Quote:
|
Originally Posted by $5 submissions
What's interesting about this topic is that there are GFY threads dating back to 2001 / 2002 re the imminent collapse of the bubble... hasn't happened yet. Of course, the Fed's actions after 9/11 helped stave off any real estate collapse... Now that we live in a completely different world--$50+ per barrel of oil, weak dollar, has any factors changed to SUBSTANTIALLY increase the chances of an RE collapse?
Even if there was a collapse, Im sure it would be REGIONAL as opposed to the WHOLE US real estate market.
|
You are right. No one should EVER predict an IMMINENT crash in any market! No one is that smart. Just that lucky. It was obvious in the mid-1990s that the stock market was fundamentally over-valued and that holders of stock in companies like Etoys and WebVan were heading toward disaster. If you would have said in 1996 that a market crash was imminenet you would have been proven a fool. Of course, it kept rising. Then in 2000 the NASDAQ crashed in the world stock market crash since 1929. It lost 80% of its value. The other markets got shelled too.
Has anything substantially increased the chances of a Real Estate crash? Absolutely. The prices have risen completely out of historical context. An inflation adjusted chart of real-estate prices shows a steep rise the past 5 years completely out of line with anything we have ever seen in the US before on a national average basis. Bubbles usually bring a lot of speculators to the table buying on margin. A LOT of people are speculating on real estate and people are using dangerous leveraging options such as ARMs.
Can anyone predict WHEN a bubble will burst? No.
Can anyone say with certainty that an RE crash will happen? No. because the market could just as well trend sideways for 10 years until values come more in line with what people have historically been willing to pay for real-estate.
On regional vs. whole market. When the markets crashed in 2000 some stock maintained their value, some even rose but overall it was a bad place to be investing.
In 1999 I knew the stock market had become too speculative because every time I would go out to dinner I would overhear a conversation about the stock market. Now, the same thing is happening with real estate. It happened just last night, for example.
Some people get rich in bubbles. Very rich. Others, buying near the top, go broke. They lose their life savings and more. 1929, 1973, 1999, tulip mania, South Seas shares. There are many examples.