Discussion in 'Economics' started by The Kin, Apr 5, 2005.
The internet has changed everything. The old business cycle does not hold. Its not about profits - its about eyeballs.
This time, its different.
oops, sorry, flashback. I thought we were back in 1999 discussing the dot coms.
Exactly. I was hoping for a smartass response like this so I can flip it. Real Estate does follow normal business cycles. It is about profits. And it is highly profitable.
Tech on the other hand. Was not profitable. Let's start a company, give everyone a million dollar salary, keep issuing more shares when we start to run out of money.
Real Estate, no more land can be produced in the prime areas of Manhattan, Miami, or any other major city for that matter. If the economy grows, real estate will grow too as people fufil their dream of owning a dream house.
Real Estate is too cool. I live in some. It's way better than before I had real estate.
The correct analogy will be obvious in hindsight, just as the flaws of the New Economy were obvious in hindsight.
In many markets, real estate investors make up a significant proportion of buyers and they are not profitable either. Where I live, houses rent for less than the cost of money on the purchase price. Without further price appreciation, these real estate investors are losing money. This is more or less the definitional characteristic of a bubble.
There is a big difference between what amounts to in many cases a commodity, tech, and re. Realestate in some places like NJ is in very limited supply. Waterfront property is also in short supply if at all available.
RE is all about location. Tech depending on which space you are talking about is all about commodity pricing.
RE will have its bubbles but it will be local where land is plentiful and then it follows more along the lines of a commodity.
Based on the recent history in Australia
Investment in housing going up (stocks weaker now)
House prices rising strongly
Developers strongly invested themselves
Some see potential for top (too early as always)
Price rising strongly (doubled some places)
More books on real estate come out
More course/opportunities for involvement
A little doubt from the finance minister
Its going to go up forever from Real Estate Sector
Every man is protecting his retirement savings with a second home.
A bit of a down twinge in a few places
It will only be "a softening (flat for a bit) and only some sectors"
Developers preselling everything now
Picks up again amongst some tales of woe on tv
More concern from finance minister
Some areas down 20% to 30% ... but its just some sectors and cities
Stories on local tv and press of why "this area" will keep going up even though major cities are soft (the early risers (is this like the strong stocks in an eary cycle vs the second rise in "funny" stocks just before it goes to hell?))
Real estate "guaranteed to go up" by agents (who can't be sued)
April 5th ... prices down widely by up to 50% on asking prices in some cases
Darn, even waterfront prices are falling ... surely that doesnt happen????
Petrol price rises are pinching budgets and another rate rise is expected very soon.
Counter case is tales of great bargains for investors who can buy even more houses now that the prices are soft.
The real estate agents, course sellers, sprukers are all still sell, sell, selling. And those who have to get in now or won't be able to get in because they have too little money havent felt the cold wind blowing.
Hmmmm ... Lets see what happens over the next year or two.
Personally I think that one last strong rise (maybe taking a few years) would be beautiful market behaviour.
This would suck in the last group after it broke recent highs including those selling now at what might prove to be lows. Perhaps the "stock markets" and "housing markets" are different crowd would get it at that point.
Ain't market behaviour grand.
Real estate of today differs from the dot-coms of the late 90s in that the present "bubble" is based on something of intrinsic value.
Separate names with a comma.