Posted on 10/08/2005 2:35:32 PM PDT by wagglebee
Are you referring to the infamous Avocado green ?
Just the opposite: there is a belief that manipulation of money supply smooths out cyclicity.
How do you know that? Have you heard about rental property being vacant for years?
Corrections are no different than than drinking. If you get drunk, you can put off the hangover by continuing to drink. But the more you drink, the worse the hangover will be. Recessions serve to clear out the excesses of the boom. Greenspan delayed the onset of the recession by pumping the economy full of money and credit. Now we as individuals and the government are up to our eyeballs in debt. The economy will contract as individuals and government have to curtail spending in order to service their debt.
Not even like a future trader either. Usually with futures trading you won't lose more than the money you put in. That is unless the price drops too quickly and there isn't enough liquidity to liquidate your positions during a margin call.
People need to remember when buying a house that prices are the people's opinion of what something is worth at a particular moment in time. Prices can change in either direction at any time. DEBT IS REAL and is not based on people's opinions.
It's true that a house can't totally "disappear" in value the way stock can. However, a house CAN end up costing a great deal to maintain. God forbid your house goes down in value and is upside down in the mortgage - and then you end up with a major problem like mold or flooding not covered by insurance. It can be a true financial disaster.
Houses are very like the stock market, in a way people don't realize. They do go up and go down - logically people realize that, but they don't really internalize that knowledge.
My father was a real estate investor for many years - it provided him with a great living, but it takes a lot to be suited to it - a lot of work, and like politics, a thick skin. You can't go to bed at night worrying about a tenant or the mortgage.
Home buyers do.
You like brown and orange? The linoleum on the kitchen floor was brown and gold. It went nicely with the harvest gold appliances. Can you imagine paying 325k for an apartment with two windows? One that hadn't been updated since it was built in 1970? And did I mention that the ceilings are not even 8' high.
People think million dollar homes must be mansions. There are loads of million dollar homes in MA that I wouldn't even consider living in if you paid me.
The OC Register reported 11% before we left, so I suppose that figure applies to Orange County - the 2nd most expensive place in America to live (2nd only to Bay area). Bubble there? You betcha!
"Can you imagine paying 325k for an apartment with two windows? "
Yours had a window??????
In L.A. 3 bedroom tract houses go for a million. If you insist on a YARD, 1.5 million : )
The cost of land is going up more than anything. And with an inflated price of 2x4s, new houses will cost more too.
The result I think is no bubble burst. Maybe flat in some places, but here in Phoenix it's obviously still a good time to buy.
Sell me your house for 20% discount? After all, it will be worth nothing tomorrow so I'm offering a good deal.
The biggest bust I've seen was in Houston in the 80's. Houses went down maybe 10%. Another "big" bust was in LA in the 90's. Houses went down maybe 5%.
Whoop de do. Big busts there.
Real estate IS NOT Wall street, and never will be.
I think this is not a clear market to predict. The population is driving as far as I can tell. I see 5-10 offers for $350,000 condos. And people moving up with all the equity they built up. So that gets them into OC.
I don't know how long this will go, but the demand should remain high at the low and low-middle.
One more phenomenon I observe is homes with three incomes. This means more families can buy higher.
This is not a popular opinion with the "sky is falling" crowd here.
When I was talking about a bust, I was talking about California, not the whole country. The Houston bust was nothing. Orange County went down more than 50% in 1991-1995. I know - I was there. We bought our condo in 1998. By 2005, it has increased in value by 350%, and we sold and left while the leaving was good. It is a bubble that is going to explode.
People are stretched to their limits - many have mortgages of $4 - $5,000/month! Taxes are in excess of $10,000/year. They live paycheck to paycheck. All it will take is higher interest rates which will bankrupt the ARM people, or a downturn in the jobs. Think about it. That cannot last. It's the very epitomy of a bubble in Orange County. I left and I'll never look back. The ONLY good thing about So. Calif. is the weather. My new State has better everything else.
Oh, was it avocado? Yes, you're right. It was hideous, that's for sure.
Right...
I lived in Corona, Azuza, Chino Hills and other locations around LA between 1986 to 1996. I remember no such tanking of real estate. Perhaps in some neighborhoods that were high growth in the 80's and became illegal mexican by the 90's could have tanked. But those were very isolated neighborhoods at best and not any kind of national problem.
In New Jersey, prices are coming DOWN.
The air is out of the balloon. Instead of saying "reduced" some are some "new price" and others are just lowering with no comment.
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