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Re: This is nuts
Old 06-01-2005, 10:53 PM   #21
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Re: This is nuts

I would have to agree with some of the ex-sperts, some areas are bubblish most are not. It seems most people are looking at the prices of houses and the fact that it takes two incomes to afford the prices. Many if not most housholds have been two income since WWII, I doubt that will change anytime soon. In most areas, unlike the late 90's early 2000's stock market, the fundementals support the price of the houses.

But just in case I'm wrong about the bubble I'm throwing most of my portfolio into the stock market. Nobody is paying attention to it right now. The ones who are complain that it isn't doing anything. Give it a few years, if the "bubble" bursts peope will start putting money back into the market and watch it go nuts again. If there isn't a bubble my house will be valued high enough to retire to a small plot of acrage in the country some where.

Kind of off topic. Did anyone see the report that many high schools are experiencing a large influx of students. To me it sounds like the employee pool will be growing in the near future, further increasing house prices.
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Re: This is nuts
Old 06-01-2005, 11:46 PM   #22
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Re: This is nuts

There was an interesting discussion on NPR last night (this am) about housing prices. The host was a gal out of Georgetown. Basically, housing prices are driven by local demand.
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Re: This is nuts
Old 06-02-2005, 07:16 AM   #23
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Re: This is nuts

Quote:
Originally Posted by Brat
There was an interesting discussion on NPR last night (this am) about housing prices.* The host was a gal out of Georgetown.* Basically, housing prices are driven by local demand.
I remember in the mid-90's, there was local "concern" that middle eastern proprietors were invading the Georgetown business scene. You could get a cute (but tiny) federal townhouse for as low as $150K.

Quote:
Originally Posted by retire@40
Now I think we have a bubble on the bubble, but maybe I'm wrong again.
maybe this is the froth that Mr. Greenspan refers to...

Couple of things wondering about...
-if many loans in certain areas are interest only with no money down, then when the foreclosures come (and they will) won't the banks try to recup. at cost so that the foreclosed price be not such a bargain?

-if these loans are interest free for the first 5-10y, then barring any change in the overall economic scene/job availability, would it be conceivable that prices cont for the next few- (10 minus a couple) years until the "reckoning" arrives?

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Re: This is nuts
Old 06-02-2005, 08:38 AM   #24
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Re: This is nuts

Back in the early 80s I spent a lot of unhappy time at work foreclosing on peoples' homes. With the very high interest rates and a struggling local economy, a lot of people were upside down on their homes.

In Minnesota, you can foreclose the "hard" way or the "easy" way. The hard way involves getting a judgment for the amount of the debt, foreclosing the house, and if the foreclosure price is less than the judgment, the lender would have a deficiency judgment against the borrower for the difference. Often this ended up driving the borrower into bankruptcy when the lender tried to collect the deficiency judgment. The easy way just involved a foreclosure sale and didn't allow for a deficiency judgment.

Most lenders took the easy route, foreclosed and then sold the house as fast as possible for whatever they could get.

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Re: This is nuts
Old 06-02-2005, 09:32 AM   #25
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Re: This is nuts

Quote:
Originally Posted by P.S.
I remember in the mid-90's, there was local "concern" that middle eastern proprietors were invading the Georgetown business scene.* You could get a cute (but tiny) federal townhouse for as low as $150K.

maybe this is the froth that Mr. Greenspan refers to...

Couple of things wondering about...
-if many loans in certain areas are interest only with no money down, then when the foreclosures come (and they will) won't the banks try to recup. at cost so that the foreclosed price be not such a bargain?

-if these loans are interest free for the first 5-10y, then barring any change in the overall economic scene/job availability, would it be conceivable that prices cont for the next few- (10 minus a couple) years until the "reckoning" arrives?

1) That's great until rates rise and payments go up materially. Remember that most of these loans involve interest rates tied to 6 month LIBOR or something similar. That rate has gone up a lot in the last year and will likely continue to rise. Only a matter of time until borrowers who were stretched to buy with these loans in the first place start defaulting. When the actual principal payments kick in, watch out below.

2) Banks hate having OREO (other real estate owned) on the balance sheet. They do not want to sit on a bunch of single family homes that are empty, so they sell quickly. They get whatever market price is. If there was little borrower equity (or negative equity), te bank takes it in the shorts.
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Re: This is nuts
Old 06-02-2005, 10:53 AM   #26
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Re: This is nuts

Quote:
Originally Posted by brewer12345
6 month LIBOR
Totaly off topic here, but what would happen if the UK adopted the Euro (big IF, I know...)? Wouldn't that be the end of the LIBOR (since the EU CB would then have the power to set rates)? If this is the case, then what about all those credit cards and loans tied to the LIBOR rate as published in the NY times on the first new moon of the second month?
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Re: This is nuts
Old 06-02-2005, 11:16 AM   #27
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Re: This is nuts

Quote:
Originally Posted by Marshac
Totaly off topic here, but what would happen if the UK adopted the Euro (big IF, I know...)? Wouldn't that be the end of the LIBOR (since the EU CB would then have the power to set rates)? If this is the case, then what about all those credit cards and loans tied to the LIBOR rate as published in the NY times on the first new moon of the second month?
Probably nothing, since LIBOR has nothing to do with govt set rates. LIBOR is established via the market, not the UK govt.
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Re: This is nuts
Old 06-02-2005, 11:22 AM   #28
 
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Re: This is nuts

Quote:
I've been calling the housing bubble (wrong) since 2003. Now its even higher.
Can you believe _average_ house prices (for home resales I believe) were up across the country some 15% year-on-year in the latest stats. If the average is up 15%, there must be some wacked out appreciation in some parts of the country. Feels bubble-like to me.
ESRBob,

You remember back in 1997-98 when Buffett and Templeton were getting out of the market. They called the slump too early also.
I can't remember who said it But the secret to one investor's success was that "he always sold too early".

One thing that surprised me was that 37% of all the homes sold in the U.S. last year were Second Homes. A lot of speculation going on!I would not be buying real estate at these high prices for investment purposes

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Re: This is nuts
Old 06-02-2005, 11:26 AM   #29
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Re: This is nuts

Quote:
Originally Posted by brewer12345
Probably nothing, since LIBOR has nothing to do with govt set rates.* LIBOR is established via the market, not the UK govt.
Did not know that... for some reason I just assumed that since it was the inter-bank rate, that it was set by their equivalent of 'the feds'. You know what they say when you assume...
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Re: This is nuts
Old 06-02-2005, 12:16 PM   #30
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Re: This is nuts

Quote:
Originally Posted by Cut-Throat
ESRBob,

You remember back in 1997-98 when Buffett and Templeton were getting out of the market. They called the slump too early also.
I can't remember who said it But the secret to one investor's success was that "he always sold too early".

One thing that surprised me was that 37% of all the homes sold in the U.S. last year were Second Homes. A lot of speculation going on!I would not be buying real estate at these high prices for investment purposes

Sounds like the Tulip market to me! Ye-Gads, 37%!! But money is still so easy to come by, I think it's still got a couple years left. And it is regional, my buddy lives in Deleware, his parents bought their house 10 years ago for $80k, he just bought his for $127k, so pretty flat there.
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Re: This is nuts
Old 06-02-2005, 12:53 PM   #31
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Re: This is nuts

Riiiiiiiiiight! Follow the money = follow the dang boomers. "I have some Florida swamp land for you" used to be a joke.

Not anymore!

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Re: This is nuts
Old 06-02-2005, 01:17 PM   #32
 
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Re: This is nuts

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Riiiiiiiiiight! Follow the money = follow the dang boomers. "I have some Florida swamp land for you" used to be a joke.

Not anymore!

Those cliffs in Laguna Beach, Ca are not lookin too good right now.
I bet you can pick up one of those rather cheap. Especially the ones that fell down the hill. Heck they would probably pay you to take them away!
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Re: This is nuts
Old 06-02-2005, 01:48 PM   #33
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Re: This is nuts

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Originally Posted by Cut-Throat
No one is excited about the stock market, and that is the only thing that makes me somewhat comfortable with it. High P/E's and all.
I dont think most people like dog crap too much, but I'm not going to invest in it
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Re: This is nuts
Old 06-02-2005, 02:36 PM   #34
 
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Re: This is nuts

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I dont think most people like dog crap too much, but I'm not going to invest in it
Nope, Dog Crap is not an asset class that I track or consider.
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Re: This is nuts
Old 06-02-2005, 03:22 PM   #35
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Re: This is nuts

JG gives it away for free...
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Re: This is nuts
Old 06-02-2005, 03:26 PM   #36
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Re: This is nuts

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JG gives it away for free...
Even has free home delivery.
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Re: This is nuts
Old 06-02-2005, 07:34 PM   #37
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Re: This is nuts

Quote:
Originally Posted by Cut-Throat
I can't remember who said it But the secret to one investor's success was that "he always sold too early".
Asked how it was that he was so successful in the stock market, Bernard Baruch replied, "I always sold too soon."

Which isn't exactly true considering all the inside info he bought.

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Re: This is nuts
Old 06-03-2005, 10:43 AM   #38
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Re: This is nuts

Selling early works for me... 'on wall street, bulls make money, bears make money, pigs get slaughtered'

Spoke with by landlord brother last week: he mentioned that it is hard to get good tenants these days since with interest rates so low, anybody who has anything on the ball is buying instead of renting.

Now of course, those of us really 'on the ball' here are thinking we might be better of renting than owning, but that is pretty drastic and I'm sure that will be a minority.

But if 37% of these homes sales are second homes, does that mean these are all being rented? Or are they truly sitting idle waiting for people to come to them on the weekend or something. Or are people just 'warehousing' these things to sell later? Seems like a curiouslyl high statistic to me. If rented, it could help keep rents even lower.


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Re: This is nuts
Old 06-03-2005, 11:43 AM   #39
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Re: This is nuts

Quote:
Originally Posted by ESRBob
But if 37% of these homes sales are second homes, does that mean these are all being rented? Or are they truly sitting idle waiting for people to come to them on the weekend or something.* Or are people just 'warehousing' these things to sell later?* Seems like a curiouslyl high statistic to me.* If rented, it could help keep rents even lower.
They can't all be rented. US has something like 67% home-ownership (owner-occupied). Lots of renters rent in large apartment complexes. Home ownership is rising- so I don't see how the addtional 37% of sf units that will not be owner-occupied could find renters- unless they are all new immigrants.

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Re: This is nuts
Old 06-03-2005, 01:33 PM   #40
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Re: This is nuts

Quote:
Originally Posted by ESRBob
Or are people just 'warehousing' these things to sell later?* Seems like a curiouslyl high statistic to me.* If rented, it could help keep rents even lower.
A few months ago we went to a FSBO Open House. The owner had bought the place in 2003 in the mid-$400Ks, left it vacant for two years, and sold for $645K. I think he had very high equity and very little debt tied up for a gross ~60% return over two years. (And some of you guys think that I have an appetite for risk.)

Oahu's median single-family home prices just went over $600K. That's nearly 12% since April.
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