This must be some sort of housing bubble again
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Anonymous
Dude, the involvement of investment banks in the mortgage market is a root cause in the credit and housing bubble. Completely relevant but go ahead and keep your blinders on. You probably blame the CRA? As for Phoenix vs DC, my point was basically any urban area save Detroit purchased in 90s would have amazing returns. DC did Not wobble like other markets (which dipped until QE flew in) b/c of the war on terrorism etc. but that phase of spending is winding down, and the appeal of DC is limited since it has high cost rents, expensive buereucratic workforce (look at the drek software put out by government contractors), so without huge Federal coffers why would DC appreciate or even hold this high value. DC is a great company town and if housing was more reasonable would be a great source of highly educated but procedural businesses like accounting or tax law. But true innovation does not happen here, and all it's wealth is from siphoning off external wealth seeking influence. BTW, the Fed voted unanimously yesterday to continue taper despite lackluster jobs and new home starts. They see the bubble. |
Anonymous
wrong they have been slowing down buying bonds for a while they actually debated to go the other direction because of the low rate of labor participation. |
Anonymous
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Any discussion about the stimulus is to save face and not reveal they know the bubble here. This was a unanimous decision. Unanimous.
http://m.us.wsj.com/articles/BL-REB-22848 It's not like they're going to say oops there is a bubble housing and stocks. |
Anonymous
Actually, as a person who bough 15 years ago - I'm sitting really pretty, than you very much! But I did at that time think I overpaid and my house is currently worth twice what I paid for it (but not yet matching the 2007 highs). Of course, I am in Fairfax county, not some far off county. |
Anonymous
How do you know that someone offered more? Even if all three were equal, one still needs to be chosen. |
Anonymous
No, I do not blame the CRA. But you speak of Gramm-Leach-Bliley as if it was some bellwether event. It wasn't. It was the slow recognition that regulatory decisions from the mid-80s had slowly repealed GS "in effect." Starting with Greenspan, the Fed began granting exemptions to GS (and other financial regulations) as an almost procedural matter. GLB, which to people largely unfamiliar with the history of financial regulation signals the repeal of GS, was merely the recognition that policymakers had already decided to "adjust" GS in light of changes in financial services organization and provision. In particular, the approval (at first temporary) of Travelers-Citi was the straw that broke the camel's (no pun intended for those in the know) back. By the time this merger was approved, GS was already long gone. And then came GLB. You can make a claim that the securitization of mortgage-backed debt was the impetus for the run-up in housing prices. That's a reasonable debate, but it is somewhat orthogonal to GLB, since the creation of a market for MBS did not depend on the "involvement of investment banks." (The investment banks' role was to create derivatives that mutual funds and insurance funds could invest in, per their covenants. This grew the market, but I'm not prepared to say this wouldn't have happened anyway. Moreover, it is not immediately clear to me that other financial firms couldn't (and wouldn't) have performed this service, or even that investment banks couldn't have done it themselves under a fully-functioning GS.) At least you got the "dude" part right. |
Anonymous
I'll definitely concede, securitization was a huge part in freeing up credit at lenders helping feed the run-up. The bubble really got running though when investment bankers got involved, and also pressured their commerical bank divisions (now that they were all merged) to relax loan standards to feed the machine. Derivatives like CDOs and the like were just gravy for the credit bubble, less so for housing bubble (but were the reason why the housing bubble almost led us to Great Depression II). Are you finance? I think you clearly can see that the run-up in housing prices since the 90s was funded by radical changes in financing; DC benefited just like most other metro areas, and is really nothing special. It's a fine town, but really have a hard time justifying the price. Don't worry, I would hold the same standard to SF, which seems to be in the midst of Tech Bubble 2.0. WhatsApp is worth more than Sony or ARM Holding which powers most of those app enabled phones? |
Anonymous
I don't know enough about technology, start-ups and their valuations to comment informatively on a potential Tech Bubble 2.0. One way to look at the FB acquisition is that they paid 20B to potentially acquire 50% more users (450m Whatsapp users, I believe). Without knowing the existing overlap between Whatsapp subscribers and FB users, and without knowing their models for how successfully they'll [FB] convert Whatsapp subscribers into FB users, it is not outlandish to view this as a relatively cheap way for FB to substantially grow their userbase. I have no knowledge and this is idle (maybe idol is more appropriate) speculation. I'm in something related to finance. My PhD is in a quantitative field. That's enough information for judging my arguments. Personally, I've struggled with how to judge DC housing prices. I've said it before on here (while regressions run in the background on my machine), that perhaps the right comparable city is London. I don't know, but that doesn't strike me as outlandish. Nonetheless, while I don't know if the current prices are the correct level, I'm fairly certain that DC prices pre-early 2000s were far too low. This allays much of my concern over a potential DC housing bubble. The comparison period -- usually something like pre-2000 -- used when discussing the recent run-up is a straw man, pure-and-simple. |