T Nation

Real Estate Bubble?

The bubble is bursting. How will it affect the economy?

"Home prices: Record drop in October
Median price sinks 3.5 percent from a year earlier, trade group sees more price declines ahead.
By Chris Isidore, CNNMoney.com senior writer
November 28 2006: 12:49 PM EST

NEW YORK (CNNMoney.com) – The price of existing homes sold in October fell for the third straight month and posted the biggest drop on record, an industry group said Tuesday, adding it expects weakness in pricing to drag on into next year.

The National Association of Realtors said that the median price of a home sold in October was $221,000, the same as in September, but down 3.5 percent from October 2005."

Good. The housing market has been out of control for how long now? Bring that shiat back down to Earth.

Its only a housing bubble to the speculators. Guys flipping houses for massive gains. Those days are gone, for a couple of years.

For the average homeowner, the market is what it is. It will continue along its course and hold its value

[quote]emdawgz1 wrote:
Its only a housing bubble to the speculators. Guys flipping houses for massive gains. Those days are gone, for a couple of years.

For the average homeowner, the market is what it is. It will continue along its course and hold its value[/quote]

Fuck the speculators.

[quote]emdawgz1 wrote:
Its only a housing bubble to the speculators. Guys flipping houses for massive gains. Those days are gone, for a couple of years.

For the average homeowner, the market is what it is. It will continue along its course and hold its value[/quote]

Suggesting that the housing bubble only affects speculators is like suggesting that the tech bubble only affected day traders. Shrewd speculators aren’t affected by bubbles because they’re long gone once the air starts coming out. Your average joe is left holding the bag. It’s the average person who felt the need to chase this market up that will be punished, the person who paid too dearly, overextended himself, and is upside down and facing an ARM that’s going to readjust in the near future. \

Those are the people who are in trouble. The market is what it is, but if you’re trying to unload your house, then it IS shitty and it’ll likely get worse.

Someone just let me know when the hell the New York City housing market is going to actual drop more than one smidgen of one thousandth of a percentage point, so I can be ready to jump the hell in.

Damn thing’s been relentless for years upon years now.

[quote]jjblaze wrote:
Suggesting that the housing bubble only affects speculators is like suggesting that the tech bubble only affected day traders. Shrewd speculators aren’t affected by bubbles because they’re long gone once the air starts coming out. Your average joe is left holding the bag. It’s the average person who felt the need to chase this market up that will be punished, the person who paid too dearly, overextended himself, and is upside down and facing an ARM that’s going to readjust in the near future. \

Those are the people who are in trouble. The market is what it is, but if you’re trying to unload your house, then it IS shitty and it’ll likely get worse.[/quote]

Nice Post!! I totally agree.

[quote]emdawgz1 wrote:
For the average homeowner, the market is what it is. It will continue along its course and hold its value[/quote]

It will help homeowners looking to buy, it will hurt homeowners looking to sell. It will have the same effect on homeowners as it does on investors.

[quote]Zap Branigan wrote:
Fuck the speculators.[/quote]

Hey, hey now. We’re not all so bad.

(just kidding, yes we are)

[quote]Coldiron wrote:
jjblaze wrote:
Suggesting that the housing bubble only affects speculators is like suggesting that the tech bubble only affected day traders. Shrewd speculators aren’t affected by bubbles because they’re long gone once the air starts coming out. Your average joe is left holding the bag. It’s the average person who felt the need to chase this market up that will be punished, the person who paid too dearly, overextended himself, and is upside down and facing an ARM that’s going to readjust in the near future. \

Those are the people who are in trouble. The market is what it is, but if you’re trying to unload your house, then it IS shitty and it’ll likely get worse.

Nice Post!! I totally agree.[/quote]

Me, too. It isn’t so much a housing bubble (once thought impossible by speculators) as it is a credit bubble.

Like jjblaze wrote, the problem has been mortgage brokers shoehorning buyers into houses they really couldn’t afford for the last several years, based on an extremely low Prime, and thus ARM rates at the time.

Luckily, my wife and I bought our home in March 2000 when the market was still relatively stable. It was recently appraised for triple our original purchase price which sucks for us because we have no plans to sell and our property taxes have skyrocketed.

Hell, even if we did want to sell, I doubt we could find a buyer at this artificially inflated market price, and everything else in our area has gone up accordingly.

Hopefully, this drop in prices will allow the average, working American to buy a house again. If my wife and I were to try and buy the house we live in at today’s market price, we could never afford it.

Here’s an interesting chart, from Prudent Bear.

[quote]Headhunter wrote:
Here’s an interesting chart, from Prudent Bear.[/quote]

Wow. Not a real surprise when you think about the starter mansions that seem to be the norm today.

Hmm, maybe I’ll actually be abl to afford a house when I finish my BS now in the Spring. I just hope the prices keep falling.

[quote]jjblaze wrote:
emdawgz1 wrote:
Its only a housing bubble to the speculators. Guys flipping houses for massive gains. Those days are gone, for a couple of years.

For the average homeowner, the market is what it is. It will continue along its course and hold its value

Suggesting that the housing bubble only affects speculators is like suggesting that the tech bubble only affected day traders. Shrewd speculators aren’t affected by bubbles because they’re long gone once the air starts coming out. Your average joe is left holding the bag. It’s the average person who felt the need to chase this market up that will be punished, the person who paid too dearly, overextended himself, and is upside down and facing an ARM that’s going to readjust in the near future. \

Those are the people who are in trouble. The market is what it is, but if you’re trying to unload your house, then it IS shitty and it’ll likely get worse.[/quote]

READ THE WORDS I WROTE.

Im not suggesting it only affects speculators. Im suggesting that to the average homeowner, who will live in their house, on average 7.5 years its not a bubble. Housing prices spiked, they are settling now and will continue in the general course that it was on . Look at a graph of home prices over the last 20 years. You wont see a bubble rather a general trend upward.

I swear, some time the folks in this forum are so contentious. So ready to slam someone. If you disagree fine, if you question the veracity of my facts, fine. but how about some intelligent discourse w/o the rancor?

[quote]Headhunter wrote:
Here’s an interesting chart, from Prudent Bear.[/quote]

interest rates over roughly the same period

[quote]Digital Chainsaw wrote:
Coldiron wrote:
jjblaze wrote:
Suggesting that the housing bubble only affects speculators is like suggesting that the tech bubble only affected day traders. Shrewd speculators aren’t affected by bubbles because they’re long gone once the air starts coming out. Your average joe is left holding the bag. It’s the average person who felt the need to chase this market up that will be punished, the person who paid too dearly, overextended himself, and is upside down and facing an ARM that’s going to readjust in the near future. \

Those are the people who are in trouble. The market is what it is, but if you’re trying to unload your house, then it IS shitty and it’ll likely get worse.

Nice Post!! I totally agree.

Me, too. It isn’t so much a housing bubble (once thought impossible by speculators) as it is a credit bubble.

Like jjblaze wrote, the problem has been mortgage brokers shoehorning buyers into houses they really couldn’t afford for the last several years, based on an extremely low Prime, and thus ARM rates at the time.

Luckily, my wife and I bought our home in March 2000 when the market was still relatively stable. It was recently appraised for triple our original purchase price which sucks for us because we have no plans to sell and our property taxes have skyrocketed.

Hell, even if we did want to sell, I doubt we could find a buyer at this artificially inflated market price, and everything else in our area has gone up accordingly.

Hopefully, this drop in prices will allow the average, working American to buy a house again. If my wife and I were to try and buy the house we live in at today’s market price, we could never afford it.[/quote]

Hate to disagree but the prices( generally) arent artificially inflated. Interest rates are low, and population pressure, and other factors. (i.e. the section8 program here in phila) put real pressure on the market. real estate prices may settle, but generally they are what they are.

You though are a winner. Why not sell your house and roll your increased value into a better property. If you are smart you should be able to find a neighborhood that will fit your need. This will also set you up well for the next cycle, when prices increase again, you’ll have increased value again.

[quote]emdawgz1 wrote:
Headhunter wrote:
Here’s an interesting chart, from Prudent Bear.

interest rates over roughly the same period
[/quote]

Hmmm…with rates at such historic lows, wouldn’t that imply that it’s going to be a long time until prices boom again? Most everyone who wants to has bought (about 65% now are in, which is a historic high), rates are very low, and the population is aging.

I think real estate will be a very poor investment over the next 20 years. But then again I’m a ‘prudent bear’. :slight_smile:

[quote]Headhunter wrote:
emdawgz1 wrote:
Headhunter wrote:
Here’s an interesting chart, from Prudent Bear.

interest rates over roughly the same period

Hmmm…with rates at such historic lows, wouldn’t that imply that it’s going to be a long time until prices boom again? Most everyone who wants to has bought (about 65% now are in, which is a historic high), rates are very low, and the population is aging.

I think real estate will be a very poor investment over the next 20 years. But then again I’m a ‘prudent bear’. :slight_smile:

[/quote]

I agree. In general the boom is over.

It will not repeat itself for a long while.

[quote]Headhunter wrote:
emdawgz1 wrote:
Headhunter wrote:
Here’s an interesting chart, from Prudent Bear.

interest rates over roughly the same period

Hmmm…with rates at such historic lows, wouldn’t that imply that it’s going to be a long time until prices boom again? Most everyone who wants to has bought (about 65% now are in, which is a historic high), rates are very low, and the population is aging.

I think real estate will be a very poor investment over the next 20 years. But then again I’m a ‘prudent bear’. :slight_smile:

[/quote]
Mmm maybe, populstion pressure will keep home prices up. I wouldnt bet on another boom but when you have a commodity and the supply is limited, it helps to keep prices up.

[quote]Headhunter wrote:
emdawgz1 wrote:
Headhunter wrote:
Here’s an interesting chart, from Prudent Bear.

interest rates over roughly the same period

Hmmm…with rates at such historic lows, wouldn’t that imply that it’s going to be a long time until prices boom again? Most everyone who wants to has bought (about 65% now are in, which is a historic high), rates are very low, and the population is aging.

I think real estate will be a very poor investment over the next 20 years. But then again I’m a ‘prudent bear’. :slight_smile:

[/quote]
Also remember, before Greenspan the fed chief didnt see hight interest rates as a problem. Tody the fed fights to keep it low.

[quote]Headhunter wrote:
I think real estate will be a very poor investment over the next 20 years. But then again I’m a ‘prudent bear’. :)[/quote]

Real estate has always and will always be the best available long term investment for anyone. I say this as someone who subscribes to the firm foundation theory the majority of the time and who has a portfolio almost entirely comprised of long term investments.

There’s increased liability with real estate, but it’s much, much easier to see red flags in specific markets in real estate and growth is guaranteed if the initial investment isn’t poorly chosen, and most of the time if it is poorly chosen.

[quote]Headhunter wrote:
Hmmm…with rates at such historic lows, wouldn’t that imply that it’s going to be a long time until prices boom again? [/quote]

No, why would it? Unless I’m misinterpreting something that was written, low interest rates promote continued activity.

People are living longer, death has not outpaced population growth since the black plague.

[quote]Zap Branigan wrote:
It will not repeat itself for a long while.[/quote]

I’ll see you in six years when we start to hit the next upswing. There will always be peaks and valleys, but increasing demand is a constant. It’s going to hit a valley over the next 4 years, and then it’s going to speed back up again. The days of steady growth over decades is over in any major metropolitan areas, and the volatility of those markets show you what’s going to happen on a smaller scale in more rural locales.

If anyone is considering buying property, you’re probably best off buying it anywhere from 6 months to 2 years from now. It is undoubtedly a buyers market.

I also have to disagree with emdawgz1 saying that prices aren’t artificially inflated. I’ve been running through listings that have changed hands 4-8 times over the last 3 years. That is artificial price inflation, and it is extremely common on the coasts, which is where you’re going to see the only real potential losses until 2010.