June 28, 2007

The Great Housing Bubble and Crash - this will make a great story one day

And then Congress passed a law per their REIC masters making gains on home sales non-taxable

And then the Fed inexplicably lowered interest rates to 1%

And then thousands and thousands of people became mortgage brokers and realtors

And then CDOs and toxic loans were invented

And then China manipulated long term interest rates

And then homebuilders started building an insane amount of inventory

And then sheeple lined up outside of new home developments to be lucky enough to buy a home, and told everyone they knew that they were stupid to rent, and to buy as many homes as they could

And then TV shows came out about how easy it was to get rich flipping houses, and Time magazine went goo-goo for housing

And then 20-year-olds could get $2.4 million in loans with no income and no job

And then appraisers got paid kickbacks to "make the numbers work"

And then Bush told everyone to buy a home, regardless of cost

And then Greenspan told people to take out adjustable rate mortgages, even though he'd be raising interest rates again and again and again and again and again and again and again and again and again and again and again and again and again and again and again and again

And then it all caved in... Oh, did it all cave in...

32 comments:

Tinfoily said...

haha sounds like 1929
or 1999!!!

what is the next bubble? collecting unemployment. Suing people/companies. Bankruptcies. get ready for 10 years of bad news.

dammit where is my law degree?!?!

Anonymous said...

Yep, that basically sums it up hitting the high points!!

Anonymous said...

It's just so funnny when you sum it all up like that.

Here's a funny bit of news from the radio on my drive to work this morning in Palm Beach, Florida. The Saint Lucie County Appraisers Office claims that even though the gains of past years are way down, Port Saint Lucie and Fort Pierce property still inceased in value by 4% and 7% respectivly in 06. Simply amazing. Florida is getting hammered and Port Sain Lucie is among the hardest hit, every month setting a new forclosure record, but the appraisers office still has the bottle of Mad Dog 20/20 firmly in its grip.

So great to rent!!!! Love the free cash flow for put options.

Anonymous said...

Seems stupid when you think about it doesn't it

sequoia512

Lawrence the Hun said...

Dammit, you forgot the illegal immigrants!

Greenspan Jr said...

They not only lined up, they bent over and asked for more, sheeple.... they never learn. I laugh all the way to the bank....suckers...cha ching$

Anonymous said...

and w has done nothing to protect the country from a horrific economic collapse.

Anonymous said...

"And then Bush told everyone to buy a home, regardless of cost
"

Of course! The more leverage he could get everyone into the better! Just makes land in Paraguay all the more valuable!

Anonymous said...

Keith,

God love you for getting it right! The Tax Act of 1997 is where this all started! Every thing else (while much GREATER in magnitude) fed off of tax free money. At least that's the way I'll tell it to MY grandkids (as soon as I get some). No hurry there!

DinOR

Anonymous said...

...and then home sellers were in denial and then people couldn't buy and then home sellers (especially in Massachusetts/Cape Cod) were in denial and then people wouldn't buy and then home sellers were in denial (curiously helped by MSM and MAR) and people refused to buy and then home sellers were in denial and then....

Anonymous said...

Well, you really have to hand it to the Fed. They have been able to juggle chainsaws now for 8 years, it was a good run. Now the jig is up, it will be interesting to see what the next move is.

Can the U.S. Government declare Bankruptcy? Tell China thanks for playing?

Anonymous said...

KB Home Posts Quarterly Loss,
Home-Building Revenue Slides
By MIKE BARRIS
June 28, 2007 9:35 a.m.

KB Home, one of the nation's largest home builders, said it swung to a loss in the fiscal second quarter as it booked charges for land and inventory write-downs amid continuing woes in the housing industry.

"We can't predict when market conditions will improve," President and Chief Executive Jeffrey Mezger said.

Mark in San Diego said...

I find it amazing how accurate all of the HP predictions were - just happening at a "slow train wreck" pace, however. . .now the Financial Times this morning is full of "credit contraction" items - how the subslime mess is making people wake up to all types of CDO risks. I would not have believed that a housing bubble in Miami,Phoenix,Las Vegas, etc. would have caused a world-wide credit contraction - but there it is. . .can we say "recession" anyone. . .(and we will be lucky with just a garden-style recession). . .what next for HP - perhaps refocus and give tips on job-hunting for the newly unemployed??

Anonymous said...

I think there was a movie made by the NAR about this called,
Much ado about nothing!

Desperate in DC said...

what is the next bubble?

Foreign equities + commodities

The Thinker said...

That was a very good executive summary of the housing bubble. I am not big on conspiracy theories, but I do believe that schemes come together with the intent on separating the fool from his money.

Good job Keith, or shall I say, "Good show old chap!"

SPECTRE of Deflation said...

Senate Blocks Immigration Bill [Sucker Goes Down In Flames]

Power to the people and those senators that love the Constitution and the Rule of Law!

P.S. Elites suck the big one!

Anonymous said...


I do believe that schemes come together with the intent on separating the fool from his money.


How did they separate the fool from his money with zero down or cashback mortgages? It looks like the fools were the lenders and MBS bagholders. Some of the fecal matter will drip down to the masses through pensions and so forth, but much of it is owned by the banks and foreigners.

Mark in San Diego said...

The Myth of millions of potential buyers"

The big "myth" now is that there are millions of renters out there who want to buy. . .although there always are some people who want/need to buy, there are also millions of people who have/are been burned by real estate this time, and will never return to the market. . .much like internet investors who lost everything, now park their money in CD's. Then there are the sophisticated renters like us, who will not buy until the housing PE's return to historic normal (about 100 to 120 x rent). Then on top of that, millions more who want to buy can't get "real 6.5% 30 year fixed loans." SO - who is going to buy all of these houses? Like Japan, it will likely take 10 years from 2005 peak till 2015 for the market to see gains again. . .it's going to be a long long way down. . .then there are former owners like me, who at 55 are enjoying NOT owning. . .gives us freedom to travel, without responsibility of ownership.

K.W. - Southern Ca. said...

Lawyers need clients - many of which got caught in the housing bubble as well.

It will be a mess across all professions.

K.W. - Southern Ca. said...

Add on top of that global warming, run-away healthcare costs and an end to social security for coming generations.

~~~

Lawrence the Hun said...
Dammit, you forgot the illegal immigrants!

HauspocalypseNow said...

Dont forget all housing bubbles are creating as a response to government intervention.

1. tax code
2. NIBYism
3. tax code!!!

Housing is backwards tax wise. If you MAKE money on a house its tax free. But if you LOSE money you owe tax (forgiveness of debt=1099 for example short sale)

HOW THE HELL IS THE TAX CODE BACKWARDS FOR REAL ESTATE!?!? The mighty REIC lobbyists.

K.W. - Southern Ca. said...

I believe it's just being open to seeing things as they really are with this crisis, and admitting that the broader economy will be hit - and hit hard.

Unemployement will become staggering, and the problem is many people don't have the skills or money to acquire a better education for a higher paying profession.

With time and money we can accomplish many things, but as a country,
we're running out of both - and fast.

~~~

Mark in San Diego said...
I find it amazing how accurate all of the HP predictions were - just happening at a "slow train wreck" pace, however. . .now the Financial Times this morning is full of "credit contraction" items - how the subslime mess is making people wake up to all types of CDO risks. I would not have believed that a housing bubble in Miami,Phoenix,Las Vegas, etc. would have caused a world-wide credit contraction - but there it is. . .can we say "recession" anyone. . .(and we will be lucky with just a garden-style recession). . .what next for HP - perhaps refocus and give tips on job-hunting for the newly unemployed??

K.W. - Southern Ca. said...

Their next move ... simple ... saving *themselves* from the mess they put this country in.



Anonymous said...
Well, you really have to hand it to the Fed. They have been able to juggle chainsaws now for 8 years, it was a good run. Now the jig is up, it will be interesting to see what the next move is.

Can the U.S. Government declare Bankruptcy? Tell China thanks for playing?

June 28, 2007 2:17 PM

K.W. - Southern Ca. said...

Right On.

I like reading comments from people as yourself who provide perspective from the side of renting vs house debting (actual home owning in your case).

Very objective, and a very good
question ... "So - who is going to buy all these houses [sitting on the market and depreciating] "

~~~~

Mark in San Diego said...
The Myth of millions of potential buyers"

The big "myth" now is that there are millions of renters out there who want to buy. . .although there always are some people who want/need to buy, there are also millions of people who have/are been burned by real estate this time, and will never return to the market. . .much like internet investors who lost everything, now park their money in CD's. Then there are the sophisticated renters like us, who will not buy until the housing PE's return to historic normal (about 100 to 120 x rent). Then on top of that, millions more who want to buy can't get "real 6.5% 30 year fixed loans." SO - who is going to buy all of these houses? Like Japan, it will likely take 10 years from 2005 peak till 2015 for the market to see gains again. . .it's going to be a long long way down. . .then there are former owners like me, who at 55 are enjoying NOT owning. . .gives us freedom to travel, without responsibility of ownership.

Anonymous said...

sell your house and buy gold and silver stocks and coins

Anonymous said...

Your all a bunch of fools! Don't you know that Hillary will save us! HEIL HILLARY!!!

Anonymous said...

Interesting how China began moving out of U.S. Treasuries and into Blackstone and now Blackstone is trading below its initial offering price. Turbulance ahead!!!

Anonymous said...

"And then China manipulated long term interest rates"


thanks GOD someone is bringing up this fact. The FED monetizes long debt through collusion with other governments

kitchenstove said...

They will be telling this horror story around campfires for ages to come.

Anonymous said...

"And then China manipulated long term interest rates"

low interest rates are good for the economy as it promotes investment and helps sustain LT growth of the economy. Plus China's purchase of US treasury notes accounts for a very small percentage of buying activity and can only go towards explaining a small portion of our low interest rates. I really don't know why your so fanatical about this whole China thing.

Anonymous said...

Yep Clinton kicked the whole thing off with that outrageous '97 250K per person deductible when there were ALMOST NO 250K homes in the whole dang country at that time, let alone 500K.

That's partly why I often think homes will more than likely go back to pre '97 prices. That million dollar shack could end up back at 180K, God willing.