csua.org/u/bhu -> www.nytimes.com/2005/03/25/business/25boom.html?hp&ex=1111813200&en=a7317cf9a6c619c6&ei=5094&partner=homepage
Trading Places: Real Estate Instead of Dot-Coms Douglas Paul, 46, at his home near Fort Lauderdale, Fla. He now has three other properties in South Florida and plans to sell one in June. Barbara P Fernandez for The New York Times Douglas Paul, 46, at his home near Fort Lauderdale, Fla. He now has three other properties in South Florida and plans to sell one in June.
Go to Complete List R eal estate-crazed Americans have started behaving in ways that eerily r ecall the stock market obsession of the late 1990's. Buying stocks on margin has mo rphed into buying homes with no money down. The over-the-top parties of Internet start-ups have been replaced by flashy gatherings where develop ers pitch condos to eager buyers. Five years ago, the cable channel CNBC sometimes seemed like a backdrop t o daily American life. Its cheery analysis of the stock market played in offices, in barbershops, even in some bars. Today, "Dude Room," "Toolbe lt Diva" and other home-improvement shows are the addictive fare that CN BC's exuberant stock shows once were. "It just seems like everyone is doing it," Laurie Romano, a 26-year-old s elf-described real estate investor, said with a giggle as she explained why she was attending an open house this month for the Nexus, a 56-unit building going up in Brooklyn's chic Dumbo neighborhood. She and her fia nc, a dentist, had already put down a deposit on a Manhattan condo earl ier in the week and had come to look at another at the Nexus. Nobody can know whether the housing boom of the last decade will end as t he dot-com frenzy did. But the parallels are raising alarms among many e conomists, even those who acknowledge that there are important differenc es between homes and stocks that significantly reduce the chances of ano ther meltdown. For one thing, houses are not just paper wealth: you can live in them. Still, perhaps the most troubling similarity, some analysts say, is the c laim that the rules have somehow changed. In an echo of the blas attitu de that "new economy" investors took toward unprofitable companies, the growing ranks of real estate investors are buying houses they never expe ct to be able to rent at a profit. Instead, they think the prices of hou ses will just keep rising. Indeed, the government reported yesterday that sales of new homes jumped sharply in February, in the biggest monthly increase in four years. A st rong economy and an improving job market contributed to the gain. But ma ny buyers were also trying to beat rising mortgage rates, which could ev entually cool the market. Adding to the parallels between stocks and housing, some of the doomsayer s from the 1990's have returned with new warnings. "We're going through something very similar in real estate that we did wi th stocks," said Robert J Shiller - a professor of economics at Yale, w hose prescient book on stocks, "Irrational Exuberance" (Princeton Univer sity Press, 2000), appeared just a few months before technology stocks b egan their slide. "It's driven by the same forces: that investments can' t go bad; A new edition of Mr Shiller's book will be published next month. The cov er promises an "analysis of the worldwide real estate bubble and its aft ermath." Premonitions of a bubble on the verge of popping do not ruffle those who are bullish on real estate. In Miami, Ron Shuffield, president of Esslin ger-Wooten-Maxwell Realtors, predicted that a limited supply of land cou pled with demand from baby boomers and foreigners would prolong the boom indefinitely. "South Florida," he said, "is working off of a totally new economic model than any of us have ever experienced in the past." The can't-miss aura of real estate has also helped nudge many families to invest more of their personal wealth in real estate by buying more expe nsive homes and taking on riskier mortgages - much as ordinary workers u sed their 401 plans to bet on company stocks. There are certainly serious reasons to believe that house prices will not suffer the fate of technology stocks. Not only are houses more tangible , but people do not sell their homes as quickly as stocks, making a pani c much less likely. Because of tax advantages, few owners are likely to sell and rent something else simply because local house prices start to decline. As high as they might seem now on the coasts, home prices nationally have not quite doubled over the last decade; during the 1990's, the Standard & Poor's 500-stock index more than quadrupled.
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