Greenspan and the Housing Bubble

This is somewhat old news, but the author makes a good case for the housing bubble based on rental prices:

http://www.miami.com/mld/miamiherald/news/opinion/7578278.htm

 

I guess if your looking for a house, your up sh1t creek.

If you already own one, yawn, who cares.

Stock market bubble and housing are two entirely different things. Equity bubbles are fabricated events (ie. the infamous pro-forma #'s). Housing does play along the lines of supply and demand and at times may be stretched there is no history of crashes in this area, not even Japan nor Hong Kong (jeez, prices are still sky high in HK).

 

i've seen commercial properties take a big hit in the late eighties due to a tax law change. i think the author is right on the money, except that greenspan gunned the economy in fall of 98 when he bailed out ltcm with a surprise rate cut. he is doing the same thing with keeping rates so low now in the face of a rapidly declining dollar. when he finally does raise rates there will be a little hell to pay. i don't think current home owners are going to exactly "yawn," especially those that over leveraged and owe more than the value of their homes. don't worry, if they are IT professionals, i hear there are plenty of jobs in india.

 

No mention of the fact that with lower interest rates home ownership is increasing, and many times there are similar monthly payments to own vs. rent.

Granted you do need some kind of down payment.

Many people with good credit and enough income can put down 3-5% and have a similar payment (especially when the tax benefits of home ownership are considered.

 

Here in the bay area the market is deffinately moving up. I'm considering acquiring my first real property. I like the idea of no money down and pay only the interest on a 45 year loan. One doesn't need to make nay down payment as long as the creadit is there and he/ she acuqires payment insuranc, among other things.

I've just compelted an appraiser license course and am to begin a real estate sales course in the next week.

If anyone has opinions or recomendations about buying properties, renovating them, and then selling.

What are the best resources available, and for TA?

For the period of 2001 to Feb. 2003 SF real prices overall increased. And when prices momentarily went down, it wasn't much.

 

You are a little late to the party. Most everyone has quit their Starbucks jobs for the free real estate course already.

What was wrong with buying the bay area 10 years ago?

 

He was in Junior High back then.

 

Thanks for the info guys, you are great! No wonder being as old as you are you communicate worthless remarks via interenet.

The both of you must be lousy investors or socially pathetic.

I'm well aware of what the bay area real estate market went through during the past thirty years.

 

There is no doubt that the attractive "monthly payment" has been the additional "carrot" IMO Greenspan has dangled in front of consumers to get them to take additional debt load. Greenspan has to place this debt somewhere to inflate a sluggish economy, and right now Joe Average is it with real estate being the vehicle. Every asset class has its day, all the other asset classes are exhausted. Real estate has been "tapped" to be the savior to get the president re-elected, and to give an old Federal Reserve chief his legacy.

Monthly payment is great, but what about the note amount? If one pays 450k for a home, that means that amount has to be repaid. Due to the big runup, that 450k home might have been worth 300k 6 years ago. What really cracks me up is that 6 years ago the "for sale" signs stayed up for 3-6 months before the house was sold. Now people trip over their d!@ks and buy it the minute the sign is planted in the yard. Bubble mania perhaps?

Since real estate has been two steps forward, one step back for generations, what happens if real estate has a correction here and the house is worth only 385k in a few years? Many people who have to sell....illness, divorce, tax liens, transfer...will be screwed. The rest will have to wait 10 years for the next "bubble" to be made whole again.

 

With a second reading I see that I was wrong. I think buying that 1 bedroom, 1 bath fixer upper in S.F. for 700k with an interest only 45 year loan and no money down is a fantastic idea!

Please check back with us (or let us know which Yahoo! board you are on) and let us know how the real estate exam went, how your fixer upper is coming along, and the NUVO investment is going.