Posted on 06/21/2005 9:42:59 AM PDT by ambrose
Just before the stock market bubble burst in 2000, the MSM was also quoting contrarians who calmly gave three or four reasons why the stock market bubble was a myth and how the new economy was different and why traditional fundementals were for losers, yada, yada, yada. The only difference then is that the MSM qouted the contrarians at the beginning of the articles rather than at the end in an effort to prop up Little Willie Clinton's economy. I went 90% cash in March, 2000, not because of what the MSM said or didn't say, but because of my own research and gut. I was very right then and I made a lot of money during the crash by simply not losing money.
I've applied a similar analysis based up traditional fundementals and values with a healthy dose of my "gut" to the current real estate market, and I believe we are already in the beginning stages of a real estate bear market, which will become a major meltdown in many (althought not all) markets. Mark my word. Eighteen months from now, you will see how very right I am.
And how many houses become unusable and need to be replaced? I bet it's more than the difference.>
Also, the new trend is to own two or more homes -- the extra for vacation, rental or future retirement. With the price of building supplies swinging up with the price of oil, it might be a bubble or the way it's gonna be...
Now THAT is funny....I love the U.S. when reading something like that....
Walk into any bar in NYC, L.A., Chicago or any number of U.S. cities and you'll see people whose ancestors one, two or four generations ago would have been at each other's throats in a murderous rage. And know what they'll be doing? Playing pool, hitting on the waitress and discussing real estate, etc. etc. etc. etc.
Hitler thought this was our weakness. Radical Islam thinks it's our weakness. It's our strength.
I saw some good data on So Cal hosuing prices going back to 1982.
Right now the bubble is probably worse than in 1987-90 as hte run up from 2001-04 has been greater than in 1987-90.
When the bubble did burst in CA prices fell about 20% but it took 5-6 years to bottom out. What you had wasnt really a popping as much as air coming out of the balloon. From 1991-96 housing prices fell by 1-5% each year. Each individual year didnt look to bad but cumulative it was pretty bad
""Is Atlanta on the list of bubble real estate markets?""
not even close...4% annual appreciation in home values...HOWEVER GA leads the nation in interest only loans
""I think it's more likely that an economic slowdown will pop housing prices than the other way around.
But I could be wrong. :^)""
youre actually 100% correct....there has never been a housing price decrease in the USA without a recession preceeding it.
In So Cal in the early 1990s, prices peaked in 1990-91, but the recession began in 1990.
A recession will pop the bubble, the popping bubble will reinforce the recession.
Bubbles dont pop on their own, they need some outside variable to do it
I wonder how often people say, "if only I hadn't bought that house twenty years ago".
Sounds right to me!
My parents bought a house in Palm Springs for $289,000 in April of 2004, now it's worth $389,000 ,Amazing
Recall in this case that the government agreed to reimburse the S&Ls for losses owed to their "depositors" they had no requirement to reimburse borrowers. When the S&Ls went under because the S&L loaned depositors money (all of which was covered by the government) on bad loans, the government was on the hook to protect the S&L depositors. The borrowers were still on the hook for the loans unless they could declare bankruptcy in which case the banks took a loss. This loophole in the depositor protection was fixed and new limits for S&L deposits on hand were implemented. and deposits are now only protected by the FDIC and savings and loan group with the same function, (Up to 100K) per depositor. But this does not mean the gov steps in to cover bad debts.
I believe this "crisis" will not result in a massive government bailout. But I guess we will see.
forgive my ignorance, but what is an "interest-only" loan?
where for the longest time you are only paying interest on the loan, no principle
As was stated below a loan where you only pay the interest for a long time, eventually though the principle comes due. A variation on the old Baloon mortage.
Shockingly according to Money magazine in 2005 these itnerest only loans accounted for about 1/3 of all new mortgages, with ARMs making up almost another 1/3 and another 5-10%(?) or so of subprime or noncomforming.
Correction the article said that regarding 2004.
If I recall correctly, the stock market sold off heavily the day the feds sued microsoft and it was all downhill from there.
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