Reply to 43% of home purchases are all cash

Forum Index » Real Estate

Reply to "43% of home purchases are all cash"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Total housing bubble, led by investors this time and hot money fleeing QEs low rates.  Definitely *different* than last credit bubble, much more similar to the tech bubble, which was also investor led.[/quote]

Did you read the latest from the fed? They are concerned that values aren't going up fast enough.[/quote]

Yes, because the Fed is trying to inflate our way out of the housing bubble.  They want values to go up, and then have it push wages and overall inflation.

We are actually on the precipice of another depression, that's why the Fed is being so aggressive.  They have succeeded to push up housing prices, but they have to exceed the past peak to stoke inflation like they want to. [/quote]

^^This is what I see happening too. Japan is a learning lesson; let's hope it doesn't happen here.[/quote]

Sadly, we are Japan except we are not civic minded and don't help our fellow man. Will be an awful couple of decades I'm afraid.

But [b]your[/b] house prices will probably remain high in nominal dollars![/quote]

Who are you addressing?[/quote]

Different poster, but I think she/he is addressing global "your". Hint is "nominal dollars", suggesting if US deflation occurs our homes will succumb to below the real value or cost.[/quote]

Beware of the poster(s) spewing economics-ish terms. S/he often (exclusively?) uses them incorrectly. Usual topics are QE3, the Fed and bubbles.

Someone previously mentioned that this "next" bubble will be investor-driven. They then said it will be more like the tech bubble of 2001 than the recent crisis.

This is probably correct. The 2001 recession and this more recent Great Recession are entirely different animals. That latter was credit driven. It looked ready to take down the financial architecture of our country, with truly disastrous consequences.

The 2001 bubble was different. Tech companies, unlike banks, are not highly leveraged. And they don't stand at the center of just about all aspects of our lives. So, there is less contagion risk and almost no systemic risk.

If the current housing bubble (which, for the record, I don't believe in) is investor-driven, then it follows that the bursting of this bubble will have almost no outsized effects upon the economy. Moreover, the presence of all-cash buyers makes the bursting all the more palatable. There will be no knock-on effects. The house goes underwater and the investor loses his stake. Contrast this with the previous crisis: the house goes under and because it has a mortgage on it that was bundled and sold to other financial companies, the default on the mortgage causes the mortgage-backed-security into which the mortgage was placed to lose money. The holder of the security has to post more collateral, which requires it to sell assets. Rinse and repeat. Complete credit contraction, almost completely stopping all investment (commercial and domestic). The data back up this story.

This is, obviously, my opinion, but I am an economist (phd) working in the field. [/quote]

Hah, the poster spewing economics term is me.

And I'm also the one who said that this current bubble is investor-driven and like the tech bubble. And I agree, it does not pose nearly the same systemic risk to the broader economy, but it does making buying a house a high stakes gamble for most middle-class buyers.

I would be curious in what ways you think I am using my terminology wrong (though I do get my real and nominal). Not a PhD Economist by any means (different kind of scientist), but I did recognize the tech bubble and housing bubbles "before it was cool", so I have a little more accuracy than a stopped clock.

I am a little skeptical you are a PhD Economist, as most that I know don't go around blaring their horn. Macro/micro? Finance/labor/???  And please don't say you got your PhD from GMU as then we'll have some beef, though they do make *awesome* music videos: https://www.youtube.com/watch?v=d0nERTFo-Sk
[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics