Even though prices in Ohio are low you'll still notice they are well above 2000 levels. Now look at the 2000 price of MSFT, CSCO, INTC or let alone JNPR then to now....
Asians are stupid real estate speculators. Ask the Japanese who purchased pebble beach or the army of idiot hong kong and chinese speculators who are holding the bag in vancouver real estate. The chinese buying means american real estate still has no floor. ( why would they even exchange the reminbi for the worthless USD? )
some of the stats that are making look like a full blown crash is the fraud, the newspaper here in tampa has had a few good stories over the year of how ridiculous it was http://tampabay.com/news/courts/article924127.ece
That is because houses strongly outpaced rent since around 9/11 time frame. People started stuffing money into their homes rather than into the stock market. Housing prices are only somewhat moving back to their normal longterm growth rate. Many rental properties were not good investments recently, since their prices did not justify the rent.
Only the subprime havens have opportunities.. I just picked up a rental property in each Vista and San Marcos yielding me about 11% after expenses. What's nice about Vista, San Marcos, etc. is the rents are very strong compared to property values on these entry level properties. It is almost as if they are on a different planet than the zipcodes you are referring to (just 10-15 miles away). That area of north county is investable.. The rest is a nightmare for anyone with an ounce of common sense (if you goal is to accrue some wealth). Banks are sitting on the inventory and asking at 'old market', not 'foreclosure' prices for REOs in the nice areas. With free fed money (hey the fed even pays interest on the reserves = fed funds target), who needs to book losses? Best to sit on them for 20 years. The 'nice' or 'central' areas are in fantasy land.... Bizarre, really.
Yes, the piano player and the hottest whore get pinched last in a brothel raid - but they still end up going to jail.
This is mostly an artifact of the different capital structures for home ownership vs. company equity share ownership. Moreover, if you look at the capital structure of home ownership, the crash is much worse than it seems from the price declines. In the case of stock market shares, the shareholders are last in line for the economic value generated by the company. Bondholders, workers, suppliers, governments, etc. all get paid first. If anything at all is left over, the shareholders get it. Thus, in a downturn, small % losses in revenues or asset values (relative to costs or liabilities) translate to large % losses in profit and large % losses in equity prices. The more leveraged the entity (C being a very good example), the worse it is for shareholders when the fundamentals deteriorate. In the case of homeowners, the owner gets everything minus the mortgage and the taxes. For people that own their home outright, this "crash" has not been that bad and they've retained much of their real estate wealth gains of the past couple of decades. That said, on a home equity basis, this has been a massive crash. At the time real estate peaked, the average U.S. home owner, only had 53% home equity. That means that each 1% decline in home price created a 2% decline in home equity levels. On a home equity basis (i.e., on the basis of the amount of wealth people have in their homes), the crash has been twice as bad as the price declines indicate. And that's just the average. For people that bought or refinanced near the peak with a 20% down payment, a 15% decline in home prices represents a 75% loss of their home equity (and a 20% drop in home prices represents a total loss of all home equity). The 25% of mortgages that are underwater represent people that have had a greater than 100% loss of the "share price" of the home. At least the price of C can't go negative! To put it another way, anyone who has a mortgage equivalent to the 2003 price of their home (or higher) has been wiped out.
hmmm... this seems like a very high percentage. This would mean that housing values could drop by 50% and the mortgageholder could break even upon a default. Doesn't it take over 20 years of paying a 30 year mortgage to cut the principle in half? Assuming a prevalence of 30y fixed mortgages that would imply that the average mortgage was in it's final third, with no $ ever refi'ed out. Not trying to disrupt the thread, just thinking about the datum cited. It would be interesting (and disheartening, given the remaining term of my mortgage) if true.
don't worry. She'll be back begging for a job. Just give the process some time. The depressionary cycle is only beginning. http://online.barrons.com/article/SB123396545910358867.html?mod=djemWR&page=sp Merrill report https://www.gpcresearch.ml.wallst.c...777875BA&pdf=pdf/Some_inconvenient_truths.pdf
Great stuff from both Dalio and Rosenberg. Rosenberg has been 'on point' for a long time. I've been waiting for this stupid "fiscal stimulus" bill to pass and the idotic "bank rescue plan" to be announced for a couple of weeks. I figure it will offer another great opportunity to buy T-bonds and short GBP/JPY. The bear move in bonds and rally in GBP over the past weeks has begun to give me pause, but reading Dalio and Rosenberg was like a slap upside the head and hopefully will turn my focus away from the moron cheerleaders on CNBC and back to the salient fact that we are in a long-term deflationary and deleveraging process. Thanks.