A few observations.

[Bugs]

As more or less rational people we’d like to think that other people think and behave in a similarly rational fashion. Unfortunately, it’s been my experience that while individuals are often smart, “the people” are as dumb as a bag of rocks and have a memory span that’s half as long.

After the last bust I was SURE that the lesson had been driven home and that people would never make those mistakes again. I was so wrong about that the measure is in magnitudes, not percentages.

The one element that might change the way “the people” operate in the future is the increased availability of the information and opinions. By the time this bust is over a lot of the losers are going to look back to see where they went wrong. When they do, they’ll see that there were people who KNEW in advance that all this was going to happen and they’ll see what types of data and analysis could have prevented their losses. At least some people will learn from their mistakes.

It could be that the shills won’t be as able to exploit the stupidity of the masses because the level of knowledge among the masses will increase. Unlike with other financial investments it is completely possible for a real estate investor to know what they’re getting into without having to rely on information or promises made by the sellers of real estate.

If the cycles flatten out as a result of a more informed market that means the lows will never go that low and the highs will never go that high. If so, it really could be 20 years before some of these people could get out from under their 2005 purchase prices.

[Bugs]

As more or less rational people we’d like to think that other people think and behave in a similarly rational fashion. Unfortunately, it’s been my experience that while individuals are often smart, “the people” are as dumb as a bag of rocks and have a memory span that’s half as long.

After the last bust I was SURE that the lesson had been driven home and that people would never make those mistakes again. I was so wrong about that the measure is in magnitudes, not percentages.

The one element that might change the way “the people” operate in the future is the increased availability of the information and opinions. By the time this bust is over a lot of the losers are going to look back to see where they went wrong. When they do, they’ll see that there were people who KNEW in advance that all this was going to happen and they’ll see what types of data and analysis could have prevented their losses. At least some people will learn from their mistakes.

It could be that the shills won’t be as able to exploit the stupidity of the masses because the level of knowledge among the masses will increase. Unlike with other financial investments it is completely possible for a real estate investor to know what they’re getting into without having to rely on information or promises made by the sellers of real estate.

If the cycles flatten out as a result of a more informed market that means the lows will never go that low and the highs will never go that high. If so, it really could be 20 years before some of these people could get out from under their 2005 purchase prices.

[kewp]

Well, hopefully the *lenders*, being the supposed professionals, will learn and remember their lessons and not lend people with no jobs $500k in order to by overpriced, bubbly assets.

[kewp]

Well, hopefully the *lenders*, being the supposed professionals, will learn and remember their lessons and not lend people with no jobs $500k in order to by overpriced, bubbly assets.

[DaCounselor]

“There isn’t anyone who can say what interest rates and employment are going to look like 5 years from now, let alone farther on down the line.”
_______________________

This is the key point. If we can’t predict 5 years out, then there’s surely no way to know what will be going on in 20 years. I think most folks understand this and don’t dwell on the vast future unknown, but instead focus on now and things they can control.

[DaCounselor]

“There isn’t anyone who can say what interest rates and employment are going to look like 5 years from now, let alone farther on down the line.”
_______________________

This is the key point. If we can’t predict 5 years out, then there’s surely no way to know what will be going on in 20 years. I think most folks understand this and don’t dwell on the vast future unknown, but instead focus on now and things they can control.

[PD]

We also focus on data. The data we have dissected here on Piggingtons indicates that there is a very large probability of a significant downturn in real estate prices…..starting in 2005.

[PD]

We also focus on data. The data we have dissected here on Piggingtons indicates that there is a very large probability of a significant downturn in real estate prices…..starting in 2005.

[kewp]

“I wonder when the foreigners will stop financing our debt?”

It’s happening right now!

http://www.europac.net/externalframeset.asp?from=home&id=8888

[kewp]

“I wonder when the foreigners will stop financing our debt?”

It’s happening right now!

http://www.europac.net/externalframeset.asp?from=home&id=8888

[Bugs]

DaC,

It’s true enough that we do live in the present, but it doesn’t strike me as being prudent to completely ignore the lessons of the past. “It hasn’t happened yet” isn’t a strong argument for “you might as well have a good time now and not worry about the future”. Especially when it has happened before.

I’ll bet there’s at least some percentage of the folks who have lost everything in the last year who would like to reconsider some of their past decisions.

[Bugs]

DaC,

It’s true enough that we do live in the present, but it doesn’t strike me as being prudent to completely ignore the lessons of the past. “It hasn’t happened yet” isn’t a strong argument for “you might as well have a good time now and not worry about the future”. Especially when it has happened before.

I’ll bet there’s at least some percentage of the folks who have lost everything in the last year who would like to reconsider some of their past decisions.

[temeculaguy]

Bugs, I like the theory that information availability will flatten the cycles in the future, it has merit and I have never heard or read anyone bring it up. Past cycles have always come when the memory of the last has faded or a new demographic who missed the last one comes into power, it has always started again. Sure they know of the ups and down of the past but they have very few facts about it. You make a valid point as I remember being a loser in the downturn that started in 1992 and a winner in the upswing that started in 1998, none of it was based on facts available to me, just advice from people and my limited research. If the internet was what it is today in 1992 I may have not purchased and in 1998, I would have not sold a rental property. It can be chalked up to hindsight but to be honest there was no easy data for people like me who are not in the real estate industry. The information available today changes everything, or does it?

You really need to write a book bugs, I’m thinking of titles, porky pigginton and bugs bunny or the ACME anvil company is the internet and it flattens the Wile E. real esate bubbles, these are still in the rough draft phase of course.

[temeculaguy]

Bugs, I like the theory that information availability will flatten the cycles in the future, it has merit and I have never heard or read anyone bring it up. Past cycles have always come when the memory of the last has faded or a new demographic who missed the last one comes into power, it has always started again. Sure they know of the ups and down of the past but they have very few facts about it. You make a valid point as I remember being a loser in the downturn that started in 1992 and a winner in the upswing that started in 1998, none of it was based on facts available to me, just advice from people and my limited research. If the internet was what it is today in 1992 I may have not purchased and in 1998, I would have not sold a rental property. It can be chalked up to hindsight but to be honest there was no easy data for people like me who are not in the real estate industry. The information available today changes everything, or does it?

You really need to write a book bugs, I’m thinking of titles, porky pigginton and bugs bunny or the ACME anvil company is the internet and it flattens the Wile E. real esate bubbles, these are still in the rough draft phase of course.

[Author]

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