Originally posted by: Vic
Originally posted by: dirtboy
If what you said happens, it will be the first time in American history such events happen following a real estate bubble. History tells us that LegendKiller is correct, but the market will take 4 years to go in the crapper, not 1.
Which history? Historically, home values have always gone up -- even without this latest boom.
There's no gravity in financial markets. And any realtor who actually needs an open house to sell a home is an incompetent whore.
Sigh, do you actually read or do you just ignore everything that goes contrary to what you actually think is reality?
Shiller, in the 2nd edition of Irrationa Exuberance, has shown that the national average HAS gone down several points in history, whether that is because of inflation or not, it *HAS* gone down. Ignoring that fact is foolish. It HAS gone up from 1890 to 1995 or so, but only by 20%. In the following 10 years, it went up 80%. How the hell is that justified? Guess what, IT ISN'T. Projected out, we should have only grown an additional 2% in that timeframe. But guess what? We blew past that by 40x. That means that houses are approximately 63% overpriced, on average.
Do I think prices will do down 63%? In some areas yes, but in the vast majority I think we will see a 20-30% decline followed by a long period of stability, within 3 years at 30% decline + inflation we will have reached approximately 45% of the benchmark, 18% more, or about 4 more years we will finally reach the mean. I think we might even undershoot the mean and extend out another 2-3 years. So I think the total cycle will last 10 years, with us being about 6mo into that.
Furthermore, there have been several areas that have gone down significantly, boston and LA namely, but those were also boom/bust job markets but relatively heathly lending markets. What happens if the lending markets *AND* the job markets go down? Oops.
Vic, I work in lending, securitization to be exact, I study the financial markets in detail for fixed income securities. It doesn't look pretty. People ignore that many countries have gone through this *EXACT* same thing. The UK creditors are stroking out right now, facing severe regulatory conditions, having to pump massive reserve funds into failing trusts and reserve regulatory capital at record levels. Yet nobody thought this situation would never happen.
People are stupid about these things. They refuse to acknowledge that people have overborrowed, over extended, and overpaid. They believe that the good times will keep going or that history has shown prices have never decreased. That is plain and simple bullcrap that Realtors and Mortgage Brokers love to spread.
Don't believe me? Fine. Nobody believed me 2 years ago that the market would go down and now they are saying it'll stay steady. Nobody believed Warren Buffet in 1999 either, nor Alan Greenspan or Shiller. Fine by me, the suckers will bitch in another year or two, complaining that nobody said anything.
They did, just as they did in 1999/2000, but nobody would listen.
. And I currently work in Worcester still, so I know quite well of Shrewsbury.
Facebook
Twitter