How big is the real estate bubble?

[gemsergio]

nice little article about houses:
http://www.freemarketnews.com/Analysis/224/5267/2006-06-12.asp?wid=224&nid=5267

 

[italiandragon]

I agree with WHODATDOG.

In Australia, there is a strange thing happening: Japanese and Chinese investors are buying the best of the Queensland, Gold Coast, Sunshine Coast....the best.
So Australians buy the cheap left and retiring people are keeping the market in the West and in the South, moving from the more expensive areas like Sydney and Melbourne.
So basically some areas goes down some are still growing.
My opinion is that when Bush is out the stock market will boom again like before Bush was there, no wars for a while and real estate will drop like in 1999 for a more lucrative stock market.
Oil is the main issue but soon or later is going to finish and the financial market already knows this. It`s normal saying buy on rumors sell on news because in the stock markets everything happens before it really happens.

 

[GT Web]

A small correction and slower growth would mean that the crowd wouldn't have to pay for their unwise decision to buy at the top of the market.

Ain't gonna happen. All idiots have to pay the price....period. There has never been an asset where idiots have made money and not had to pay in the end.....ever!

Many idiots made money in the late 90's with tech stocks and many idiots have made money in hot real estate markets. When the dust settles they will all take a bath.

It is quite common to under-estimate the downside when bubbles burst. You have to remember that most people are borderline retarded when it comes to any investment. I would guess that less than 5 percent of people who own stocks in this country could even tell you how much debt their number one holding had.

I love it....makes it so easy.

You really think highly of yourself, don't you?

While I agree with most of your points, do you think you could make them in a slightly less condescending tone?

My opinion is that when Bush is out the stock market will boom again like before Bush was there, no wars for a while and real estate will drop like in 1999 for a more lucrative stock market.

What don't you think President Bush has affected? The number of koala's down under maybe - or has he been killing those too?

 

[Duckinla]

Can't imagine how the stock market is responding negatively to the Bush presidency. War is very good for economies BTW.

 

[italiandragon]

Can't imagine how the stock market is responding negatively to the Bush presidency. War is very good for economies BTW.

That`s the biggest funny thing I have never read since I became a Financial Advisor in 2000.

I hope you`ll be around here in 2008 because I will.

 

[WhoDatDog]

I said the word idiots to make a point...it was not condescending as no one here claimed to be a buyer of tech stocks or a huge buyer of real estate.

I know one thing...they will all feel like idiots. On another topic, maybe when Bill Cowher talked to Roethlisberger last year about wearing a helmet when riding his motorcycle he should have said: "Don't be an idiot, Ben".

Sometimes you need to use strong language to cut through the rhetoric....mainly garbage like "real-estate appreciation will slow in the years to come". There is a brand of Kool-Aid for most people out there, and people tend to drink what they want and put the spin on the situation that best benefits them.

In general, it is safe to say that an idiot is someone who bankrupts his or herself by investing large amounts of money into something that they do not understand. Clearly 99 percent of the Tech Stock bubble crowd has been exposed....including CNBC commentators who breathlessly counted every uptick. Remember the daily wealth-meters, where they would show how many millions the CEO's had made that day? I wonder why they don't have that anymore?

Within two years the term "Real Estate" will make a lot of people sick. I called the Nasdaq bubble at 3,000 so I was early then, and I have been calling the real estate bubble for over two years so I was early there as well. I was made to look like an idiot both times I guess, but I never had the fear of missing out while other people seemingly printed money in their sleep. That's what separates one idiot from another.

 

[Ian]

It depends which part of the World you are talking about.
I would like to point out another aspect which has been ignored--that of population demographics in the West especially in Europe. Whereas the population of the US might be increasing that of countries like Germany is on the decline. And what this might translate to in the long term less demand for houses as a lot of old people like to save for later lives. This would certainy hurt the value of real estate. Of course I agree that there can only be a fixed supply of land but the laws of supply and demand will apply when it comes to the markets.

 

[Duckinla]

Within two years the term "Real Estate" will make a lot of people sick. I called the Nasdaq bubble at 3,000 so I was early then, and I have been calling the real estate bubble for over two years so I was early there as well. I was made to look like an idot both times I guess, but I never had the fear of missing out while other people seemingly printed money in their sleep. That's what separates one idiot from another.

You and I are in the same boat here. I tend to be too pragmatic for my own good...in the short run. I remember seeing NASDAQ hitting 5,000 and thinking there must be something wrong with my logic process. I always underestimate lunatic trends, how long they will run and how far they will go.
I just got a home delivery of groceries from Albertsons and it reminded me of the tech trend. A couple of companies like Peapod.com set up $100 million organizations to deliver groceries. Always made me scratch my head. If this was such a good and necessary thing, couldn't Albertsons do it with a $20,000 web site? Suddenly the most mundane business were clever and intregiung because they were going to be done on the internet! Like people weren't buying groceries before.

With land I still wrestle with the population growth. Places like Austin, TX are twice the size they were when they had their last big downturn. Where will people live? Will this push up rents? Won't that bring balance back to the housing market? In L.A. people are already pushing the limits of how far away they can live and still commute to their jobs in the city. You can't really build much farther out.

 

[GT Web]

You and I are in the same boat here. I tend to be too pragmatic for my own good...in the short run. I remember seeing NASDAQ hitting 5,000 and thinking there must be something wrong with my logic process. I always underestimate lunatic trends, how long they will run and how far they will go.

I am usually like that as well...and look on the positive side, predicting a down turn in the market (of whatever asset you own) a year early and losing $1000 is much better than predicting a down turn a year late and losing $10,000.

ItalianDragon needs some economics classes...war is often the quickest way for an economy to grow. World War II was one of the major reasons the West broke free of the Depression in the 1930s.

 

[Duckinla]

ItalianDragon needs some economics classes

Italiandragon needs to be ignored until he can make a logical arguement and defend his statements.

Well maybe that's a little rough but many statements seem like a hand grenade tossed out just to get a reaction.

 

[Beachie]

I am usually like that as well...and look on the positive side, predicting a down turn in the market (of whatever asset you own) a year early and losing $1000 is much better than predicting a down turn a year late and losing $10,000.

ItalianDragon needs some economics classes...war is often the quickest way for an economy to grow. World War II was one of the major reasons the West broke free of the Depression in the 1930s.

In fact, war is historically good for both the winners and losers. Germany and Japan had far superior industry after they lost the war. Not that I think Iraq is going to follow in their footsteps.. :-D

Housing is, to an extent, driven by population, so prices will always increase over time if you average out the "seven-year" cycle. The key word there is 'average'. Where you get bitten is when the interest rates rise and people are forced to sell out at the bottom of the cycle. Anyone else here remember the 17% interest rates we had in the late 80's?

 

[Duckinla]

Yep, and that is a hell of a time to have cash to buy properties. When rates are that high you can buy homes and rent them out the next day at a nice positive cash flow.

Just a suggestion for those who think rates are going to rise in the U.S. Put your money where your mouth is and buy the fund RYJUX. I've done it myself because I believe rates are at unreasonably low levels. It moves inverse to the value of long-term U.S. treasury bonds. If the interest rates go up, the value of the fund goes up accordingly. It think it is a great long-term risk/reward opportunity. Rates go from 5% to 4% you lose 20%. But if rates go from 5% to 7.5% you make approx. 50%.

 

[gmac17]

Within two years the term "Real Estate" will make a lot of people sick... I have been calling the real estate bubble for over two years so I was early there as well. I was made to look like an idiot both times I guess, but I never had the fear of missing out while other people seemingly printed money in their sleep. That's what separates one idiot from another.

I don't get it - you talk about how stupid everyone else is but then admit how bad your own predictions have been. If I had listened to you, I wouldn't have bought my condo in NYC 2 years ago which I sold last month for a nice profit.

So you are less of an idiot because you feel that you understand the market more than other people?

 

[WhoDatDog]

I was being humble by saying that even though I was right about both bubbles that I was also and idiot....just to make a point. You got lucky with your New York Investment...if real estate isn't your main business. It is people like you who led the neighbors to slaughter while chatting up your real estate gains at cocktail parties. A few people get lucky in every bubble but sooner or later your bubble will burst. I definitely understand real estate more than most people and I would venture to say that eventually you will be left holding the bag...maybe it will be the next bubble, but it will happen.

But I don't really care...I protect myself and look out for myself.

 

[WeBuyThe.Com]

CNN: Harvard says housing markets will moderate....

The housing market is entering a down cycle, according to a report from Harvard's Joint Center for Housing Studies, but is unlikely to undergo a severe reversal.

http://biz.yahoo.com/cnnm/060613/061306_harvard_study_housing_slow_growth.html?.v=1

 

[VioxxLawyers]

http://www.exitmundi.nl/oilcrash.htm

http://www.guardian.co.uk/life/feature/story/0,13026,1464050,00.html

 

[Duckinla]

A small correction and slower growth would mean that the crowd wouldn't have to pay for their unwise decision to buy at the top of the market.

Ain't gonna happen. All idiots have to pay the price....period. There has never been an asset where idiots have made money and not had to pay in the end.....ever!

Hmmm, interesting logic. Different, but interesting. Bubbles really make you angry, eh Dog?

 

[BostonDomainer]

Ain't gonna happen. All idiots have to pay the price....period. There has never been an asset where idiots have made money and not had to pay in the end.....ever!

Uhmmm... I think you forget about DOMAINS and the DOMAINS industry.... more idiots have gotten rich off this asset then any other assets ever available to idiot across the globe. Hell.... I'm which I was the idiot that owned IPOD or had thought of del.icio.us as a workable domain. This country is great because of idiots! And I am a proud idiot waiting to strike it rich!!! lol Bubbles came and went in our industries too. Some idiots made off well... some didn't. I'm a proud 'idiot' who hasn't paid the price yet :crazy: yet still making money. :lalala:

 

[WhoDatDog]

I really don't care too much. Everything plays out the way it should. Bubbles are great, and those who bought the asset before the bubble are usually smart enough to sell into it. There is no argument that can defeat someone who bought during the bubble, but time usually takes care of that.

Domains aren't even close to the bubble stage. Maybe in 5 years. Only a small percentage of people in the whole world have an appreciation of what domains are all about. A very small percentage of domainers have the basic understanding of why domains are back on the radar in the last few years. Most people in the business are so far removed from the good names that can change your life forever anyways. It took me about 8 months to sell all of my least favorite names that I bought early on, but most of those names were better than what I see on the boards today.

Dotcom is King!

 

[gmac17]

A few people get lucky in every bubble but sooner or later your bubble will burst. I definitely understand real estate more than most people and I would venture to say that eventually you will be left holding the bag...maybe it will be the next bubble, but it will happen.

and by "a few people" do you mean anyone who has purchased real estate in Florida, California, NYC, Boston etc. in the past 10 years?