a reason they signed subprime loans. They have very little wealth tied up in the assett and can walk away without declaring bankruptcy.
If it gets really bad, I can envision holders of the sub-prime debt negotiating write downs with owner-occupants that will be between the loan amount and what they would lose if the owner-occupant walked away from the loan.
I've held my rental houses in Colorado Springs for almost 10 years. If I could sell them today for the high last Spring, I would not.
FWIW, My net worth is 50% 401K, 50% single family homes.
Here in Northern New Jersey, friends of mine just lost out in their second bidding war in two months. Where the f**k do all you people live that you see a crash, 'cause it ain't happening here.
500K is the minimum for anything that's considered liveable.
"Well where I am a 3 bedroom house on .10 an acre is still selling for 400,000 + (Narberth, PA if anyone is interested)."
======
"Vacant real estate is rising. That means more rental properties will be hitting the market. $200 is a steep rent increase when the market's in the process of making a turn. I'd look around for alternatives."
The neighbor down the road (a real dick) moved out in 02 to another part of the county, but still rents his old house out. Hardly put a dime in the place in 20 years because he wasn't going to stay in this "one horse town" The new neighbor/renter is a nice old guy, retired air force, widowed, pension and SS his only income. Rents for almost 5 years without a complaint, missed rent check, or causing any problems.
Back on Nov 1, the former neighbor (the dick) now landlord informs this guy that his current rent will almost double when the lease is up on Dec 31. Seems the landlord's excavating business is down to a crawl (get it, CRAWL, his words exactly, I loved it!) and he decides that his rental income is going to have to make up the difference in the family's spending habits. In other words: "Times are tough, but why should I cut back or suffer!"
Well between myself and the neighbors and quite a few of my old business contacts, we found this old guy a slew of alternatives, all for bigger, nicer places, for less money, we neighbors even got together and helped him move.
When the landlord showed up on Jan 1 with the new lease papers, the house was vacant and spotless. I guess he thought that old sarge couldn't take a mid winter move. Wrong!
The 'For Rent' sign, with the new doubled rent amount, has been up since then, no takers. It should be interesting how this pans out! I am always amazed how some (but not all) landlords think that they are doing the renter a favor. A*shole even tried to keep the deposit on one failed pretext after another and was expecting myself and a few of the neighbors to take off on our time to be his witness in small claims court, UNTIL he found out that we had already agreed to be sarge's witnesses is it came down to it. Sarge got his deposit back yesterday by certified check!. He called to tell me.
I hope the dumb sh*thead's empty rental rots to the ground! He had a good renter and he blew it. By the way, the landlords new home in 02 was bought with an ARM. He always used to politely call me stupid for having a fixed 30yr, since his payments WERE always less than mine.
I wonder if they are today?
I'm over the enjoyment of being right about housing.
This won't be good.
I would rather have had a steady anual 5 or 6 percent price growth (for the last 10 years), rather than this unsustainable bubble.
Yes, we were right, but I'd rather have egg on my face.
We've cashed-out, and we will be buying again, at lower prices. This is good for us. But, some good people will be screwed.
I would rather have not been faced with the choice of keeping our house, or protecting our (free) profit by selling. The only way to keep the winfall was to pocket it. This meant we had to sell, or risk the money.
Am I enjoying this?
No, it sucks.
We're in the 34% tax bracket
Really? That's interesting since no such tax bracket exists.
They are probably refering to their effective tax rate rather than their marginal rate.
Truthfully, when I see the scale of the impending disaster -- just by looking at the size of the condo developments right now under construction -- I get scared. I would hate to be Donald Trump. The timing is awful.
One mans depression is another mans opportunity. I can't say I'm enjoying watching the banks transfer individuals wealth to themselves. You hammer the small time dealers [RE clerks] while the cartel runs off with all the money.
Post a Comment