SteveD, I'm semi-retired. I don't need to be "doing" anything. I just like to work. And yes I built my 1st home when I was 18 in 1970. In San Clemente, CA. That's where I grew up. Then to SB. I even wrote in my credentials. You don't need more than that, it's irrelevant to the ideas. We all get old. What do you do? No bite on the Bubble probablility except Darkhorse and UDeserve. I've realized I'm scaring some of you guys, sorry. I forget that people get emotional about RE. To me it is just another turn around the circle. I really have no emotional tie to a downturn, or UT in RE. I'm not afraid of my home's equity. It is all business. No emotion, after I sold my 1st house. Like a good stock trader, which I'm not. And I don't care what it does in the next year. I'm out. No risk. Now I'm in the way of a different kind of wave... energy and alt. energy. My philosophy is KISS. Just get in the way of a trend going up. A bunch of people have written in Private who get it. Real Estate is a cycle. A 20-30% correction is bloody for some poor folks who believe the hype and get stuck. Wait too long and you've waited too long. The herd going in one direction will be too large. Stuck. Here is one of the 3 problems. Today, Bloomberg: QUOTE: U.S. Trade Gap Widens to a Record $55.5 Billion (Update1) Dec. 14 (Bloomberg) -- The U.S. trade deficit widened to an all-time high of $55.5 billion in October, boosted by higher oil prices and record imports from China, a government report showed. The trade gap in goods and services followed a revised $50.9 billion deficit in September, the Commerce Department today said in Washington. The deficit reached $500.5 billion in the first 10 months of the year, surpassing the record for all of 2003. Imported crude oil prices jumped 11 percent in October to a record $41.79 a barrel. Americans also bought more foreign televisions, clothing and stereos. Consumers and businesses, undaunted by higher prices for foreign goods as the dollar falls, keep snapping up imports as the economy strengthens. Exports also rose to a record. ``There is a fair pace of demand in the U.S., and add to that the price story and you get a big blowout,'' said James Shugg, senior economist at Westpac Banking Corp. in London. Shugg forecast a gap of $55.7 billion, the closest in a Bloomberg News survey. Still, ``we are close to the peak. The weakness in the U.S. dollar will help and the economy will be slowing.'' END Nice that the economy will be slowing (recession) and the dollar falling (infaltion). 2+2. Trend is down. Inflation (the unspun numbers, is at 8% this yr.) Just need to sort thru the typical Bloomberg spin. No one has to be afraid. Just get out of the way. Sell all houses to Convert. A good thread needs some drama, and a burr. I guess I'm the burr. OK. I'm not in the drama part. Waiting for that, it hasn't come yet. Very nice to buy at the bottom.
I've been reading this thread thoroughly and I must say, it is probably the most useful thread I have ever read here on ET. I am A RE agent and trader in MA and here is my 2 cents: The market has already slowed. I am in the middle of it everyday. Inventory has climbed steadily over the last four months and SF's have taken a 5-10 % haircut on the starter homes(these buyers are drying up). Luxury homes have been sitting on market so long that you can't accurately say how much value they lost The data that the RE bulls are using is ancient by the time you see it. Remember any sales data is only accounting for homes that have actually sold, not pendings or actives. A home can be pending anywhere from 1-3months on average in this area. Ahh, there is the lag. My theory: 1. Fed rates have doubled, but mortgage rates are the same or even LOWER? Something's got to give. 2. Low rates and loose requirements allow buyers nto this market with 0 down 2yr. ARM's. 3. As prices deteriorate, lenders will not be so loose on lending money and simultaneously rates will be heading up. 4. So, the "smart money" will not lend anymore money to the "dead money". (Fiinally not a refi commercial on TV every 2 seconds). 5. In this declining market, many people that bought at the top with a 2/28 ARM finally reach the end of their prepayment penalty period, and call their loan officer to combine their first and second into one loan and are upset to find out that the lender will not touch them beacause well hmmmmmmmmmm. their LTV is 70%. Yes lenders have lended people up to 70% of their monthly income for housing. This is very toppy and crazy. 6. People will be upside down in their homes (esp all the 1st time homebuyers with 0 down). 7. A wave of foreclosures and bankruptcies (It wouldn't surprise me either if the bankruptcy law was changed right before this wave). BTW in my local paper there are 3X as many foreclosures in there as same time a year ago. LOL- your friend without much brains starts talking about buying foreclosures (because prices still have much room to drop). **BULL ON FRONT OF MAGAZINE = BEAR MARKET **RE BUYERS EVAPORATING" = BEAR MKT. **YOUR STUPID FRIEND BUYING FORECLOSURES= BEAR MKT. RE is a market like any other. It is cyclical. Of course if you will hold for say ? amount of years so will not be so directly affected. Funny how some people hold your RE like $500 QCOM. Just like any other market, it is hard to pick the top, but right now the mkt. is flashing a "sell" signal, at least in my area. BTW, smart logical posts by BillBuild. We all get what we want out if the markets.
This would've been a great article before the bubble burst in '00. Today, none of this applies. Companies are flush with cash, ie MSFT issuing that huge dividend payout. And rates move very slowly over time. There are no shocks.
Still posting garbage. In the real world, Nov PPI 0.5% (5.0% yoy), core PPI 0.2% (1.9% yoy). In Bill's world, PPI 8% yoy. Sell your homes, live in caves, buy gold, bottle water and guns.
- copper +100 % - steel +100% - health care inflation in the double digits. - College tuition up anywhere from 8 to 15 % per year - Oil +40% - Significant decline in the value of the dollar. - Food prices are up close to 30 % in couple of years -Transportation costs are up. - Property taxes in my area +12% in one year. - NYC tunnel and bridge tolls, subway fares much higher - Restaurants raising prices for first time in years - Hotel room rates are through the roof. - Money supply +8% per annum - Gold up 70% in a couple of years -All forms of insurance up sharply. -Plywood up 61% year over year. Those are just based on my personal experiences. Also many businesses struggle with increased costs. If that is not inflation i don't know what is.
Isnt the one thing that is different this time that the risk of making home loans has been transferred to the us taxpayer(fnm)? That makes the mortgage brokers more aggressive since few hold the loans any more.
Please show your data on most loans being fixed and that the VAST majority of people buy for a place to live...this does not appear to be true. "It is interesting (by which I mean frightening) to note that in an environment where a moderate increase in mortgage rates is likely and a huge increase is possible, 82% of San Diegans' October mortgages had an adjustable rate." I have seen figures that show up to 30% of real estate in coastal bubble areas is speculative flipping. This amount of activity is more than "some high leveraged speculators". http://piggington.com/
Moresize, Thank you, thank you, thank you, very much for shedding some more experienced light on this. Good grief this was getting silly. Monkeys and coconuts. And like OWP and darkhorse, a few wise people. What you and I know is that sellers get house proud. Even realtors do!! And that is weird. I've seen realtors burn their own home listing. The trade laughs. Then of all things, Architects are the worst bozos. Design a "work of art" that doesn't fit neighborhood and won't listen to what realtors know the public wants. "Castle to their egos". I know, not all Archs this dumb. So we have the public caught with bright light in their eyes, frozen. Do realtors enlighten them. How do you sputter and laugh in print? Who helps them? Really no one. They are going to slaughter. That is why I have stayed on this thread. I feel real bad when good people are hurt. And Old Trader has been a real problem. Not him personally, the example of someone with such a low basis that it would be tax stupid for him to sell rentals. Even if he can't rent them. Yes, that does happen!!! I'm not lying. I'm trying to help you all. Old Trader, you're in a spot few are. Keep that in mind when you think about other's positions. Mike805 is by far in the most interesting position. Such a solid market in SB/M, CA. Sitting on the wealth of LA. But way overpriced. Stupidly overpriced. But in that area, boy? I told my sister to sell 1-1/2 acres in Montecito and she choked. "I'm getting ready to build". But Mike has property where I've built for a longgggg time--Colorado. Joke in 80s here: "2 things you can't get rid of, Herpes and a condo in Vail". I can hear the moaning now, but...... The joke came after Vail was a big name town, not before. Mike has to hope SB will hold up everything else. Mike is the wealth in LA strong enough to do that? What looks impervious can tank as the circle spins. Don't go to the slaughter house. You won't like it. You are VERY lucky that a few have taken the time to post here to enlighten you. Why would we waste our time lying? Believe it or not Moresize and I (and a few others) are trying to help you. Again, with caring: Trying to help you. No one else is in the biz to help you, you're on the high seas with no pro guide at all. Most are trying to pull you under cause that is how they make their living. There's nothing else in this for us. We're already safe. We're moving on to the next asset de jour. And SteveD, what do I really do? When I am here I'm trying to pass on my experience to those that care to hear it. And in the process, be insulted by people who's only fault is they are concerned, in doubt and may have a wife who'll skin them if they talk selling. Fairly soon, Just watch from high ground when so many innocent people go under. And feel the money still left in your pockets. At that point you'll feel a little sad and a lot happy. Cash will be king. For those that feel motivated to preserve capital, the time to act has just passed, but there is still a little time. 70% LTV is here. I'll stick around if anyone needs advice. Otherwise I'm buying energy juniors, energy cargo, uranium, LNG, Nat gas plays, Vanadium battery load levelers and a little oil--------stocks of course.