Monday, August 28, 2006

Average American is Waking Up to The Housing Bubble


Newpaper box in Washington, DC

Washington Times headline 'Home prices fall; sales plummet'

34 comments:

  1. I sure am glad that I bought years ago and locked in at 5.5% Now excuse me while I worry about the bubble..... ZZZzzzzzzzz.

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  2. I found a blog and typed its name into my browser and then clicked on the link to make comments and then type out a comment telling everybody how I don't care because I bought years ago and locked in at 5.5%, and I'm going to sleep. Obviously, I really truly don't care; otherwise I wouldn't have gone to all that trouble to type in a url, click in a link, and type up a comment. See how much I don't care? See? SEE??!!

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  3. anon 7:21 burned by anon 8:20.
    that is all...

    Oh, for those of you that don't think this is a big thing, I would have to disagree. Many people have no clue what is going on in real estate and are financially clueless.

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  4. And this coming from one of the biggest right-wing bubble cheerleaders. The end of the bubble has long passed...

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  5. I think it is significant, as you no longer here the man in the street say things like "real estate never goes down." The population of flippers has probably stopped growing, and may even be shrinking. This is probably the reason why demand is down.

    Of course, it also shows how useless the big media are. These kinds of articles would have been useful in 2004 and 2005. If you have already bought a $800,000 McMansion with an ARM due to reset next year, these articles don't help.

    A Redskins fan

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  6. " I found a blog and typed its name into my browser and then clicked on the link to make comments and then type out a comment telling everybody how I don't care because I bought years ago and locked in at 5.5%, and I'm going to sleep. Obviously, I really truly don't care; otherwise I wouldn't have gone to all that trouble to type in a url, click in a link, and type up a comment. See how much I don't care? See? SEE??!! "


    See how prejudiced you are about people who own homes and aren't in financial trouble? See? SEE??!!

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  7. anon 4:35,

    Some bubbleheads, for whatever reason, need to believe everyone is going to be upside down and/or foreclosed upon.

    That belief validates choices made in years past.

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  8. Oh yeah VA Investor? Argue with this:

    Blood in the streets!

    Boooooooooooyyyyaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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  9. va_investor said...
    “Some bubbleheads, for whatever reason, need to believe everyone is going to be upside down and/or foreclosed upon.
    That belief validates choices made in years past.”

    Some housingheads, for whatever reason, need to believe that housing never goes down, there not making any more land and there’s no bad time to buy.
    That belief validates choices made in years past.

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  10. Without a doubt, there are many, many people who bought years ago, and have a lot of NOMINAL (and for some, even real) equity locked in, even if we have a severe correction.

    But I personally believe that the major factor driving the dramatic and unprecedented increases in prices over 2001-2005 were the strange loans to people who otherwise would not have qualified.

    I think those people will now be exiting the market.

    If I am right, demand is taking a severe hit and will continue to do so. I don't need to believe that "all" or "most" homeowners are underwater to believe this.

    A Redskins fan

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  11. Robert, you said sarcasticly "there not making any more land "

    In all seriousness, could you point out the land factory to us real estate novices? Does the factory have a website where I can order up some new, not previously-owned, acerage?

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  12. Out of curiosity,

    What fraction of jobs in DC is construction? RE? Ok, I know the loans are concentrated out here in California.

    Sadly, I do know people who are going to lose their homes. :( I also know far too many companies laying off: GM, Ford, (their suppliers), Bayer (anounced today), Boeing (Long Beach and Anaheim), etc.

    Believe it or not, warning that the theater is going to catch fire due to poor electrical wiring was a good thing. Now the fire is smoldering.

    In the bubble areas prices either drop or jobs move out; its that simple. In the global economy wages have far less regional variation than they did years ago.

    But don't worry, the WSJ had a piece yesterday on how the fed *might* lower interest rates. Then again, rising rents is shooting up core inflation so they might have to raise rates... or they might stay constant.

    For everyone who bought a home as a home, I'm happy for them. For those who bought homes for greed... its a two edged sword.

    Just remember, this is only the warm up act. Remember how we "bubbleheads" have warned that the driving factors pile up in 2Q2007? We're in interesting times.

    Neil

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  13. I wasn’t trying to be sarcastic.

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  14. It's amazing....suddenly at work I am the 'real estate guru' as I have been talking about the bubble for over a year...and how smart I was not to buy and keep renting after sellin home in S.California ..he.he. It is definately becomming more main stream in Northern Virginia.

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  15. "I wasn’t trying to be sarcastic."

    Ok, so there really is a factory that makes new land? Or are you saying that land as a finite resource is not a valid aspect of the value of land?

    For example, the value of brownstones in Manhattan is limited by the fact that you can create new land and construct a new brownstone in Manhattan?

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  16. I would call a condo complex a "land factory."

    A Redskins fan

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  17. Anonymous said...
    “Ok, so there really is a factory that makes new land? Or are you saying that land as a finite resource is not a valid aspect of the value of land?
    For example, the value of brownstones in Manhattan is limited by the fact that you can create new land and construct a new brownstone in Manhattan?

    You’re kidding right?
    OK, you’ve convinced me. With air tight reasoning as that I guess I should go ahead and buy since they are not making any more land, if I don’t I’ll be priced out forever, it’s never a bad time to buy, and real estate only goes up.

    But wait. I don’t want a brownstone. Hence the value of said home (for me): $0. Another valid aspect of land value is demand. How much value can you place on the one and only Manhattan brownstone if no one wants to buy it?

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  18. "With air tight reasoning as that I guess I should go ahead and buy since they are not making any more land, if I don’t I’ll be priced out forever, it’s never a bad time to buy, and real estate only goes up."

    I'm not trying to convince you to buy land, a home, or anything else. I'm trying to understand this mentality that thinks land is not a finite resource. Perhaps it isn't; in which case I am honestly looking for the attributes that make land infinite.

    You aren't in the market for a b-stone in Manhattan? That's cool. But the point is that land there is limited, and that type of housing is limited. What is someone to do if they *are* interested in that type of living arrangement?

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  19. Neil,

    The Center for Regional Analysis, a group based at George Mason University that studies the local economy, reported in 2004 that the "Building Industry" represented 7.4% of the economy in the Washington, DC MSA in 2002, while the Fed. Government was 32.3%. They claim that the Federal Government portion moderates national business cycles locally.

    Redskins -- good point about condos. In that respect, by changing zoning regulations, any locality can "make land" until it's shoulder-to-shoulder high rises. Conversely, by tightening regulations, they can effectively reduce the amount of land and drive up prices, a la the SF Bay area.

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  20. "Conversely, by tightening regulations, they can effectively reduce the amount of land and drive up prices, a la the SF Bay area."

    DC has strict regulations on building height.

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  21. Overall, the population density of this country is not that high relative to the rest of the world. As telecommuting becomes more prevalent, the population can continue to spread out. Therefore, while land, like every resource, is finite, we are not approaching the boundary. Clearly, there is plenty of supply of homes to satisfy the demands of our population as the inventory statistics show.

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  22. So the average joe is going to live in Montana and telecommute to his job in Jersey City?

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  23. "Some bubbleheads, for whatever reason, need to believe everyone is going to be upside down and/or foreclosed upon."

    Nope. It's just that the first poster was pulling the old adolescent routine of going out of his way to tell everybody how he didn't care. People who are unconcerned don't go out of their way to tell somebody else how unconcerned they are. 14-year-olds who really are concerned but want to seem cool and unconcerned do that.

    Investor, get over your paranoia.

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  24. Anonymous said...
    So the average joe is going to live in Montana and telecommute to his job in Jersey City?



    No reason for Avg. Joe to telecommute. Jersey City looks quite affordable.
    http://www.homegain.com/local_real_estate/NJ/jersey_city.html

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  25. I would say the same to you.

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  26. "No reason for Avg. Joe to telecommute. Jersey City looks quite affordable.
    http://www.homegain.com/local_real_estate/NJ/jersey_city.htm"

    Everyone, buy in Jersey City! Prices are "affordable"!

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  27. "14-year-olds who really are concerned but want to seem cool and unconcerned do that."

    Actually, my biological age is more like 25. And yes, I'm locked in at 5.5%

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  28. But then you'd be in Jersey City.

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  29. Good point, Cuff.

    Perhaps anon 9:28 meant Montana is preferable to Jersey City, in general, and the average joe would finally be able to leave.

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  30. Anonymous said...
    "I found a blog and typed its name into my browser and then clicked on the link to make comments and then type out a comment telling everybody how I don't care because I bought years ago and locked in at 5.5%, and I'm going to sleep. Obviously, I really truly don't care; otherwise I wouldn't have gone to all that trouble to type in a url, click in a link, and type up a comment. See how much I don't care? See? SEE??!!"

    David, doesn't this violate your blog rules?

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  31. Lance, David is on to something when he cross-references tropical storms and housing markets. Now he is busy plotting the course of asteroids that may collide with Earth in bubbleicious market locales. He's also calculating the real detrimental effect that the San Andreas fault has on most of the California housing market.

    Its going to be a breakthrough post by David, so stay tuned....

    (Just wait 'till we learn what the Rapture will do to real estate prices in Cleveland!)

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  32. Anon 7:28.

    Thank you. I might have increased my delay between San Diego and DC if it wasn't for the latest article on Ben Jones' blog. A nominal 7% of the jobs being construction is... nothing. Not if 1/3rd are stable government work. DC might not even feel it if half the construction guys lose their jobs (ok, if you work construction you would, but someone working in another field in DC might not even know job losses are going on.)

    But the evidence is only growing...
    Neil

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  33. "Ok, so there really is a factory that makes new land?"

    http://realestate.theemiratesnetwork.com/developments/dubai/world_islands.php

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  34. This comment has been removed by a blog administrator.

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