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| 5/24 |
| 2005/3/11 [Finance/Investment] UID:36654 Activity:high |
3/11 Housing Bubble About To Pop:
http://csua.org/u/bc9
\_ My favorite troll! You just made my day.
\_ Housing prices will increase until population growth stops.
\_ Hey, how long ago did you first posit that the housing bubble
was about to pop? -tom
\_ About a year ago. I also told everyone that tech stocks were
overvalued in 1998. Turns out I was right about that one, too.
\_ Good job, Karnak. No one could have forseen the business-
plan-less tech bubble bursting.
\_ The funny thing about financial markets is that they
naturally tend to ebb and flow; sometimes quite radically.
A funny think about know-it-all engineers is that in their
desire to prove their worth and be right, they ignore the
fact that if you say the say thing consistently for a long
enough span of time, you'll eventually be right.
\_ Gee, you're brilliant; so you told people they should have
sold a year before their houses went up 20% in value, and
they should have gotten out of NASDAQ before their
investments more than doubled in value in just 2 years.
Maybe you should run a mutual fund. -tom
\_ If you got out in 1998 and put your money in savings,
you would be better off than if you held on to today.
Sure, I missed the bubble, but I missed the crash, too.
\_ wrong; the money I had in the market in 1998 earned
a lot more than a savings account would have. (And
it paid for my house in 1999, which has since also
doubled in value). I'm sure you're doing just great
with your 2.5% annual return. Have fun. -tom
\_ Nasdaq in 1998 = 2000. Nasdaq today = 2000.
I got a nice CD in 1999 that paid me 6% for
five years. I will probably put that money back
in the market now.
\_ You are not only a moron, you are completely
full of shit. The average price of the Nasdaq
in 1998 was less than 1800, and its low was
below 1600. If you bought indexes at 1600 and
sold at 2000, that's a 25% increase; even if
you were completely asleep for the past 7 years
and didn't take any of your profit when you were
up over 100%.
And CDs were not paying 6% then or now.
Here's a real-world scenario; put $20K into
Qwest at 34, sell at 91 in less than 2 months,
use that money as down payment on a house, and
see that leveraged investment rise to a value
over 10 times the initial outlay.
How's that fictional 6% CD looking now?
Incidentally, even if you don't include this
transaction, my portfolio is worth more now
than it was at the market peak in 2000, and at
least 3 times what it was worth in 1998. -tom
\_ http://www.moneycafe.com/library/compare.htm
I got 5 yr 6% CD from my credit union in 1998.
Too bad you can't accept that fact. I am glad
you got lucky speculating in the bubble market,
but most people got burned. If you took $20k
to Vegas and bet it all on black and won,
that would be about the same thing. If you
\_ Uhm, no -- only if you have the financial
savvy of a kumquat. The primary category
of people that got burned were
non-financially savvy engineers with stars
in their eyes. Your comparison highlights
your wishful thinking wrt your own choices.
Get over it, son.
have really tripled your investment in 7 years
without adding any new money, it is you who
should be opening a mutual fund.
Nasdaq on 12/31/1998 - 2100+
http://csua.org/u/bcc
\_ How are those grapes? Probably a little
sour, right? -tom
\_ No, I actually feel very lucky to have
escape the crash that devastated the
finances of so many around me.
\_ hey cmlee, if that's you could you
sign your name, so we know we're
dealing with the true anti-analyst?
-tom
\_ Q trades at $3 today, much much
less than what you bought it at,
by the way. Was it overvalued in
1998 or undervalued today?
\_ I think it was a reasonable
purchase at $34. Not all
reasonable purchases work out.
-tom
\_ I think housing is way overvalued but it's because people
with money have dumped it into real estate and it's feeding
on itself. How would it pop though? Are there large numbers
owners waiting to flip their property for cash? They keep
dumping it back into the market. Maybe if we get some
major economic Thing happen. Inflation? Don't homeowners
do well in inflation?
\_ inflation -> interest rates rise -> recession -> pop!
\_ I agree that prices will come off the peaks, but
the question is how much. If my house loses 50%
of its current value I am still even or perhaps
even better if one considers the deductions I've
made. |
| 5/24 |
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| csua.org/u/bc9 -> www.washingtonpost.com/wp-dyn/articles/A54743-2005Feb25.html?sub=AR All RSS Feeds Michael Kinsley Bye-Bye, Housing Boom By Michael Kinsley Sunday, February 27, 2005; It is obvious to me that today's real estate prices are a speculative bub ble that is bound to burst. Of course, this has been obvious to me for a bout three decades and wrong almost all of that time. The boom is over when more people are bored by real estate anecdotes ("My next-door neighbor got th ree times her asking price before she even put it on the market, from a professional mind reader who divined that she was thinking about selling . Sign Up Now Another reason the value of your house is about to plunge is that the Los Angeles Times, the New York Times and The Washington Post all say that it isn't. A recent LA Times article reported that the median price of a local house had gone up only 17 percent in the past year. To describe a 17 percent annual increase as a "slowdown" assumes that a nnual gains of 20 percent or more are the norm. And the evidence for "ma y not last" is quotes from real estate agents whistling in the dark. You've got a bubble when today's prices assume large future increases. If you think prices will be 20 percent higher in a year, you'll be willing to pay 19 percent more today. But if others share that belief, today's price will already be 19 percent higher. Betting on appreciation makes s ense only if you are even more optimistic than other buyers. In Washington, where house prices have doubled in five years, The Post sa ys, "Experts Predict Steady Gains in 2005, but More Moderate Than in Pas t Years." But whatever "experts" say, it is not the nature of price expl osions to segue gracefully into more moderate growth. When today's run-u ps are based on beliefs about tomorrow's run-ups, the self-feeding frenz y goes into reverse when those assumptions are dashed. "In Housing Sales, Fr enzy is Giving Way to Balance," it says. And it reports from suburban We stchester County that "Housing Market Is Still Going Strong." In 2004 th e median sales price rose from $564,000 to $645,000. "More and more fami lies are seeing the residential real estate market as the best and safes t place for their money," a real estate agent says. And the article adds chirpily, "Even the ongoing problem of a lack of houses for sale in Wes tchester eased somewhat last year." Like a roller coaster, a financial bubble has a moment of eerie stillness at the top. Whe n the New York Times spins a surplus of unsold houses as a sign that "th e ongoing problem of a lack of houses for sale" has been solved, it mean s that you had better not count on the Times to tell you when it's time to bail. All the housing in the United States is worth a bout $14 trillion. If the value of existing housing (not counting new co nstruction) goes up 7 percent this year, which is the recent national av erage, homeowners will seem to be about a trillion dollars richer. That trillion dollars comes partly from non-homeo wners, who must pay more to buy in. If many c urrent homeowners tried to cash in, the drop in prices would quickly wip e out that trillion. When the price of something goes up, two things happen: the economy start s to produce more of it, and existing units are worth more. For most of what we buy, the first effect overwhelms the second and constrains it. A rise in the price of a can of tuna fish does not produce many self-sati sfied anecdotes from people who have a third of their net worth in Chick en of the Sea. But real estate is different, mainly because it requires land. Perusing the real estate ads like pornography and imagining what our hous es are worth is the great American pastime. But a real estate crash, if it came, would have some advantages. The 19th-century American Henry Geo rge explained how rising real estate values harm the economy by operatin g as a tax on both labor and capital. There are all sorts of complications and qualifications, but the basic point is a good one. People do foolish things under the impression that they are getting riche r because their houses are worth more. Egged on by television commercials, they "consolidate their debts" (ie , buy a new boat) with a second mortgage. The only beneficiaries are those who are selling their la st house, after a lifetime of appreciation. This is yet another thank-you from America to the so- called Greatest Generation. The writer is editorial and opinion editor of the Los Angeles Times. |
| www.moneycafe.com/library/compare.htm Other Financial Services Historical Rate Comparison of Adjustable Rate Loan Indexes See comparison graphs below or click on link for current rates and detail ed data. |
| csua.org/u/bcc -> finance.yahoo.com/q/hp?s=%5EIXIC&a=11&b=30&c=1998&d=11&e=31&f=1998&g=d All information provided "as is" for information al purposes only, not intended for trading purposes or advice. nor any of independent providers is liable for any informational e rrors, incompleteness, or delays, or for any actions taken in reliance o n information contained herein. site, you agree not to redistribute the information found therein. |