patrick.net

FP says

30-50% market correction in about 2 years.

On what do you base that?

Dan8267 says

FP says

30-50% market correction in about 2 years.

On what do you base that?

On dreams, hopes and wishes. Am I right, FP?

Dan8267 says

On what do you base that?

On my extensive analysis.

FP says

Dan8267 says

On what do you base that?

On my extensive analysis.

That wasn't a contradiction. It was a sincere question. Please show your analysis and the evidence that supports it so we can evaluate if it's likely.

rando says

But we have democracy, at least in theory.

No, not really. Not even in theory. We have a republic. In a democracy there would be no president and no congress. We'd vote for the laws themselves. We would all be legislators.

A democracy in colonial times was impossible. The population was simply too large. Today we can have massive democracies because of these little things call computers. The make things scale that wouldn't scale otherwise.

So the reason we don't have a democracy is that the politicians don't want to give up power. A democracy would take away their jobs. As such pretty much every politician in the United States or elsewhere is very much against democracy.

Dan8267 says

FP says

Dan8267 says

On what do you base that?

On my extensive analysis.

That wasn't a contradiction. It was a sincere question.

It was a sincere answer. It is not something I can summarize in a few comment lines, and I don't feel like writing a long explanation.

They are building apartment building after apartment building here, with prices 2-3x that of the US for half the quality (minimal outlets, bad wiring, drafty single-pane windows). Nobody lives in them, and now there's probably multiple times the condos than families that could think about affording them.

Probably laundering drug money from the Triple Frontier.

My comment was about the stock market, not the RE market.

Strategist says

"Capital moves to the highest rates of return" If those with capital, regardless of where it comes from, feel that real estate will offer the best returns, money will continue to flood in.

Real-estate has no return outside having a roof.
Real-estate goes up, at least to some degree, because capital flows in. It's called speculation. It lasts until capital flows out.
Building more would at least convert these investments into real assets and real growth.
Right now it's all based on driving the next generation into the ground (well into the basement to be specific). Not exactly a long term plan.

Heraclitusstudent says

Building more would at least convert these investments into real assets and real growth.

They haven't been building much because it's not very profitable. The cost of land, labor, and permitting are very high. They can still make money on high end homes, which is why they build the expensive homes. To start building more entry level homes, prices would need to increase further.

The rich people are price insensitive.
They drove price up insensitive and they are likely to drive price down insensitive also.
What will make them change their thinking? Nobody knows. Maybe a missile fired and they change their mind.
What I do know is they are NOT like W2 shelter buyers that will be strong hold of the price of houses since they live in it.
Yes they can drive up prices by even 2x or 3x from current level since they are insensitive. You have to remind yourself on the other side as well.

Quigley says

Straight up soothsaying doesn't get you much cred on this site. Unless you can back up your predictions with reasoning that others can verify (or pick apart) then you aren't really contributing much to the discussion.

I don't care. Feel free to ignore me.

Strategist says

They haven't been building much because it's not very profitable.

Prices have been going through the roof for years - way faster than inflation - but it's not profitable to build?
It's a joke.

I love how people make predictions they are so confidence in but don't show their math. I don't care who you are. My confidence in your predictions is determined by the evidence you show to support them, not how confident you are in them.

Dan8267 says

I love how people make predictions they are so confidence in but don't show their math. I don't care who you are. My confidence in your predictions is determined by the evidence you show to support them, not how confident you are in them.

Making forecasts like these are not a complete science, and thus math alone won't work. Accurate forecasting is also an art, which will involve subjective analysis.
Remember, most Ivy League educated portfolio managers can't even beat the S&P 500 over a 5 year period.

Dan8267 says

If you don't care whether or not anyone believes your predictions, then there is no point in posting them.

Actually there is. Look at the entertaining (for me) exchange it resulted in.

I wish Patrick adds a feature where comments are revealed after certain amount of time. This way I will be able to demonstrate how predictable patnetters are.

Dan8267 says

when someone becomes defensive

Defensive? LOL

Strategist says

Making forecasts like these are not a complete science, and thus math alone won't work. Accurate forecasting is also an art, which will involve subjective analysis.

Irrelevant. Analysis is still analysis. Anyone proposing a specific prediction should be able to show the work even if the work is "subjective". If you are using a heuristic, then show the heuristic.

FP says

Actually there is. Look at the entertaining (for me) exchange it resulted in.

You're not making a good case that you should be taken seriously.

But Ivy League educated mathematicians and physicists can:

https://en.m.wikipedia.org/wiki/Renaissance_Technologies

Dan8267 says

You're not making a good case that you should be taken seriously

I ceratainly do not have what it takes to be a PNP

Don't worry about housing prices going higher. Live great the way without needing the the fucking house anyway.

Are you going to spend life complaining that houses are too high for your $200K saved down payment? What a waste.

Live great without needing a fucking house! I repeat.

I live in one of the finest and most expensive neighborhood in SF Bay Area. I have 2 kids. I rent 3 bedroom in law apartment with private huge garden from old millionaire for wait for it .................$1000......utilities included! If you look actively, you can find something like that. But you have to look. Don't wait for advertised for rent signs.

I don't even want a house! I save hugely not owning house.

Rather Spend your resources starting businesses and investing your money elsewhere.

Ironworker says

I live in one of the finest and most expensive neighborhood in SF Bay Area. I have 2 kids. I rent 3 bedroom in law apartment with private huge garden from old millionaire for wait for it .................$1000......utilities included! If you look actively, you can find something like that. But you have to look. Don't wait for advertised for rent signs.

Yeah, it's easy to find a sponsor willing to give you (leave on the table) thousands of dollars every month.
In other words, just assume that the exception is the rule, and things will be great.

Even if you manage that, it still doesn't change the fact that the current model is galactically stupid.

Ironworker says

I live in one of the finest and most expensive neighborhood in SF Bay Area. I have 2 kids. I rent 3 bedroom in law apartment with private huge garden from old millionaire for wait for it .................$1000......utilities included! If you look actively, you can find something like that. But you have to look. Don't wait for advertised for rent signs.

Congrats, you found a winning lottery ticket. Not everyone can find one. When the old millionaire dies, his heirs will kick you out. They could also claim you ripped off the old man by not paying market rent, and sue you. I would stop boasting.

Ironworker says

I've never seen a proud homeowner and real estate investor say his house will go substantially down soon.

I have never seen a proud renter ever say houses will go substantially up soon. But it happens a lot more often than going down.

Ironworker, you can NOT post your rent like this. Somebody may call your landlord and tell him "shame on you! We, the landlords should unite together and corner the rental market and squeeze the shit out of the renters and make them our serfs and suck our dick for the rest of their lives. You traitor should NOT betray us and price your rental like that!"

Some people realize that they won't take it with them. It's just the fucking money. And they in my opinion live the greatest and most generous life's. My landlord is smart and very intelligent man. And yes he's not a greedy bastard that will swueeze everything out of you. I will be the same quit honestly someday. It's just the fucking money. We are all going to die. And if you don't have any heirs, the state will take it from you or you donate it to anymal shelter. Or your kids will fight for it and hate each other for it, the devil takes it due eventually.

Ironworker says

Some people realize that they won't take it with them. It's just the fucking money. And they in my opinion live the greatest and most generous life's. My landlord is smart and very intelligent man. And yes he's not a greedy bastard that will swueeze everything out of you.

Aren't you the one squeezing him? Old people are very vulnerable to rip offs. No one in their right minds gives away thousands of dollars every month like that. If they wanted to donate it, they would do so to the needy. Red Cross, Orphans, Refugees, Poor, Starving, Wild Animals, and what not.
Either you are just bullshitting about your rent, or you are ripping off an elderly person. Which is it?

I have a friend whose grandfather used to rent an apartment in his house. He was a stubborn old guy who refused to raise the rent. Kept it the same what it was in the 60's or 70's, I am not sure exactly, but basically free.

Strategist says

Ironworker says

Some people realize that they won't take it with them. It's just the fucking money. And they in my opinion live the greatest and most generous life's. My landlord is smart and very intelligent man. And yes he's not a greedy bastard that will swueeze everything out of you.

Aren't you the one squeezing him? Old people are very vulnerable to rip offs. No one in their right minds gives away thousands of dollars every month like that. If they wanted to donate it, they would do so to the needy. Red Cross, Orphans, Refugees, Poor, Starving, Wild Animals, and what not.

Either you are just bullshitting about your rent, or you are ripping off an elderly person. Which is it?

These are quite strong and offensive words you're using here.

Ironworker says

These are quite strong and offensive words you're using here.

You are right. I apologize.

It all good

What would happen in the event of even a single year of stagnation in real estate pricing on a broad basis? Stagnation in pricing in a majority of locations worldwide? Disaster.

Just because the skin is rising and falling does not mean there is a healthy heart beating beneath.

Real Estate prices realitive to salaries is evidence of the inflation many people deny. The inflation is in stocks of all kinds as well. And Shadow Banking.

In the end, because of rents being high compared to the tenant's ability to pay, stability is possible only because the tenant is willing to continually change his lifestyle for the worse. He's willing to go back and live with mom and dad. Soon his sister and her family will join them. Those that can will work 70 hours instead of 60, while voting for anyone promising higher subsidies.
You are counting on the poor finding hope in inevitable decline in an age where God is dead. Don't count on it. Count on Bastille Day.

The rich again in stead of putting money to create business that are productive, they buy houses to squeeze rent, and they buy back shares to boost stock prices.
I do NOT blame them for their TAX.
I blame for the bail out. Without the 2009 bailout, the rich would be poor. The poor will stay poor and that would even out the playing field. Then let's see who can actually produce anything useful to pull ourselves out of the hole.

The bailout and money printing did way more than the tax cuts.

Except that's not true. The rich would have bought even more assets at fire sale prices without the bailout. Wealth disparity would have increased once the economy picked up.

I do not have numbers to justify whether it would put the poor or the rich on more leveled play ground assuming there was NO bailout.

What I do know is that the poor have access to 20% credit card while the rich have access to 0% FED window and the debt of the rich got bought by the FED.

I can tons of money if I can borrow at 0% over night and buy 3% treasury and leverage that by 10 to 1.

Great--I'm pretty wealthy. How do I get access to the FED window? Is there a special bank I go to? Or special handshake at my regular bank that gives me access?

joey, i was referring to the few banks that has access to FED, then their money/profit gets loaned out at a different rate to guys like black stones to use to buy up properties and rent at yet another rate and then sell them through securities market. Or loan to people like Buffet, who borrow at 1 or 2 and then buy Heinze preferred stock with 9% yield. This is a multi stage transmission process and buy the time it gets to you, it will be at what ever rate it is. But if you are rich, and has lots of collaterals, you can borrow a lot at still low enough rate and compete out those 20% credit card W2 serfs.

Without the bailout, the entire process will stop and there is no difference between 20% credit card borrower and the rich since the rich can NOT borrow. The freaky Goldman Sucks will be dead.

JZ--

Banks were not able to borrow from the FED and loan it out for a profit. Those were overnight loans, and came with a large stigma.

The rest of your post describes what is called risk premium. Loans to Buffet have much less risk than loans to corporations with higher risk. Interest rates reflect this.

And to your second post, the rich don't need to borrow--they are the ones with money. They will be the ones buying productive assets at fire sale prices.