GoFuckYourself.com - Adult Webmaster Forum - View Single Post - Real Estate Bubble -- Fact or Fiction

G Sharp · 01-27-2003, 01:09 PM

A majority of my friends, those that work the 9-5 grind, have bought houses in the past 2 years. Whenever I start thinking about joining them, I keep running into the following analysis:

You don't want to buy at the top of the bubble. The signs of a collapse are imminent

1) unemployment has increased in the past 2 years
2) foreclosure rates are at a record high http://biz.yahoo.com/rb/030107/economy_housing_2.html

Then, on the other hand, the following facts:

1) housing prices in the Los Angeles region has climbed higher and higher for the past 5 years
2) interest rates keep sinking

One line of analysis is that due to the tight housing supply here, buying a house in a relatively decent part of town [ median: $280,000 but actual avg is around $350,000] is a safe bet b/c even if prices dip, the tight supply will push them back up.

Another line of analysis is that the rise in prices are due to people refinancing their existing loans and people who NORMALLY CANNOT afford to buy a home getting enough $ for a down to lock in on the low interest rate. According to this line of analysis, a growing proportion of people buying homes now or living in homes now cannot afford to live in their homes once the market craps out. That's why the 2 sets of data above are interrelated--bubble buying fueled by low interest rates, sustained by refinancing, which then fuels more buying.... all it takes is a jolt to knock this chain out. Maybe in the form of a interest rate hike [doubtful...although the dollar IS crapping out against the Euro], earthquake [useless in predicting nor wishing this, but it is a, albeit a distant one, factor] or further economic erosion.

Maybe another approach is this: Just buy the damned house as long as you are sure that that is where you want to live for the next 15 years--fuck the economic rollercoaster.

I am beginning to like the last piece of advice..... what do you guys think?

01-27-2003, 01:09 PM
G Sharp So Fucking Banned Join Date: May 2002 Posts: 1,343	Real Estate Bubble -- Fact or Fiction A majority of my friends, those that work the 9-5 grind, have bought houses in the past 2 years. Whenever I start thinking about joining them, I keep running into the following analysis: You don't want to buy at the top of the bubble. The signs of a collapse are imminent 1) unemployment has increased in the past 2 years 2) foreclosure rates are at a record high http://biz.yahoo.com/rb/030107/economy_housing_2.html Then, on the other hand, the following facts: 1) housing prices in the Los Angeles region has climbed higher and higher for the past 5 years 2) interest rates keep sinking One line of analysis is that due to the tight housing supply here, buying a house in a relatively decent part of town [ median: $280,000 but actual avg is around $350,000] is a safe bet b/c even if prices dip, the tight supply will push them back up. Another line of analysis is that the rise in prices are due to people refinancing their existing loans and people who NORMALLY CANNOT afford to buy a home getting enough $ for a down to lock in on the low interest rate. According to this line of analysis, a growing proportion of people buying homes now or living in homes now cannot afford to live in their homes once the market craps out. That's why the 2 sets of data above are interrelated--bubble buying fueled by low interest rates, sustained by refinancing, which then fuels more buying.... all it takes is a jolt to knock this chain out. Maybe in the form of a interest rate hike [doubtful...although the dollar IS crapping out against the Euro], earthquake [useless in predicting nor wishing this, but it is a, albeit a distant one, factor] or further economic erosion. Maybe another approach is this: Just buy the damned house as long as you are sure that that is where you want to live for the next 15 years--fuck the economic rollercoaster. I am beginning to like the last piece of advice..... what do you guys think?