[HereWeGo]

So if transactions are down and prices are starting to fall, yet the “consensus” opinion says that real estate is a great investment, what does that bode for the future?

[HereWeGo]

That sounds like a good bet until the current glut begins to sort itself out.

Anyone have a list of apartment REITs to consider?

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It’s a landslide … 9-1 for a pause.

I would imagine the pause voters took the latest jobs report into consideration, as well as the fact that consumer demand is likely to be reduced by the housing market downturn.

[HereWeGo]

A pause is more likely with the latest employment news.

Bernanke knows that a popping bubble can lead to a collapse of aggregate demand. He’ll be very cautious wrt/ raising rates for the forseeable future.

[HereWeGo]

Some observations on Rich’s graph:

1) The housing price does not revert to the mean so much as it reverts through the mean. It’s interesting that residential real estate has, for the two previous booms, had a somewhat sinusoidal characteristic about the 120% level. There is no appreciable period of time where housing prices settle at the historic mean. Indeed, if the change in housing prices slows or appears flat, that seems entirely indicative of a shift from boom to bust or bust to boom, based on the previous two cycles.

2) Over the first two cycles, the peak above the mean on one cycle was the same distance from the mean as the valley below the mean on the next cycle.

Will that pattern carry through this cycle? If so, that graph implies far more than a 50% drop from peak to valley.

[HereWeGo]

Yes, many have ended the story with the foreclosure on the overextended borrower’s property, but what then?

How will the lending institutions fare under a hailstorm of falling knives?

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