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ParticipantNot true. Anyone who has heard housing analysis but buys right now at peak prices thinking they are going to make money in the next couple of years is dumb or stupid.
People who use words like “dumb or stupid” are usually dumb and stupid. It stems from a deep seated sense of inferiority. And anyone who doesn’t know that is …well, you get the point.
ParticipantMe me me me…money money money money…pathetic Americans.
Uncomfortably numb, what makes you think we are all Americans? This is a problem that has affected many countries, not just the US. Besides this is a sounding board for ideas, not prejudices.
ParticipantMe me me me…money money money money…pathetic Americans.
Uncomfortably numb, what makes you think we are all Americans? This is a problem that has affected many countries, not just the US. Besides this is a sounding board for ideas, not prejudices.
ParticipantThe one thing that is lacking here is the concept that houses cannot be traded like stocks.
…in spite of the perfect storm of negative news, prices have not gone down that much.
Chris, if it’s one thing that Piggintons has taught me its that housing is not like stocks. This point was pressed home some weeks back, by posts and youtube video clips.
Furthermore, since we accept the housing market is illiquid and not subject to the instant vagaries of the stock market, one would expect a slow and at times impercetible movement, and interspersed with small rallies as has been pointed out many times.
If you look at cyles the world over they are measured in years. What’s different about this one is that we have never seen such a huge surge in values. That’s the crux of the concern here and quite rightly too.
However, no smart person will call anyone dumb or stupid for buying now. It’s your choice, and your life. There may be people who would like to see a faster correction in prices and view buyers as delaying that process, hence the angst.
ParticipantThe one thing that is lacking here is the concept that houses cannot be traded like stocks.
…in spite of the perfect storm of negative news, prices have not gone down that much.
Chris, if it’s one thing that Piggintons has taught me its that housing is not like stocks. This point was pressed home some weeks back, by posts and youtube video clips.
Furthermore, since we accept the housing market is illiquid and not subject to the instant vagaries of the stock market, one would expect a slow and at times impercetible movement, and interspersed with small rallies as has been pointed out many times.
If you look at cyles the world over they are measured in years. What’s different about this one is that we have never seen such a huge surge in values. That’s the crux of the concern here and quite rightly too.
However, no smart person will call anyone dumb or stupid for buying now. It’s your choice, and your life. There may be people who would like to see a faster correction in prices and view buyers as delaying that process, hence the angst.
ParticipantPatience has taught me that the waiting game takes on an entirely different complexion, if you add the condition ‘unless’. Unless the market corrects to an acceptable level, I will seek alternatives. That removes the uncertainty of “if and when”, which gnaws away at our sanity. For many, I guess ‘alternatives’ are a palliative and not a cure, or they are simply not palatable.
If it wasn’t for the internet I wonder how savvy some or most of us would be. Maybe a portion of the people who are still buying are those who don’t have the time to research the market as thoroughly as others. But I defy anyone to stand back from the situation and given the facts, not question whether paying more than something is worth is rational. If I said in 2009 you will have to pay $50,000 for a $25,000 car, I wonder how many people would accept that unquestioningly.
ParticipantPatience has taught me that the waiting game takes on an entirely different complexion, if you add the condition ‘unless’. Unless the market corrects to an acceptable level, I will seek alternatives. That removes the uncertainty of “if and when”, which gnaws away at our sanity. For many, I guess ‘alternatives’ are a palliative and not a cure, or they are simply not palatable.
If it wasn’t for the internet I wonder how savvy some or most of us would be. Maybe a portion of the people who are still buying are those who don’t have the time to research the market as thoroughly as others. But I defy anyone to stand back from the situation and given the facts, not question whether paying more than something is worth is rational. If I said in 2009 you will have to pay $50,000 for a $25,000 car, I wonder how many people would accept that unquestioningly.
ParticipantI discovered something really interesting as I was on Zip Realty last night. I live in Diamond Bar, and have been really amazed (and disturbed) at how the prices have been so resistant to declining. But I was only looking at listing prices. True, they haven’t budged much. But just for fun, I thought I’d look at sales prices. They were all about 10-15% lower than the asking prices! So something is really happening after all.
Ziprealty also lets you select only those houses that have had their price reduced. Some properties show up to four reductions in a short space of time, and show a not insignificant drop (though nowhere near enough to tempt me). Others merely pay lip service to it, and expect it to generate interest. The tale is still wagging the dog.
ParticipantI discovered something really interesting as I was on Zip Realty last night. I live in Diamond Bar, and have been really amazed (and disturbed) at how the prices have been so resistant to declining. But I was only looking at listing prices. True, they haven’t budged much. But just for fun, I thought I’d look at sales prices. They were all about 10-15% lower than the asking prices! So something is really happening after all.
Ziprealty also lets you select only those houses that have had their price reduced. Some properties show up to four reductions in a short space of time, and show a not insignificant drop (though nowhere near enough to tempt me). Others merely pay lip service to it, and expect it to generate interest. The tale is still wagging the dog.
ParticipantThanks for the full reply Rustico, and that’s enough for me to be getting on with, and I’ll continue to use it as a reference.
I have a feel that if you want to save the environment, then building an eco-friendly home is a good thing. But you definitely won’t save you money.
Yeah, I would like to save money. My guess is that you probably only save money, if you can do a share of the work yourself. Unfortunately, I’m not much of a handyman. However, I have noticed some home builders selling off the shelf plans at what seems like reasonable prices. DIY is always cheaper, but assembly fees don’t seem to extortionate either. Whether there are any eco houses that fall into this category I don’t know. My searches on the internet haven’t turned up much, but books and magazines on the subject may have more info.
May 15, 2007 at 9:17 AM in reply to: Question: Is there any direct correlation between stock market and real estate market? #52885ParticipantAccording to the New York Times there would appear to be.
Here is a link to a paraphrased article in the NY times I posted several weeks ago. http://piggington.com/the_unwind_is_just_starting
Here are some excerpts:
“…the very nature of mortgage securities has changed, as Wall Street has been swallowing up mortgage companies, trading securities in a manner reminiscent of the technology bubble, are now beginning to feel the pinch
…how rating companies are only delaying the inevitable by stubbornly refusing to downgrade ratings… there will be record losses in pension funds and other other areas exposed to residential mortgage-backed securities
…New Century Financial, a lender to the ‘cash poor’, whose shares had lost half their value in three weeks, and needed emergency funding to survive. Failure to identify such problems was symptomatic of the technology stock bubble burst.”
The most obvious connection, is that the bouyant market has been propping up the economy. A tightening of credit is likely to affect corporate profits.
ParticipantI don’t think the real avg rate of increase is 9%/year.
Maybe not! This was a back-of-a-cigarette-packet calculation. I wasn’t really suggesting starting from 2000 to give a meaningful figure. It’s just that the only data I could find was in ten year increments from 1940 and ended in 2000. It doesn’t really matter where you start if you include any of the huge surge in recent prices, because I don’t see how that will give you an idea of where prices “should” be. It’s all hypothetical anyway.
ParticipantInteresting is the use of the word “should” with reference to calculating houses values, but let’s not get into that one. I would have thought that using just ten years of historical data is not enough, because the last five years are going to distort the trend.
Forgetting the importance of rents for the moment and just focussing on historical data the following may be helpful. From 1940 to 2000 the median inflation adjusted price of a house in the US has risen 390%. California was almost double that for the same period at 570%. For the last five years, house prices in the US have risen 180%, and for California 247%. Taking California in isolation, historically the market grew about 9% per annum to 2000 over a sixty year period. So if the median price was $211k in 2000, the compounded figure in 2007 will be $385k at a 9% annual average increase. If you were to use the straight line or other statistical methods to caluculate from 1940 to 2007, you’d arrive at a figure between $385 and today’s prices.
I have no evidence that the data above is accurate, but it looks sort of plausible.
ParticipantEverybody, listen! I am the one with the crystal ball.
Where can you get these crystal balls? I tried Target but the nearest they came to it was a cut glass chandelier “…if it starts to rattle, dive under a table.”
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