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George,
It seems like every 3rd article over at Ben's pertains to the FL market, and it's not good as you well know.
The big difference that I see is realtors are allowed to take positions in the very product they are promoting. Stockbrokers on the other hand have to be the last to buy and the last to sell if they take a common position w/clients. (This way they are buying at the "top" and selling at the "bottom" so to speak, especially with thinly traded issues).
While this seems unfair on the surface it actually makes sense and usually prevents brokers from becoming entangled in their clients affairs. However realtors often own one or more homes in the very projects they are attempting to fill. If RESPA addresses some of these issues pain could be spared on both sides of the transaction.
I'll reserve my schaudenfraude for a very few demonstrably horrid people and in private. But by the same token, I'm not going to be very sympathetic to FBs and flippers.
George,
What I should have said is that both NAR and RESPA need to draw a better defined line between a "broker or agent" and a "market maker".
I am somewhat surprised that no one seems to have actually read this thread's initial post.
I was never talking about people who bought overpriced McMansions, designer handbags or Hummers with slot machine home equity. These people aren't collateral damage, by definition.
What no one seems to want to accept is that there are lots of people -- up to 60% of 1/3 of working Americans across the entire country regardless of the "color" of their state, that rent and are at some risk of losing their jobs because of all this.
And I am a bit surprised at the universal contempt that most everyone here seems to have towards everyday working folks who are guilty only of trying to make a living in an economy that offers them ever more McJobbed opportunities. Everyone seems to be locked into some kind of tunnel vision focusing only the enemy across the trench. Well, all those folks you can't or don't want to see will take the brunt of this; much more so than the FBs you have in your sights.
I think that healthy schadenfreude has become seething anger and outright hatred. Good luck with all that.
I love fois gras, but hate pate de fois gras.
Particle board foie gras?
And I am a bit surprised at the universal contempt that most everyone here seems to have towards everyday working folks who are guilty only of trying to make a living in an economy that offers them ever more McJobbed opportunities.
I have a universal comtempt towards humanity.
I’ve been forced to change my plans because of this nonsense to protect myself and my family. How much anger at people who threaten your family is too much?
I share the same annoyance. When the fundamentals do not align, it takes too much faith (future price, future career, etc) to buy.
I'm a secular apocalyptist, so a little contempt for humanity comes rather naturally.
But more seriously. The primary reason the housing bubble worried me was its economic aftermath. I could live with renting all my life and I could even live with living in a 400 sq ft studio for the rest of my life. But I can't live without a job.
I think that healthy schadenfreude has become seething anger and outright hatred. Good luck with all that.
The old saw "Comedy is bad things happening to other people. Tragedy is bad things happening to yourself." is applicable to the bubble bursting. I see nothing wrong with drinking a beer and chuckling as the more farcical extremes of this bubble come crashing down. If it doesn’t come down, it will be truly tragic as I will have screwed my wife and little ones.
I agree that the hatred thing is bad Karma. Bad for your soul. Bad for the people around you. Chill, wait and chuckle. If it doesn’t pop, cry.
But more seriously. The primary reason the housing bubble worried me was its economic aftermath. I could live with renting all my life and I could even live with living in a 400 sq ft studio for the rest of my life. But I can’t live without a job.
The bubble does not worry me. I worry myself.
SFWoman Says:
This is interesting, from Ben’s Blog. This Realtor seems to be able to hold contradictory notions in her head. Boston seems to be the second dead canary.
If not a canary in a proverbial coalmine, Boston is certainly one of the leading fronts of the bubble, along with FLA, NOVA, LV and perhaps SD. Our old neighborhood in Boston city proper (South End) has been dead in the water for over a year now. The change in sentiment that's occured amazes me still. When we listed our place a little over a year ago, most of the agents we talked to gave us very high comps for thinking about our listing price. I was honestly surprised. We eventually listed and sold slightly below comps at the time, and today's comps are at least $50k, sometimes over $100K below our SALE price! Besides, sales volume is seriously down there. The BA RE market looks and feels just like Boston's did last summer/fall.
SQT,
Thanks for the links. Isn't truly amazing how much the MSM have jumped on the RE downturn bandwagon? I'm a little surprised how they've embraced it so wholeheartedly. Like SF Woman points out, the WSJ literally has an article about the RE downturn every single day it seems. They at least have completely accepted it as reality.
Randy H,
I'd hoped that I made clear that if for nothing more than my vocation I'm forced to straddle this issue. I'm one of a handful of planners here in the PNW (to my knowledge) that actually takes the pains to understand the IRC as it pertains to "self-directed" or RE IRA's. I can't be publicly critical of those that no longer have any desire to invest in the stock market and want to buy bricks and dirt. While not by any means a "licensed realtor" I will not hesitate to pull the plug if I suspect someone is flipping or in any way doing a "momentum play".
As I said our "third daughter" is in the belly of the beast by being employed directly through a major builder AND having just bought in Sacramento! I talked until I was blue in the face trying to prevent this transaction. I don't know there was anything more ANYONE could have done.
I've come to accept that you can't "save" everyone. Not even from themselves.
But I can’t live without a job.
Cavepeople did not have jobs. Yet they lived.
So I'm the bubble sitter, my husband is the "we should have bought three years ago" - although he conveniently forgets that he was unsure about his new job and how long it would last and he didn't seriously want to buy a house then. Last night he tells me his work colleague who did buy a townhouse for 400,000 or so, says that it is now worth 600,000, and we should have bought one too (and it's all my fault because I din't want to buy a townhouse in a crappy school district) - meanwhile I'm quietly sitting there thinking - "but he hasn't sold his townhouse yet, has he? And he's not planning to at the minute, so by the time he does it won't be worth 600,000"
But for the sake of avoiding an argument I let it go, I will definitely remind him when everywhere is really crashing - I hope it crashes and quickly - I don't want this guys story shoved down my throat every 5 minutes if he does make a huge profit.
Peter P,
My mammoth hunting skills are a bit rusty, but maybe I should go deer hunting this fall to practice for the RE hard landing.
DinOR,
Yeah, people will have to learn their own lessons. But at least your "third daughter" has skills that can be applied outside of RE and they're young. So hopefully they'll make it out somehow.
SQT,
You've got your own blog? Cool. Lay it on us.
But you have to stay out of Costco! (It's a weird "cult") that only costs $35 to join. There's never any parking and I'm not sure you save all that much. Me and Mrs. D? We've come full circle. As empty nesters we now have reverted back to like it was when we were dating. Either eating out every night or going to a local market and cooking what we just bought!
If it weren't for the salad crisper I'm pretty sure we could get by without a fridge. (We used to keep the beer in a styrofoam cooler). "The life of Reilly!"
Claire,
"Last night he tells me his work colleague who did buy a townhouse for 400,000 or so, says that it is now worth 600,000, and we should have bought one too"
That's the sort of Monday morning quarterbacking that makes me bitterly resentful that my parents didn't go into debt buying Microsoft shares in 1990.
Claire,
I will straighten your husband out!
Jeebus, If my Aunt had balls she would have been my Uncle!
As we revisit "Great Moments in Flipper Wet Dreams" 05 prices in 06, 04 prices in 07, 03 prices...... in 07, 02 prices....... in 07, 01 prices in 08 and 2000 prices...... in 08/09 you make extra sure to bring up the carrying costs as we pass each "grave marker".
"Welcome to Lago!"
DinOR,
Yeesh, Costco-basher!@#$!!@?!
I'm single and I buy 80% of my groceries there (the rest going to Trader Joe's and various Asian supermarkets). It saves time and money (though most of the money goes back to buying some kind of less than necessary electronic gadgets) to shop there, and they actually pay their employees a living wage.
SQT,
Yes, they sell coffins and other things
http://www.costco.com/Browse/Product.aspx?Prodid=11066312&whse=BC&topnav=&browse=
Don't knock it, it's probably a decent quality coffin at a good price.
They also sell jewelry, designer bags, bulk florals, etc.
I could live with renting all my life and I could even live with living in a 400 sq ft studio for the rest of my life. But I can’t live without a job.
The bubble is a test of our confidence in our future earnings prospects. As long as the ratio of dwellings to people remains at around 1-3, and you are willing to bunk with at least 2 family members or roommates, you should be able to keep yourself appropriately housed if you can earn a median income and avoid ruinous debt. In the last depression (deflationary), it was leveraged farmers and stock speculators who got hit the worst. Even at the height of the depression, 2/3 of the workforce was employed.
Even in a hyperinflationary scenario, your income should hyperinflate in line with the rent on your apartment (while home prices, which have already hyperinflated, start to stagnate). If wages are not hyperinflating, then it is impossible for rents to hyperinflate unless the population grows faster than the total supply of housing (owned and rented). In a deflationary scenario, rents will fall along with incomes. In the inflationary '70s we had high inflation and high income growth (good for owners of real assets like RE, bad--but not ruinous--for renters).
Even in a hyperinflationary scenario, your income should hyperinflate in line with the rent on your apartment (while home prices, which have already hyperinflated, start to stagnate).
You get a raise = economic growth
Everybody gets a raise = inflation
Everybody gets a raise but you = hyperinflation
Robert Cote',
They aren’t productive. In some cases they are anti-productive. Keeping the 6% plus closing costs monopoly alive is part of our current problem.
RTFA. Collateral Damage. I didn't realize so many people were unfamiliar with that concept.
DS,
What's wrong with Francis Fukuyama? I thought he detached himself from the neocons. You do know who he is, right?
SFWoman,
I wouldn't call Pat Buchanan a classic conservative. But then my idea of a classical conservative is Edmund Burke.
astrid,
I'm sorry. We've been members there over the years and for males it's a nightmare! What should take an hour out your weekend TOPS becomes a shopping adventure. Please to notice the guys that have given up and actually think shopping is FUN! Let's make a day out of going to Costco! (That's why you can never find a decent parking place). Besides if you go every week it's basically the same stuff anyway.
They DO pay decent wages and that I applaud. It's just as an independent I'm somewhat expected to shop with other independents. It's kind of how things work in Oregon.
"Devil's chickens"--that is outstanding. I suppose the FBs are deviled eggs, then.
Glen,
Sorry, I wasn't very clear in that statement. What I meant to do was the idea of a perma housing bubble versus a major housing bubble crash. I could live with the prospect of a permanently inflated housing prices (though I don't think for a second that this permanently high plateau is possible) but I may not be able to live with a depression.
The Great Depression in the US is by no means the worst depression in the World's history. Worse would be Germany in the 1930s or most of Africa today.
But you're right, paranoia aside, there's very little chance that my boyfriend and I and our family members will be unemployable. We may have to settle for a lower standard of living for a while, but our cash savings and learnt skills will see us through.
SQT,
Punished's post left me........ puzzled? Thanks for putting it into perspective. Hey dug your blog! There used to be a really good one called "Boycott Hollywood" that did a really great job exposing the facade but took a strange bend and went totally political. Sad.
I can't help but get a little steamed when anyone says "I check back from time to time and prices are still going up". So now that all this time has passed you guys are FINALLY right yada yada. (Like the sun even shines on a dog's a$$ somedays). Sheesh. Enough already.
Are punished's comments any more vitriolic than others in this thread? I don't really see anyone chiding "anon" for claiming that any and everyone who dared take a job even tangentially related to real-estate should have better understood cyclical industry rotation.
I second Peter P with that 'Huh?'
Either "Punished" is pulling our leg or s/he's a clueless troll.
Let me get this straight, Robert.
The children of a home depot clerk who applied when they hung up the sign "help wanted" because the RE boom was creating excess demand is an "active participant" deserving of due comeuppance?
Give me a break.
DinOR,
My boyfriend hates shopping but copes with Costco because they always have free food samplers. Same with Trader Joe's. He puts up with the longer shopping trips for the free food. The books, CD/DVD, hardware and electronics sections can also distract him while I shop.
Parking can be a problem for some Costcos, though I find that to be less of a problem in CA because there's a lot of Costcos there.
Punished,
Jump now while the jumpings good. Get off this site and start surfing for a new job while the economy is still humming.
If you work with that realtor gal who bought three cash-buring rentals on ARMs to be managed by her stay-at-home husband was managing, tell her we were asking about her trip to Fiji.
Comedy, pure comedy.
Since when did we all claim to be rich, independently wealthy and self-employed, or to hate network admins (one of my former jobs, btw)? And what's the deal with the "people reluctant to commit suicide by neg-am finaning = colluding to drive up rents" ?
What a load of crap.
The children of a home depot clerk who applied when they hung up the sign “help wanted†because the RE boom was creating excess demand is an “active participant†deserving of due comeuppance?
Fair point and thus do your best to educate the innocents (like Punished here) to maneuver now for the post bubble economy.
The Great Depression in the US is by no means the worst depression in the World’s history. Worse would be Germany in the 1930s or most of Africa today.
Agreed. Like the US, Pre-war Germany had too much debt (for war reparations, though, not McMansions). Too much debt + economic crisis + highly militaristic and chauvinistic population = bad result. Hopefully we won't repeat it.
SFWoman,
The current White House is about as fiscally conservatives as a pack of sex and booze starved sailors in port after 6 months at sea. So I definitely agree that Pat Buchanan is more conservative than that bunch. But Buchanan's rhetoric always struck me as more xenophobic and popularist (similar to certain popularist politicians of the 1930s) than classically conservative.
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We've been called JBRs (jealous bitter renters). Once hurled at us by genuine real estate bulls and trolls, the term has faded as our collective perspective has gained mainstream recognition. But I see a risk. We risk being seen as cruel, ungracious winners, bad sports. Of course we will have our schadenfreude. But I ask you to reflect for just a moment about those who will become unfortunate collateral damage of the Bubble popping. The real estate boom has created many jobs. Not just for agents and mortgage brokers, but contractors, home builders, office workers, IT support techs, retail clerks, document couriers, janitors, etc. Directly and indirectly, as the residential real estate industry shrinks back to its normal size relative to the rest of the economy, many workers will likely lose their jobs. Sadly, those lowest on the totem pole will probably suffer the worst.
Many, if not most, of these people are just hard working, everyday folks who took jobs where they could find them. They didn't cause this mayhem, but they will get burned by it. As things unwind, I ask you to consider those who are the innocent casualties, while enjoying the fruits of your self discipline.
It's always better to be a gracious winner and a good sport.
--Randy H
#housing