One of the best summaries of the current situation that I’ve read in a long time. Good find!

Perspective — This housing bubble only occurred in several “hot” markets – California/Florida/Arizona/Nevada. It did not happen nationwide. Homes in other parts of the country appreciated in value at a year over year rate in a much more normal manner — those areas should be fine.

So, while California’s economy is what, 7th largest in the World, and the housing bubble will definitely criple those “hot” cities exposed to the bubble, in my humble opinion, it won’t be devasating on a nationwide scale. That is of course unless more predatory lenders/banks go belly up and the unemployment rate increases all over the country.

This theory is given to you from my last reading on my crystal ball and it’s been cloudy these days — So it’s probably a load of junk. 🙂

I think that summary was well written, and accurate. I home there is a big correction, as there should be, I don’t wish suffering upon anyone, but many people threw logic out the window on this one, they became emotional, and stupid. They bought with no money down, int. only loans, adj. rates, and then refied to all hell. They bought cars, trucks, toys, even more homes with their equity. They paid absolutely ridiculous prices for their mediocre tract homes. The taxes that they now pay are even more ridiculous. The home they just bought in 05 for $500K, should easily be worth $700k in a year or two, just like the last two years, right?

They did not think logically, they forgot history. They became impatient. They said to hell with saving up money, who saves, when you can take a loan out even for your 20% down? Some were duped by friends, family, even agents, and lenders. They saw at least one person make a small fortune on owning their own home, and did everything in their powers to duplicate them. Only the monthly payment mattered, not the amount owed, but still they now “owned their own home”. They felt sorry for the renters in the community, while the renters wondered, “what’s the difference, between me and them? I pay less per month than they do, and live in a nicer home. How can they own a home, when they owe all or more than what it is worth? With an interest only loan, they don’t even pay down the principle balance, but what do I know? I just rent.”

I don’t think as many of these people will spent a lifetime paying of their bad investment, instead, I believe most in that position will just eventually walk away from their homes. Call me cold, but I won’t feel too bad for them.

Thanks for posting that interesting article mayasako.

I agree with hipmatt. Americans will just walk away from their homes and keep on consuming… That will save the economy but kill housing. Consumers will cut back but not enough to kill consumer spending.

I’ve seen enough broke people spend like crazy to know that Americans view certain things as basic necessities of life — cable TV, Tivo, movies on weekends, a newer car, new clothes, beer, soda, and of course everything that their kids clamour for. They’ll move down housing wise rather than go without.

One example that I could point to is that people would rather go without teeth (dental care) than beer or cigarettes. I’m not too worried about the consumer economy.

Trump recently started his mortgage company. I wonder how that’s going. His CEO lied big time on his resume but Trump kept him.

Not all of Trump’s properties are doing well. Specifically his development in Palos Verdes, CA is bombing:
http://la.curbed.com/archives/2006/12/trump_homes_not.php
…..as is his television show The Apprentice. No amount of fueding with Rosie O’Donnell can save that show – or sell his houses.

Pete

Nor_LA-Temcu-SD-Guy

It was not Trump doing the presentation, Trump just gives his name to these scam-athons where there will be several scam artist pitching different scam ie.. EBay, Tax liens ETC…

The only Trump that was there was his son doing a motovational speaking part (not scaming anyone but the scam artists).

I will not say what he said, Just would not try it myself.

That being said The Ebay, and Tax liens presentations actually sounded plausible.