Makes Absolutely No Sense

[slackerboy]

I am confused.

My confusion is why does everyone treat real estate like it is the golden medina? If I was selling stock and I told someone I know it will go down in value by 5-30% in the next year or so they would run in the other direction. Yet people are still buying houses. This real estate bubble was so obvious. I remember little of what I learned at San Diego State Business School, but I do remember the story about JP Morgan (Or was it Rockefeller)getting out of the stock market before the crash of 1929 because he went to get his shoes shined and his shoe shine man was talking up the stocks he just bought. Same here, when migrant workers, secretaries, and busboys are buying houses in California you know it is time to sell!!!!

[no_such_reality]

Most will not only think you’re just plain wrong, but an idiot or even thinking real estate could go down 30%.

[PD]

The realtors are starting get it, even if the public hasn’t yet. I went to a couple of open houses and talked to two of the realtors. I was pretty upfront about how I thought the market was going down in the next few years. While they did not outwardly say they agreed with me, they did not make any attempt to deny it. Both seemed somewhat resigned about the whole thing.
As an interesting side note, one realtor told me about a house that she has in escrow where she admitted (in a round about way) that she had priced the property almost 25% over what she thought it would sell for. She was surprised that it sold for 20% less than the asking price.

[blahblahblah]

Remember that homes are not stocks; very few people get emotionally attached to pieces of paper or blips on their computer screen, but a house is a home. There are buyers who made a lot of cash on previous homes that just want to have a nice place to live and raise a family. There are also buyers that just inherited a few hundred grand and want to buy a home. They’re not idiots for buying now, just as someone who didn’t buy in 2003 wasn’t an idiot either. Everyone is in a different situation and no one has a crystal ball.

But yeah, they’re probably going down 30% in real value over the next five years between inflation and small nominal YOY declines, so I doubt I’ll be buying for a while…

[SD Realtor]

I am in agreement that yes the market will depreciate and by the end of the cycle we could be down by 20-40% DEPENDING on the type of property and neighborhood, maybe even a little more.

Yet I am in disagreement in comparing real estate to stocks. You cannot live in an equity. Nor can you raise a family, entertain, or have a bbq in the back yard. You can’t have an ocean view with an equity. Similarly your equity doesn’t live in a neighborhood where you send kids to school and such. Again, I am not defending the economics of buying a home. For the umpteenth time, I am pointing out people buy real estate for other reasons then the economics. They enjoy other aspects that cannot be measured in dollars and sense because they can afford to. I don’t defend the decision or condemn the decision.

I just get puzzled at why the same question is asked over and over and over again.

SD Realtor

[capeman]

Yes but when MOST get involved in an investment vehicle I get the hell out. 30% is conservative from my perspective as a lifetime San Diegan.

[ibjames]

I hope you are right capeman. When I look at the numbers I can’t help but feel they have to by 30% or more. With tighter lending standards there is no way to finance it. No one has a down payment, where can it go but down? I mean.. DOWN!

[Critter]

It was Joseph Kennedy who made the comment about how it’s time to get out of the stock market if your shoeshine boy starts giving stock tips.

[ibjames]

has anyone noticed the commercials about how to invest in the stock market? They have software now that supposedly analyzes trends and can tell you where to buy etc. etc. I was working out and watched 30min of an infomercial about this software. It seems like I hear more commercials about the stock market and how to invest now also. Perhaps that will be the next bubble indeed

[NeetaT]

ibjames,

When will we see these tighter lending standards?

[Author]

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