Sunday, September 11, 2005

My Date & The Housing Bubble

I usually don't talk about my personal life on this blog, but on my date tonight we ended up talking about the housing bubble. I related some of my knowledge about the housing market. She went ahead and said flat out that people will be burned from the it. She gets points in my book for being aware of the housing bubble and realizing the precarious nature of this speculative episode. :-) ( Please note I will not date housing flippers and speculators.)


  1. I sell real estate. My family owns one of the most successful and profitable real estate companies in South Texas, and like you I don't date anyone who pretends to flip houses or speculates on the real estate market.

    I work mostly with repossessed homes. Most realtors (80%) don't want to work with repossessed homes, mainly because it's a lot of work. But then they're too busy chasing clients to make any money.

    Me, I simply wait for the first Tuesday of every month (repo day), then my clients (Fannie Mae, Freddie Mac, MGIC, Centex, Fidelity, Washington Mutual, etc.) chase me. It's not a glamorous job, but there's a lot of work and little competition, and it pays very well.

    As to the real estate bubble, we're not really in one. Real estate is not a bubble in the same sense as the stock market is. It's more like bubble wrap, a sheet of tiny bubbles. Those on the edges, corresponding to the east and west coasts, have expanded dramatically and are on the verge of bursting. Those in the middle, corresponding to the mid-west and the south, have increased only slightly and are at much less risk.

    In my area, housing prices increased 3.3% over last year, in line with economic growth. This area (South Texas) is experiencing phenomenal growth and development, which is substantially different from a bubble. However, I do fear that the finance bubble the country is experiencing will negatively impact the entire country.

    When over 1/3 of the buyers have to take out interest only or negative amortization loans to finance their purchases, trouble is on the horizon. I fear a banking crisis like that which struck in the 1980s. Lots of people are going to lose a lot of money, not to mention their homes.

    The changes in bankruptcy law that go into effect next month will hit the people with secondary mortgages and home equity loans the hardest. They won't be able to simply walk away from their homes. Instead, the lenders will go after them for everything they've got. And it won't be pretty.

    There is only one way to make money in real estate. That is by improving the property you own, by either rennovation or development. The speculators who took out high-risk loans on the anticipation that property values will continue to increase are going to get burned badly.

    Not that it will affect my business very much. Foreclosure is my favorite word, and the first Tuesday of every month is a great day in America to me.

  2. People get more points in my book if they are homeowners and they acknowledge the housing bubble.

  3. Sometimes, I can't tell if people really agree with my bubble theory, or if they're just humoring me to be polite.

  4. ScottC, we know you already.

    There is no housing bubble in Texas because the growth laws there make sense. This is not the case in California, where "liberals" somehow are conservative about growth. LOL

  5. It's wise not to date people whose economic sensibilities are different from yours: supposedly money is the biggest thing couples argue about. My husband and I weren't completely in agreement financially when we met and started dating, but we were close enough, and over the years we've both gotten more convinced that saving money and staying out of debt, like our grandparents did, is the way to go.

    I've seen a lot of people who get married without really thinking about the financial aspect of their relationship, and it can become a big deal, unless one comes around to the other's way of thinking.

    Even if you're not thinking about marriage just yet (and after a first date, I hope you're not! ;-)), I think you're doing well to weed out the people you definitely don't want to be involved with. :-)