tag:blogger.com,1999:blog-15453937.post114693362256597363..comments2024-01-10T17:36:15.040-07:00Comments on The Lippard Blog: Is There Really a Housing Bubble?Lippardhttp://www.blogger.com/profile/16826768452963498005noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-15453937.post-1148533533634870692006-05-24T22:05:00.000-07:002006-05-24T22:05:00.000-07:00The Daily Reckoning rubs me the right way, but rea...The Daily Reckoning rubs me the right way, but reading them too often gets tedious. Plus: You have to consider how long they've been wrong. Just like Marx over 150 years ago when he said "The rich are getting richer and the poor are getting poorer" - a mantra that has been repeated by his followers every year for the last 150 years. Wouldn't the world have looked somewhat different if they had been right each of those 150 years? Game: Ask them which years that was, or ask them why not all kids are David Copperfields these days.Solanhttps://www.blogger.com/profile/10548071704344622360noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147783230386453322006-05-16T05:40:00.000-07:002006-05-16T05:40:00.000-07:00So, you're siding with the guys over at the reckon...So, you're siding with the guys over at <A HREF="http://www.dailyreckoning.com" REL="nofollow">the reckoning</A>, huh?Einzigehttps://www.blogger.com/profile/06406227217230727209noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147760846089185072006-05-15T23:27:00.000-07:002006-05-15T23:27:00.000-07:00You won't. Those guys overseas working their shirt...You won't. Those guys overseas working their shirts off will get theirs, though. Or something like that. I am (as always) convinced that times are going to get tough.Solanhttps://www.blogger.com/profile/10548071704344622360noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147742726605572832006-05-15T18:25:00.000-07:002006-05-15T18:25:00.000-07:00If it is, then I hope I get a pay raise soon!If it is, then I hope I get a pay raise soon!Einzigehttps://www.blogger.com/profile/06406227217230727209noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147684751631886142006-05-15T02:19:00.000-07:002006-05-15T02:19:00.000-07:00That should serve to explain why there is a housin...That should serve to explain why there is a housing bubble (or "price hike") in Europe as well. Does that mean it's going to be permanent?Solanhttps://www.blogger.com/profile/10548071704344622360noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147271779262688572006-05-10T07:36:00.000-07:002006-05-10T07:36:00.000-07:00Here's some possible evidence that the underlying ...Here's <A HREF="http://money.cnn.com/magazines/fortune/fortune_archive/2006/05/15/8376864/index.htm?cnn=yes" REL="nofollow">some possible evidence</A> that the underlying issue is a declining dollar: many asset classes that used to move out of sync are now correlated, with the notable exceptions being Treasury bills and bonds.Lippardhttps://www.blogger.com/profile/16826768452963498005noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147124463026366552006-05-08T14:41:00.000-07:002006-05-08T14:41:00.000-07:00I feel ya, Solan. Although my 4 investment propert...I feel ya, Solan. Although my 4 investment properties were a huge albatross around my neck, at least when I had them I could say that I had a positive net worth. Now, on the other hand, I'm a veritable pauper by comparison.<BR/><BR/>Jim, in a purely self-serving way, I do hope that it <I>is</I> a bubble and we <I>do</I> end up seeing some regression, because, as a current non-owner of real estate, the alternative is disconcerting.Einzigehttps://www.blogger.com/profile/06406227217230727209noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147072939161629452006-05-08T00:22:00.000-07:002006-05-08T00:22:00.000-07:00Didn't Bernanke get almost famous for saying there...Didn't Bernanke get almost famous for saying there was an excess of capital world-wide? You don't need an excess in physical money supply, only in the spendable (loanable) amount, which is a different beast, and international.<BR/><BR/>Housing prices have been on the rise everywhere else in the West as well, btw. I think Britain's little bubble just got pricked, but I don't pay too much attention to it all these days.<BR/><BR/>BTW2: I hope it's all a bubble in Norway as well, since I am not among the landed aristocracy these days.Solanhttps://www.blogger.com/profile/10548071704344622360noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147047174824459522006-05-07T17:12:00.000-07:002006-05-07T17:12:00.000-07:00I think that if you don't see price declines and r...I think that if you don't see price declines and reversion to the mean on some of these measures, then there must not have been a bubble.Lippardhttps://www.blogger.com/profile/16826768452963498005noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147030392693640122006-05-07T12:33:00.000-07:002006-05-07T12:33:00.000-07:00I should point out that the "increase in the money...I should point out that the "increase in the money supply" hypothesis - which undoubtedly raises many questions of its own - at least helps explain the weak dollar, the current high price of gold, and oil at $75/barrel.Einzigehttps://www.blogger.com/profile/06406227217230727209noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147030252145423462006-05-07T12:30:00.000-07:002006-05-07T12:30:00.000-07:00I, of course, grant all that you're saying.But wha...I, of course, grant all that you're saying.<BR/><BR/>But what if the driver of all of this is, say, a huge expansion in the money supply, instead of some weird mass irrational exuberance? How might we tell the difference?<BR/><BR/>5 years from now, how are we going to know for sure that this was a "bubble"? Years of doublt-digit negative appreciation rates? A large drop in new construction? Tighter lending policies? Some combination of all those things and more?<BR/><BR/>What if appreciation rates drop back down to a "normal" 4%-10%, and stay there? What if the number of Trustee's Sale Notices in Maricopa county stay at an average of 800/month for the next several years?<BR/><BR/>I make no claim to know which is the likelier scenario, but both of them leave me thinking, "What the hell just happened?"Einzigehttps://www.blogger.com/profile/06406227217230727209noreply@blogger.comtag:blogger.com,1999:blog-15453937.post-1147011637236658312006-05-07T07:20:00.000-07:002006-05-07T07:20:00.000-07:00The Economist has been declaring the existence of ...The Economist has been declaring the existence of a housing bubble in the U.S. for several years primarily on the basis of comparisons of monthly mortgage to equivalent rent (a comparison where the Washington Post just reported yesterday that Phoenix isn't particularly out of whack).<BR/><BR/>The signs of speculation in Phoenix have been investors buying new home contracts and flipping them, which seems to have mostly died out, with a huge growth in inventory, much of which is vacant. I've reported those numbers here. Home builders are reporting slowdowns in purchases as well as an increase in contract breaking due to inability to sell existing homes. They're also offering interesting creative incentives to attempt to sell homes without dropping prices (which would upset holders of existing contracts waiting for their homes to be built).<BR/><BR/>The percentage of homes sold with option ARMs (and with features like negative amortization options and no documentation of income required) has grown (I believe I saw a statistic that 25% of Phoenix new home purchases have been with option ARMs, with much higher percentages in California), though I think the use of them has declined as interest rates have gone up.<BR/><BR/>I think you're correct that most of the discussion on blogs seems to be based on anecdote rather than hard evidence, but there are certainly a number of measures that support claims of a housing bubble, at least in particular regions. (BTW, the decline in the stocks of homebuilders could be viewed as another indicator, as well as down-sizing in the mortgage industry.)<BR/><BR/>Phoenix has the advantage of lots of people moving here, but like California, has the disadvantage of a high percentage of jobs being real-estate related.Lippardhttps://www.blogger.com/profile/16826768452963498005noreply@blogger.com