Study: Tech, not spec, fueled U.S. housing boom

[uncledrz]

Wow. How did I do something right for a change??

I put the blame directly on the wisdom and sage advice from this community!

 

[greg]

Heh, I dunno, I think the big, fat textbook on my desk is even more fascnating: "Financial Institutions Management: A Risk Management Approach"

Seriously, an interesting and very readable book on how bubbles play out is "Devil Takes The Hindmost". IIRC, it was written befoe the dot bomb unfolded, but it starts with the tulip craze and covers most of the other big bubbles since.

Brewer: Been there, done that. I already have a series of cascading sells/buys/holds in preparation for implantation of the new tulip bulbs. My forcast on RE is a 3-7% drop/yr for 5-10 years--the middle way. I'm prepared for this. May be worse, may be better. Who knows? Jekyll is a tale from the darkside.

(Slightly off-topic maybe: All those mortgage companies such as Countrywide have packaged up their mortgages and sold a lot of them off. Spreading the risk, as Greenspan used to say. Most have ended up in pension funds or are owned by foreigners. This risk may hurt the 'forclosure walkaways' more than they think. Or other pensioners? What's in your wallet pension fund? )

 

[janeofalltrades]

I am so glad I have positioned my self to be able to sit back and not worry about how to pay my mortgage.

Amen!

 

[al_bundy]

Uhuh, but who regulates the banks?

uh, the government

but from what i heard the federal reserve has had a lot of trouble trying to get lenders to stop with the short term financing

 

[FinanceDude]

Heh, I dunno, I think the big, fat textbook on my desk is even more fascnating: "Financial Institutions Management: A Risk Management Approach"

Hey, I had that book.............I think it's missing...................

When I took my ARM test in the 80's (didn't pass), they had us do case studies about risk management...........and all the examples were about banks and Savings and loans.................

 

[al_bundy]

there's likely a semantics problem here ... a bubble is defined by "pure speculation" ie speculation upon speculation.  if the price rise is caused by "fundamentals", it's not a bubble.  In the case of housing, i'd guess there is some pure speculation, but the authors of the study are not-so-simply concluding that there's more to it than that, and hence it's not a "bubble".

a lot of it was pure speculation. back in 2003 or 2004 i was watching the evening news and they profiled a couple who wanted a nice house they couldn't afford. so they bought using ARM and planned to sell when it reset. if NBC news found out about it, then it was probably done by a lot of people before.

the official numbers I've read showed that california had a rate of 75% of all mortgages last year were some type of ARM. nationwide it's around 25% up from single digits several years ago. I think in the next 2 years we will find out just how so many people who make less than $100,000 a year were able to afford $400,000 homes