[michael]

I personally don’t see a need for a mortgage broker…

it’s not rocket science… would you like some cheese with that burger? but we have different types of cheese, it can get complicated? Would you like to super-size that? For here or to-go?

[michael]

Lonestar2000 nailed it. Real estate became a playground for wall street.

As far as the Ivy League types… I’d partner with any of those guys over some shmoe that just read a copy of “Rich Dad Poor Dad” and has uncovered the secret of becoming rich overnight. For every wall street idiot, there are hundreds of wannabe real estate “investors” or mortgage brokers (call themselves bankers).

Long Term Capital Management demonstrates just how complex capital markets are. The effects of the Russian default in 98′ along with other factors blew up the fund. But the fact remains that the types behind LTCM, Ivy League types or not, are a little bit more sophisticated than the geniuses you see on “Flip that house” or your local real estate experts… The housing bubble was cool in that it made even the dumbest folk feel for the first time in their lives that they too were smart investors.

[michael]

For the most part, the housing market doesn’t require substantial in depth analysis. There are relatively few variables to consider. On the other hand, capital markets have hundreds of moving parts that require serious brain power to analyze.

No doubt, there are plenty of amateurs and idiots on wall street, but for the most part, there are many sharp, Ivy League types that try to outsmart the competition and therefore create fairly efficient markets. The creation of derivitives by math whizes is what allowed the housing bubble to occur. The real estate folks were simply going along for the ride.

Take a look at the housing market and you find very few Ivy League educated Realtors and Mortgage brokers – just kids from a brain power standpoint. Order takers.

The housing market is a cute playground that allows some to feel smart and important… paint the house and add a room because that will sell the house… yes, an ARM is a great mortgage for you…

[michael]

I’m sure there are plenty of folks on the sidelines waiting to buy. I think there have always been plenty of folks on the sideline ready to buy. The question is how many of them are qualified buyers? With underwriting standards making a comeback, the “REAL” demand will be weak. PIGs for the most part are the responsible folk that have enough cash for a significant down payment, solid FICO scores and good income. PIGs and PIG types will benefit, however, as indicated in my original link, a rate cut will not help aleviate the pain of the downward spiral.

The point of posting the link to the interactive yield curve was to demonstrate (simplisticly) that a rate cut didn’t help the housing market during the last downturn of the 90’s.

[michael]

She’s a realtor – what did you expect.

[michael]

It’s called credit spread. Nothing new. From Investopedia

1. The spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating.

Looking at history, there will be periods where spreads are tight and others where they are wide. The world is a whole lot bigger than mortgage lending. The big boys in the bond market have been doing this for decades. They run the show.

Nothing new.

[michael]

It’s called credit spread. Nothing new. From Investopedia

1. The spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating.

Looking at history, there will be periods where spreads are tight and others where they are wide. The world is a whole lot bigger than mortgage lending. The big boys in the bond market have been doing this for decades. They run the show.

Nothing new.

[michael]

I think the DMV driver’s license exam is more difficult than the Real Estate exam…

[michael]

I think the DMV driver’s license exam is more difficult than the Real Estate exam…

[michael]

Rates of longer dated CD’s and Bonds are a function of future inflation and economic expectations by the market. Short term rates, including money market rates are far more closely tied to the overnight lending rate (Fed Funds Rate) that banks charge one another in order to meet reserve requirements.

[michael]

Rates of longer dated CD’s and Bonds are a function of future inflation and economic expectations by the market. Short term rates, including money market rates are far more closely tied to the overnight lending rate (Fed Funds Rate) that banks charge one another in order to meet reserve requirements.

[michael]

Problem with the pent-up demand is that a good chunk of it doesn’t qualify for a loan. The true measure of demand in this “normalized credit environment” is who can qualify for a loan and for how much.

[michael]

Thank you Rich. My days, prior to your site, were filled with numerous Google searches for data and information. Piggington is a blessing! Your hard work and knowledge provided me with the information and support that I needed to “stick to my guns” when all around me were jumping on the real estate band wagon. Thank you so much!

[michael]

I emailed links to this blog, as well as other great blogs, to several conservative and libertarian think tanks and policy research foundations (i.e. CATO, etc) and asked for their help. I encourage you to do the same.

[michael]

Happy Renter – thanks for the great link.

Thanks for the comparisons also. I would never move to Whittier or Norwalk or any place that is comparable. Pasadena has both its good and bad areas.

I guess it’s peoples knowledge that can only come from living in an area that i find extremely valuable. Pictures and data don’t always provide the full story.

[Author]

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