- People do not need to buy. People can and do rent.
- People do not have to live in a bubble market. They may move to cheaper locales.
- There is a practical limit on what people can afford based on income, other expenses, interest rates, and lending standards
- Many of the people now buying are not living there, they are renting ( or trying to rent) their highly leveraged housing units.
- People have always needed 'a place to live,' which did not stop prices from falling in California in the early 90's
Another Housing Bull Argument ( HBA ) debunked.
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Nor did the "need" for a place to live stop the market in NYC from crashing in the early 1990s.
ReplyDeleteThis is the worst argument of all - I rent now because renting, I have cashflow. Owning, I won't. It's as simple as that.
exactly.
ReplyDeleteYeah, sure sounds like the argument that 'this times its different'. Call it a bubble or asset balance problem, the idea that 'everyone needs a place to live' sounds like a plea or cry of desparation. That 'hissing sound' is here and getting louder.
ReplyDeleteWell, the NAR President came out with a total CYA statement today. I blogged it.
ReplyDeleteGreenspan today showed his indifference to the bubble, (the homebuilders stocks are all up)Greenspan is a moral coward. Any chances at all of this thing ending with the least amount of pain is now gone- the bubble will go on- and the bigger the pain will become.
ReplyDeleteGood comments. I agree with your analysis. Plus, don't forget Japan's real estate collapse. People sure need a place to live over there, and most of them can't even really move.
ReplyDeleteBtw, I'd also like to take this opportunity to shamelessly promote my new blog, Seattle Bubble.
Thank you.
the tim,
ReplyDeleteThanks for dropping by. I added your blog to my links section. Quality blog. It is wonderful to see a growing amount of local bubble blogs. :-)
Greenspan is a wimp beyond compare. For me this was his last chance to do the right thing. It is clear (to me) he is just wanting to smoothly cruze to his retirement date.
ReplyDeletemarinite,
ReplyDeleteCan you please explain in further detail? ( I think I know what you mean )
I really think he should of jacked up the short term lending rate by 50 bps, not 25. I think he should come clean and admit the mess he has made. I think he should stop pretending that everything is fine and dandy with our economy (vis-a-vis inflation, employment).
ReplyDeleteGreenspan retires in, what, January '06? I think he wants to keep the status quo, no matter how damaging, until he retires so that the blame goes to the person who assumes his chairmanship.
I am an idealist. Flame me all you want. He just makes me so angry.
Greenspan is responsible for this mess- and even when the shit does hit the fan next year and he is long gone- the fact remains is that he created this monster- and will be rembered for the chaos that followed afterward. He has to be the biggest wimp and coward that has ever been FED chief.
ReplyDeleteI agree 100% that Greenspan is largely responsible for this mess. However, I remain unconvinced that a 50bp increase is the best move t this point.
ReplyDelete