Discussion in 'Economics' started by BrandNewTrader, Jul 30, 2006.
why don't u check yr assumptions...
i def stand corrected on that. i glossed over the nature of the figs and thought price was in there somewhere. price appreciation against gdp, wages, population, choose ur weapon... all appear to lead back to one thing, monetary inflation explaining the majority of the 'bubble'. what am i missing
it might not be a bust, sure we could go to 50 on the dxy or 1500 on gold
except it isn't... not a single one of them is $-based
avid, i like u but honestly, wishful thinking...
have a nice day mate... am done with this thread until we see THE PROMISED BUST
ditto but price is a fact, forget the posted figs and debunk the q
...........Quote from Avid Consumer...ditto but price is a fact, forget the posted figs and debunk the q
Are we all going to bed now?
I call bullshit.
My house has not doubled in price in the last 5 years - it only went up 15%.
My parents house, 45 minutes away, has gone from 135k in 1990 to 215k today.(their area has recently received an influx of populous...)
That chart may be "inflation adjusted", but that's all it has going for it. Throw accuracy out the window.......
if by many you mean <50 out of the thousands of towns and cities, then yes, you're right.
there is a VERY SMALL FRACTION of areas where real estate has doubled in the last 5 years - it's NOT THE ENTIRE COUNTRY BY A HELL OF A LONG SHOT.
just like some momentum stocks rocket up in bull markets, so did some areas see a dramatic increase in housing prices, and when the correction comes, the momentum stocks take the biggest hit. The ATT, Altria, etc. of the world gyrate a bit, but stay the course or are at least more resilient.
Mine has quadrupled in 20 years which points to 7% inflation. Houses themselves don't change much over the years, the function, quality, etc. is very stable. I am going to use those as the basis for economic comparisons from now on.
What really happens when house prices go up is not that a house is worth more, it still serves the same purpose, has the same costs of operation relative to it's price, etc. What happens is that the currency used to buy it is worth less. People complain that Americans savings rates are very bad, actually it points to Americans being smart. They don't put money in a pass book account that pays 1%/annually when the dollars are deflating much faster than that. Americans are putting their money in houses and leveraging like crazy to do it As long as we don't have deflation they are making out like bandits. If we have deflation they will still have a house to live in if they pay it off, If they don't pay it off the banks will take any kind of token payments a person can make during deflationary times because they don't want to repo worthless properties. They will be a huge liability to a bank rather than an asset. One rule of real estate is that abandoned properties will be destroyed, banks know this.
Edit: One line of mis-reasoning I see in this thread is the leap from a hard real estate landing automatically leading to a recession!! That has essentially never happened historically!! And regarding the economist that is the subject of the thread, he is an advisor probably to fund managers and something like 95% of funds underperform the indexes!! The "appeal to expert" philosophical false argument abounds here and probably will, once again, be soundly refuted next year.
that was very insightful.
How liquid is a house? I don't see them as guards against a depreciating currency.
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