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Not much info in here, besides him plugging his blog
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Not much info in here, besides him plugging his blog -
Re: Mish called the housing top from a TIME cover ?
A reference to this cover June 13, 2005:
lol at the last paragraph....http://www.time.com/time/magazine/ar...069097,00.html
America's House Party
Sunday, Jun. 05, 2005
The stock market may be dragging, but home prices are soaring, fueling a national obsession with real estate. Your house is now your piggy bank, ATM and 401(k). House gawking is a hobby; remodeling, both entertainment and an investment. Folks brag about having bought their home in the '90s the way they used to brag about having bought Microsoft in the '80s. Even if you're not contemplating buying or selling anytime soon, the amazing lift in home values is changing the way we think about the roofs over our heads. Real estate isn't so much about nesting today as it is about nest feathering.
[..]
Some economists believe that housing lifted the economy after the tech crash. And some, worried that it could take the economy right back down, warn of a bubble in home prices driven by the same psychology of greed as the tech one. Even Federal Reserve Chairman Alan Greenspan--often credited with godfathering the home boom with low interest rates--cautions about "froth" in the market, recalling the "irrational exuberance" of yesteryear.
But who wants to listen to buzz-kill talk? Just as during the 1990s' stock frenzy, the idea that "everybody's getting rich" echoes in a vast media chamber. Joining TV mega-hit Extreme Makeover: Home Edition, HGTV's Designed to Sell and A&E's Sell This House teach you how to unload your home for top dollar. Making its debut this month, TLC's Property Ladder will focus on fixing up houses--not to live in but to flip. Business and personal-finance magazines that once touted tech stocks now promise tips on how to grab land and cash in. Books like the best seller Rich Dad, Poor Dad laud real estate investing as the ticket out of the rat race.
The boom is as much an emotional story as an economic one. It's about the excitement of potential wealth, the fear of missing out and the envy toward the guy next door who bought for a third of what you paid. It's about the giddy tabulation of how many plasma TVs your house's appreciation could buy and the embarrassment of feeling too poor for your neighborhood as houses around you are torn down for McMansions. If home is where the heart is, it is now where ever more of your cash is. And when love and money collide, things can get a little crazy.
[..]
A sizable chunk of Miami's condo buyers--as much as 70%, estimates real estate analyst Lewis Goodkin--is made up of investors itching to flip condos like scalpers wanting to unload Orange Bowl tickets. And the story is similar in other highly developed metro areas. The biggest-paying bets in Las Vegas are being laid on the condos and hotel condos (essentially, hotel suites that you can buy) going up on the Strip.
[..]
Past generations thought of their house as an investment, but a passive one. Burning the mortgage after 30 years promised a debt-free retirement and a little legacy for the next generation. But now people track their home values almost daily. And thanks to home-equity loans and refinancings, the home is an easily tapped source of cash. In 2004, U.S. homeowners took an estimated $139 billion out of the walls and floorboards through refinancings, compared with $26 billion in 2000, according to Freddie Mac. They put about 35% of that money into home improvements, spent 16% on consumer purchases, and used 26% to pay off debt (including credit cards for other consumer purchases), according to the Federal Reserve Board.
Of course, that's not free money. It's more debt, albeit at low interest. But you have to excuse homeowners for getting a little giddy. When they look at the rest of the economy, they see little else to be excited about. Employment has picked up, but wages haven't. Inflation has risen from the grave. The stock market is crawling to get back to where it was five years ago. Savings accounts throw off barely enough interest to feed a parking meter. Companies are cutting pensions, and politicians are making dire noises about Social Security. It's a scary message people are getting: We are heading toward a future in which we will need more money than ever to avert disaster, and there are fewer opportunities to get it. So people see their homes as their last, best hope for prosperity--as not just houses but also lifeboats.
[..]
To Edward Leamer, economist and director of the UCLA Anderson Forecast, the housing market, especially in hot coastal areas, is a bubble just as ripe for popping. "We've had a more than doubling of housing prices in the past three years here in Southern California, for instance, and there's no fundamental driving it," he says. "There isn't some big crush of people coming to California. That's ridiculous."
Instead, say Leamer and other bubbleologists, what's driving the market is low interest rates, herd psychology, speculation and the expectation of unending price increases. (One study found that Los Angeles homeowners expect their home values to grow 22% every year for a decade.) Meanwhile, promiscuous lenders are throwing money at buyers like beads during Mardi Gras. "Anybody who can crawl in off the street can get a loan with 0% down at three or four times their income," Leamer says.
It's tempting to call real estate NASDAQ 2.0, but there are key differences. David Lereah, chief economist for the National Association of Realtors, predicts another record year for real estate in 2005, with a 9% jump in prices nationwide. Lereah says the run-up in house prices is not built on the kind of hot air that promised that theglobe.com would be the next General Electric. Rather, he says, it is based on fundamentals that include tight housing supply--especially in places where it is tough or expensive to build, like New York City and San Francisco--such population factors as immigration, foreign buyers (snapping up properties cheap because of a weak dollar) and baby boomers' demand for second homes. "It's the demographics, stupid," he says.
Stocks, he adds, are more readily sold and thus more volatile. "Stocks are pieces of paper," Lereah says. "People can get in and out very quickly. Real estate is different. It's tangible. It's secure. So even if the price of the home next door may go down, it doesn't always mean yours will go down too. It doesn't mean you're going to sell. You're not going to react the way IBM's shares would react if there's a big sell-off."
But there are troubling aspects to the real estate boom. At the stock market's peak, 1% of investors controlled about 33.5% of stock wealth; the top 1% of home-equity holders have only 13% of housing wealth. In other words, a broad drop in home values, should it happen, would affect a far larger cross section of Americans than did the NASDAQ bust.
Complicating that danger, home buyers have turned to some risky strategies to afford their purchases. Nothing-down, interest-only and "negative amortization" (in which you wind up paying so little each month that your loan amount grows larger, though hopefully your house's value rises faster) mortgages are on the rise. Such loans can pay off--if you sell within a few years at a profit. But if interest rates rise and home values stall or--gasp!fall, those borrowers may become overwhelmed by steadily rising payments. (Household monthly debt costs are already at an all-time high.) Even the bullish Lereah is concerned about the loose lending practices. Such trouble would have repercussions for the whole economy. If enough homeowners become swamped by their debts and have to sell, prices would drop, creating a reverse wealth effect and fueling a slowdown.
California's $186 billion state pension fund is worried enough to have begun unloading some of its real estate holdings. Phyllis Rockower, who started the Real Estate Investor's Club of Los Angeles in 1996, is worried too. Membership in her club has soared. "Most people who come to my meetings sold their high-tech stocks after 2000," she says. "We had to move to a bigger room. It's either a sign of the times or a market top." What's her bet? Rockower has six houses on the market--nearly every investment property she owns.
AFTER THE PARTY'S OVER
Whether the market rises, plummets or flattens, whether it happens over one year or five, it will not undo changes that the boom has wrought in the relationship between homeowner and home. The tech crash and the market slump didn't erase the culture of stocks. Even after day-trading mania disappeared, there remained a broad class of people buying stocks and mutual funds who were more knowledgeable than they used to be about the market and more closely attuned to business news.
Likewise, the deeper changes of the real estate boom are likely to stick, particularly the notion that the house is no longer just a home. By tapping their built-up home profits through refinancings and home-equity loans, owners have ensured that the home-as-piggy-bank will be with us for some time, and that may have wide implications for tomorrow's economy.
Vegas Hotel Condos.....
Signature at MGM Grand - Original asking prices: Suite Type Price Range
Studio Suite $515,000 to over $700,000
One Bedroom Suite $750,000 to over $1,000,000
Two Bedroom Suite $1,300,000 to over $2,000,000
fast forward to April 2009:
I recently attended the public auction held to sell 20 units in the three MGM Signature towers located just off the Las Vegas strip. The auction was held on April 21st and was attended by about 125 people. All units were sold.
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The top one bedroom sold for $255K and the low sold for $185K. The previous low comp for a one bedroom unit was $274K. So this sale brought the comp down quite a bit from $274K to $185K. The top studio unit sold for $200K and the low sold for $142K. The previous low comp was $174K. So again the comp came down from $174K to a new low of $142K.
http://www.articlesbase.com/business...es-891179.htmlLast edited by Slimprofits; July 15, 2009, 07:36 AM. -
Re: Mish called the housing top from a TIME cover ?
a lot of people commented on that cover at the time. i know i did. also bill fleckenstein wrote about it as calling the top.
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Re: Mish called the housing top from a TIME cover ?
you can count on mishmash for that kind of super-duper heavy analysis.Comment
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Re: Mish called the housing top from a TIME cover ?
thomas huxley was called darwin's bulldog. i think metalman's appelation should be "ej's bulldog."Originally posted by metalman View PostComment
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