Third Anniversary Celebration of Why The Real Estate Boom Will Not Bust
Today we celeberate the 3rd anniversary of the publication of this famous tome by David Lereah:
If you haven’t purchased a copy, what are you waiting for? Buy 10 copies today and share them with all of your friends!
Are there any books that you would like to recommend?
February 21st, 2009 at 9:35 am
Check out some of the reviews on Amazon:
“An invaluable book . . . Today’s real estate markets are booming and Lereah makes a convincing case for why the real estate expansion will continue into the next decade. This book should prove to be a truly practical guide for any household looking to create wealth in real estate.” —DEWEY DAANE, FORMER GOVERNOR OF THE FEDERAL RESERVE BOARD OF GOVERNORS
“An important book, whether you agree with the author (as I do) that housing will remain an excellent investment or are convinced that home prices are poised for a plunge, David Lereah lays out a compelling vision of housing as a continuing positive investment—and how you can profit from real estate if you already own the home you live in, are looking to move from rental housing to an owner-occupied home, or want to use real estate as an investment.” —DAVID BERSON, CHIEF ECONOMIST, FANNIE MAE
Other reviewers -
Your Yugo Will Run Forever and How to Set the Land-Speed Record With It.
Wow. Fortunately, I didn’t have to actually buy this book. My friend had it, and as we were packing up his foreclosed home, I found it on a bookshelf.
February 21st, 2009 at 10:30 am
I found this review intriguing:
Could one of the Econ 101 scholars out there elaborate on the EMH? The reviewer goes on at length, and not too eloquently, how assumptions of multivariate normality are violated by real financial data. I understand multivariate normal distributions, but have no idea how they apply to economics.
Can’t tell whether the following 5-star review is serious or sarcastic:
As the cover art suggests, buy now or be priced out forever!
February 21st, 2009 at 10:38 am
Am I happy I bought my teeny tiny house 20 some years ago? Yes — I can’t rent anything for 642.50. But would I buy my house at the 2005 height price? Hell, no.
A good book recommendation — Amy Dacyczyn’s Tightwad Gazette.
February 21st, 2009 at 1:00 pm
You know what I love about that cover art? The family looking up adoringly at the floating house will be squashed to death when the bottom falls out.
Love the Yugo reference. Is there another book by the same author called Thinner Thighs In 14 Days By Eating All the Fat and Sugar You Want? Or perhaps You Can Blow Off All Your High School Classes and Still Get Into Harvard: And No You Don’t Have to Endow A New Professorship.
#2, haven’t you yet figured out that there is no secret to economics? Put enough variables in an equation, run a few regressions, omit any variable that doesn’t track as exogenous, use as many fifty dollar words as possible (multivariate is always good), and there ya go! Would you believe I spent tens of thousands of dollars to learn that? Now I am sharing the secret with you for free!
Sorry, the Efficient Market Hypothesis is what it is. it says everyone has perfect access to the same information, but we know that isn’t true in the real world. That’s why arbitrage exists.
February 21st, 2009 at 1:07 pm
I’m thinking of featuring a book every Saturday. Suggestions welcomed.
February 21st, 2009 at 1:09 pm
#5: Do we have to refer to books by number, too?
February 21st, 2009 at 1:14 pm
#4, amazing summary of my graduate econometrics work. the site is always better when you are not on vacation.
February 21st, 2009 at 1:32 pm
#5: Is the week officially over 12:00 AM PST this evening?
#4: Thanks. I’m clearly in the wrong business: in my field, multivariate is only worth $12.57.
February 21st, 2009 at 1:39 pm
#8: What kind of dollars were you using to get $12.57? I was using RBA dollars. They devalue by 50% every ten years, which is how RBA real estate continues its unbroken winning streak.
February 21st, 2009 at 1:44 pm
#7: Thanks very much for the kind comments. Fortunately, I did not have to go to graduate school to learn what I did, just undergrad. So your taking a graduate program in it makes me think you should have spent your RBA dollars on a house. Just think, you could be sitting there enjoying your Prop 13 windfall and all you had to do was ask me what year I indexed “multivariate” at. And whether it’s acceptable for an economist with a creative writing streak to end a sentence with a preposition.
February 21st, 2009 at 1:58 pm
OMG, zero closing costs at Regis Homes communities including everybody’s favorite: Gables End!
Take a breather from today’s financial stress. There’s never been a better time to buy.
February 21st, 2009 at 5:02 pm
The Great Crash by John Kenneth Galbraith is good reading!
February 21st, 2009 at 5:10 pm
Just picked up Contagion by John Talbott today, looks like good reading.
February 21st, 2009 at 5:42 pm
#3, did you follow me here from City-Data? Either way, welcome. You may not be from the Real Bay Area where prices never go down, but it will be good to have you here.
February 21st, 2009 at 9:33 pm
Friday night’s Cavuto – on the stimulus plan.
http://www.foxbusiness.com/story/markets/markets-final-word-stimulus/
As a semi-frequent poster on here would say, “epic fail.”
February 22nd, 2009 at 12:49 am
#1, your new rule is gay, just like you.
I’d prefer just calling people out.
Burbed, you’re gay.
February 22nd, 2009 at 1:33 am
#9: The word multivariate is less valuable in my field because it’s much more common. Statisticians are much more comfortable with math, on average, than economists. I’ve never met an Econ major who didn’t break out in a cold sweat at the mention of logarithms, despite the fact that interest rates and inflation and such are all exponential functions.
February 22nd, 2009 at 9:05 am
I’ve mentioned this book a few times and think anyone- both the real estate cheerleaders and renters should read it. Its by John Talbott and the book is:
Contagion: The financial epidemic sweeping the global economy.
Here’s the summary:
“Tough times are ahead and Talbott argues that the coming recession will be on a global scale, affecting economies across the world. We have had no real growth in GDP for the last ten years if purchases with government and personal debt are excluded. In effect, government borrowing and spending on the war and healthcare and Social Security and corporate give-aways combined with dramatic increases in personal spending funded by credit card and mortgage debt have funded unsustainable levels of personal and government consumption. The world’s banks are threatened with insolvency due to bad mortgage loans and will not be making new loans for any purposes for a very long time. Consumption, by definition, has to decline. Our financial markets worldwide are in chaos with the inability of any financial house or big hedge fund going bankrupt without pulling down the whole $400 trillion derivatives market and the global financial markets at the same time. With this as a backdrop, Talbott offers practical suggestions as to how homeowners and investors can best weather the coming storm with specific advice on where to invest by type of investment and geographic location. Stocks, bonds, TIPS, commodities, real estate, housing and currencies will all be examined.”
I’m not through reading the book, but the most interesting bit so far is that he shows that the US economy has actually been in very bad shape for well over 20 years. The reason is that our overall total debt is getting to be almost as big as the value of our entire economy. As of right now, we have 11 Trillion dollars in overall debt. The US economy is worth 14 trillion, thus 90% of our potential is swallowed by debt. The grand total value of the world economy is anywhere from 35-40 Trillion.
The most troubling thing is that he sees absolutely no way for the economy to turn around anytime soon. For one thing, baby boomers will be retiring en mass. Their retirement costs in terms of social security has a stress value in the trillions- adding to the existing trillions. When all potential future debt outstanding from medicare, defense, and so on are added up, there is the potential for 56 Trillion dollars of US debt, a crushing number. Additionally, when these boomers retire, their exit will create an enormous loss of productivity. Additionally, as the largest group of homeowners, they will create a HUGE glut of homes to appear on the market as they downsize or die off, hence creating an echo-bust in housing, potentially much greater than the one we’re in now.
Anyhow, its very doom and gloomy, but fascinating, scary, and educational just the same. He has some very good points, plus he explains in great detail the housing boom, bust, the financial system that created the boom, and the involvement of politicians, lobbyists, and economists whom corrupted the US financially.
February 22nd, 2009 at 9:06 am
#17, this may be true for undergrads, but not for a serious grad program. historically, some of the best math in the statistics field has been done by the econ profs — they tend to have more challeging data sets — and econ phd programs recruit top math majors heavily. to your meta point, their philosophy is that it is hard to teach math but, by comparison, easy to teach econ. interestingly, I can think of no other field where there is a larger dichotomy between undergrad and grad level ciriculum than in economics.
February 22nd, 2009 at 9:11 am
#18, good summary, but I am waiting for you to get to the specific advice part
February 22nd, 2009 at 10:52 am
Is naming the post by # a new thing? I must have missed that one. Anyhow… #20, I think his advice comes later in the book, but from what I gather he basically thinks Americans are idiots. He made an interesting comment that there seems to be ( perhaps more so during Bush’s presidency) a rising amount of political leaders elected by fundamental Christians who are more concerned about things like abortion, school prayer, and other stuff in that vein and would rather put their faith in the unseen versus the practical- like economic management. Pretty harsh, but an interesting assessment. So in other words, a movement to have an ineffective government.
February 22nd, 2009 at 11:49 am
I’m about a third of the way through the book (pretty easy reading – good job of writing in plain English) and echo’s Bob’s review, very insightful and sobering. Bob’s summary of his view are spot and so far, I can’t say I’ve read anything that I disagree with.
On the real estate side of things, he explains the run up and the reasons for it (which he claims really started in 1981 and accelerated in 1997 and then really took off in 2002 or so), and explains why there is still a long way to fall. As a general rule, he says prices should fall to 1997 levels (start of unsustainable run up) plus inflation (30%). So he says generally, take 1997 prices, multiply by 1.3 to factor in inflation and that’s a good estimate of where things will settle, ie. what would get us back to historical price levels, which as he points out (citing Shiller) have been pretty constant for 100 years.
February 22nd, 2009 at 12:19 pm
bob (#21): It was an experiment set up by burbed to see whether referring to comments by number instead of by the previous commenter’s name would reduce the amount of acrimony in this forum. burbed specified that the experiment would run “for the rest of the week”, from which I infer that it ended at midnight PST last night. We shall leave it to burbed to judge whether it was a success. On the whole, the Burbed.com regulars did not seem to view the new system favorably (see, for example, #16).
February 22nd, 2009 at 1:05 pm
Happy new week, everybody.
February 22nd, 2009 at 3:05 pm
>>The most troubling thing is that he sees absolutely no way for the economy to turn around anytime soon.
Here’s what Bill Clinton said: “Anybody who has bet against America has lost money.”
February 22nd, 2009 at 3:25 pm
Undoubtedly we are in a severe recession, but there are two sides to each coin. The current environment represents an ideal opportunity for investors. The clueless amateurs who jumped into real estate are thrown off the bandwagon, with a reinforced thinking that real estate investing doesn’t work. This is the perfect time for the pros to act, while a ton of willing renters are lining up to pay for their mortgages. By the time the amateurs realize again real estate is a great investment, the pros are not only well positioned for the next cycle; they are well positioned for life.
In the current economy, if you lost your job, you toast. If you own rental properties, you have a steady income coming to you. No way would you be standing in line begging for a job at Great America.
February 22nd, 2009 at 3:52 pm
“Undoubtedly we are in a severe recession, but there are two sides to each coin. ”
Severe elsewhere, right?
February 22nd, 2009 at 5:13 pm
“This is the perfect time for the pros to act, while a ton of willing renters are lining up to pay for their mortgages.”
Not really. The “pros” are all saying that housing prices, notably here in the bay area, have other 20% to fall. Haven’t heard a single person with any knowledge of the local market that thinks we close to the bottom. And believe it or not, I talk to local realtors.
Renters are lining up to pay their mortgages? Yeah, about 50% of their mortgage. Renting still costs close to half of buying in most areas. BTW, if renters are lining up to pay mortgages, why haven’t you purchased yet? Surely you yourself aren’t a “clueless amateur,” are you? What are you waiting for? The renters are lining up.
February 22nd, 2009 at 5:22 pm
steve, you were asking about TVs a few weeks ago.
Two things you may find interesting:
- Pioneer is exiting the TV business (so the Kuro line will be gone).
- Magnolia in downtown Palo Alto is shutting down (on 2/28) and they are discounting their inventory.
Kill 2 birds with 1 stone and buy a TV from a dying brand in a dying store!
February 22nd, 2009 at 7:49 pm
#28,
Have you been following the news? Sales numbers have been shooting up, as tons of people are jumping in to buy houses at current affordable prices.
February 22nd, 2009 at 9:07 pm
#30,
Again, why aren’t YOU buying right this very minute? Either way, your argument for buying in the BA right now is ridiculous. Its the worst economy since the 30′s. You are still clinging to the notion that real estate will be as good an investment as it used to be. People like you will be rather disappointed because the mechanism that created the allusion that RE is a fool-proof investment is gone. Sounds like you’re right up there with the bulk of middle america that will need to re-learn personal finance from the ground up.
February 22nd, 2009 at 9:18 pm
#28, he said “This is the perfect time for the pros to act…”
The operative word is pro.
February 22nd, 2009 at 9:19 pm
bob, what exactly is that in your avatar? It looks like an elevated doublewide.
I actually enjoyed reading posts #29 and #30. I thought RE was going to encourage steve to run out and buy a bunch of flat screen TVs.
Anyway, so glad the number experiment is over. I kept waiting for a moderated post to increment everyone’s comment numbers and then nothing would make any sense at all.
Oh yeah. Just like it is here everyday. Carry on, then.
February 22nd, 2009 at 9:23 pm
#28, he said “This is the perfect time for the pros to act…”
The operative word is pro.
nomadic:
February 22nd, 2009 at 9:27 pm
Plenty of weirdness here I guess.
February 22nd, 2009 at 9:33 pm
>>bob, what exactly is that in your avatar?
Looks like a trailer in flyover land.
February 22nd, 2009 at 9:40 pm
Bob says,
>>Again, why aren’t YOU buying right this very minute? Either way, your argument for buying in the BA right now is ridiculous. Its the worst economy since the 30’s.
Did you read my argument? If not, I invite you to scroll to #26 and read it. Hit print, and read it again over cofee tomorrow morning — decaf.
Precisely because this is the worst economy since the 30′s, this is an unprecedented opportunity. Also, as I explained, you don’t have to worry about losing your job if you have rental checks coming in each month. WillowGlenner gets 10 of those checks each month. Can you beat that kind of security?
February 22nd, 2009 at 10:17 pm
> bob, what exactly is that in your avatar? It looks like an elevated doublewide.
It reminds me of this.
February 23rd, 2009 at 7:28 am
So what are you waiting for? I believe that is what bob is asking you.
February 23rd, 2009 at 8:38 am
#37, which begs the question:
1. Why haven’t you bought?
2. Where in the RBA does rent cover PITI or even close to it?
3. Where in the RBA have prices fully corrected?
If you can find a place in the RBA that meets 2 and 3, I’ll get in line. Heck, I’d even consider letting you represent me. I’d probably have to outbid willowglenner though.
February 23rd, 2009 at 9:22 am
you don’t have to worry about losing your job if you have rental checks coming in each month
RE, when did you become such a bear? I don’t even think RBA prices for choice property will come back to the point that they can be income generating. But, I’m happy to see you are focusing on the fundamentals.
the Kuro line will be gone
Herve, thanks. I saw the sad news as well. Best Buy, of all places, has been discounting these deeply. It will likely be the best TV made for a few years. The new LED-backlit LCDs are getting close, but there aren’t quite there yet.
February 23rd, 2009 at 9:42 am
I won’t buy until the price goes up by at least 20%.
February 23rd, 2009 at 11:30 am
R says,
1. Why haven’t you bought?
2. Where in the RBA does rent cover PITI or even close to it?
3. Where in the RBA have prices fully corrected?
We’ve mostly discussed these questions before:
1. I’m looking. Have you not noticed I’ve been going to open houses, talking to mortgage brokers, and tracking sales of specific properties?
2. Whereever you can find homes for under $1M, the numbers should work out reasonably.
3. RBA is already down by 15% in some cases. While there may be further corrections in some places, majority of the people here would don’t expect to see the type of correction we see in the lower end.
February 23rd, 2009 at 12:01 pm
Wait a second, do we have consensus that actual RBA is down by 15%? Or does some cases only mean busy streets/powerlines, which then means MRBA, not RRBA. (Real RBA).
In the long run, I expect to see exactly the same amount of correction at the lower end – b/c the ratio of high end property to low end property shouldn’t move by much unless the neighborhoods are getting worse or better relative to each other. In the aggregate I don’t think Palo Alto vs. San Jose has changed much over 20 years – except maybe in SJ’s favor…
It’s just the correction comes swifter to the low-end.
February 23rd, 2009 at 12:15 pm
#44, you forget that the higher end didn’t appreciate at the same high % that the low end did. See the three Case-Schiller tiers for data. Here’s an outdated link to get the idea:
http://www.socketsite.com/archives/2007/11/spcaseshiller_home_price_index_for_san_francisco_by_pri.html
February 23rd, 2009 at 12:20 pm
#43, thank you for the reply.
1. If renters are lining up, you shouldn’t have to look too hard. BTW, are you looking for a rental or a move-up owner occupied?
2. I guess you’re definition of “reasonable” is different than mine. I don’t think 2k + per month out of pocket on a rental is that reasonable.
3. Impossible. If the RBA is down by 15% in some areas, the definition has changed. I do applaud you accepting reality that prices have in fact dropped though. I agree that I don’t think we’ll see the percentage drops that we saw in areas like East San Jose just because they didn’t go up as much. I do think they will drop back to their historical norm however, which is probably around 2001 prices in most areas.
February 23rd, 2009 at 1:55 pm
#45 – well I’m accounting for that. Whatever up-down level the bottom did, and ended up at, the same will apply, at a ratio to the top end.
February 23rd, 2009 at 2:04 pm
“#45 – well I’m accounting for that. Whatever up-down level the bottom did, and ended up at, the same will apply, at a ratio to the top end.”
A Lewis, this is precisely what will not happen. Between the years of, say 2001 and 2005, the trash homes in the ghetto saw more than 200% gain. During that same period, I would estimate that RBA homes saw a gain of roughly 10%.
I’m going to use some arbitrary definitions. The crap boxes – similar to the ones WG would buy, were in the range of 250k in 2001. In 2005, one would have been lucky to have found one for 550k. That is more than double in 4 years.
On the other hand, a $2,000,000 home in the entry level RBA would have seen a gain of 10% during that time. That puts the value at $2,200,000.
I’m not sure if I am reading your post correctly, but I can tell you with near certainty: you won’t see the same depreciation ratio in the RBA as you saw in the trash boxes. At least, not as far as I can tell…
February 23rd, 2009 at 3:01 pm
Herve, wonderful picture in #38. Not only LOL, but chuckling a long time afterward. All we need is an indoor view. Wonder how many flat-screen TVs are flying through windows?
February 23rd, 2009 at 3:35 pm
Between the years of, say 2001 and 2005, the trash homes in the ghetto saw more than 200% gain. During that same period, I would estimate that RBA homes saw a gain of roughly 10%.
anon, tremendous competition for 1M houses in the RBA pushed prices higher at an astounding rate. here were some comps I pulled for a comment in August. I agree the trash will compact further, but now that the economy is contracting and credit is tight, the good stuff will too.
516 Georgia Ave 94306
Oct 28, 2003 $1,500,000
May 07, 2008 $2,305,000
365 N California Ave 94301
Oct 23, 1998 $850,000
May 28, 2008 $2,400,000
707 De Soto 94303
Mar 26, 1996 $485,000
Jun 30, 2008 $1,708,000
781 Marion Ave 94303
Mar 08, 1996 $464,000
Oct 11, 2007 $1,595,000
760 Colorado Ave 94303
Aug 10, 1994 $387,000
Oct 17, 2007 $1,548,000
(note, ‘89 buyer lost money on this one)
2642 Ramona St 94306
May 16, 1996 $588,000
Jun 05, 2008 $1,799,000
1121 Parkinson Ave 94301
Apr 07, 1994 $620,500
Jul 24, 1998 $838,000
Apr 30, 2008 $2,250,000
3652 Arbutus Ave 94303
Oct 21, 1994 $380,000
Mar 20, 2006 $1,400,000
Apr 03, 2008 $1,550,000
1344 Tasso St 94301
Feb 21, 1997 $435,000 + cost of new house
Mar 18, 2008 $2,875,000
February 23rd, 2009 at 3:35 pm
It looks like the administration has an end-to-end strategy of “giving the addict another shot in the arm”. First it was the stimulus plan. Then there’s the housing plan. Now there’s this:
Clinton urges China to keep buying U.S. debt
February 23rd, 2009 at 4:15 pm
Steve,
Thanks for confirming that owning real estate in RBA still beats any other type of investment by a mile (with the possible exception of gold).
February 23rd, 2009 at 4:32 pm
RE: “still beats” is very different from has beaten in the past. your reasoning would have had me buying the dow all the way down.
Anyone who treats their house as an investment, as opposed to a home, would be wise to take money off the table — just as you did with equities at the beginning of last year. After all, real estate is a lagging indicator.
1990 – bad time to buy a RBA house
1994 – good time to buy a RBA house
2008 – very bad time to buy a RBA house
20xx – good time to buy a RBA house?
February 23rd, 2009 at 4:40 pm
Steve,
The point is that if you put your money in the stock market, you could’ve lost 40-50% of your money. If you put it into the downpayment of a RBA house, you’d still be looking at over 100% gain (on your downpayment). That’s a day-and-night difference in returns.
February 23rd, 2009 at 4:40 pm
Assumption in #54 is that you did this in 2003.
February 23rd, 2009 at 4:52 pm
re #55 Anything is money-making if you time it perfectly.
That said, RBA real estate has been a can’t miss investment over the long run. Some of the richest folks I know made their fortunes in commercial and residential development. But, things got really strange in 2001-2002. Prices should have come way down as the tech economy tanked and people left the area. Instead, after a too brief pause, they continued a spectacular run.
We now understand why — easy credit, bubble mentality, re-allocation of assets toward real estate. My point, and it’s applicable to the economy, deficits, real estate, is that you can only ignore fundamentals for so long. That’s why I think we are headed back to 2001 prices for the RBA, and possibly lower. If you bought before then — or a planning to hold for a very long time — no big deal. If you need to sell soon, you should be running to get out while you still can.
February 23rd, 2009 at 5:39 pm
Steve,
I said 2003 because I thought that’s the priod we are comparing. If you want to go back further, the gain is even more.
In any case, what you’re basically predicting is that RBA would drop by 40% or more (to get back to 2001 levels). From all of the conversations we’ve had in this forum, I’ve only heard that kind of sentiment from Bob.
February 23rd, 2009 at 5:57 pm
and my point is that if you sell DJI in 2007, your stock investments do fine too. I think we are at off 15% or so (maybe approaching 20 but hard to tell with the low sales volume). obviously, where we are next year at this time is anyone’s guess, but off 35% to 40% from the peak seems reasonable given the direction of the world economy.
my high water mark continues to be 443 ferne. 40% off would be 1.1M — that’s seems doable for a nicely updated eichler in extreme 94306. that’s still $583 per sq ft, hardly a sign of the coming apocalypse.
February 23rd, 2009 at 8:35 pm
RE: I think RBA will drop by 40% in real terms too. May take a while though.
Although the completely incompetent Obama administration is leading us towards Japan style stagnation and deflation, but with double digit unemployment. So maybe it will happen faster than I think?
February 23rd, 2009 at 8:50 pm
If RBA prices rose 40% from their historical norm, they’ll fall 40%. If they rose 30, they’ll fall 30.
There is no reason that real estate prices should be higher than their historical norms, and in fact, due to the economy being worse than any time since the great depression and banks tightening lending more than normal, they in all likelihood will fall below their historical trend line.
February 23rd, 2009 at 8:53 pm
> If RBA prices rose 40% from their historical norm, they’ll fall 40%. If they rose 30, they’ll fall 30.
DreamT, do you mind correcting that?
February 23rd, 2009 at 9:02 pm
“DreamT, do you mind correcting that?”
The part where R forgot to adjust for inflation, or the part when he/she thought that 1 / 1.4 is equal to 1 * 0.6 ?
February 23rd, 2009 at 9:03 pm
“RE: I think RBA will drop by 40% in real terms too. May take a while though.”
I agree as well. My previous statements have been to absolute dollar valuation.
Again, a real devaluation of 40% does not seem of the realm of possibilities. It may be high, but we’ll see.
February 23rd, 2009 at 9:05 pm
anyone else care to join the 40% off club? memberships are going fast. buy now or be priced out forever…
February 23rd, 2009 at 9:15 pm
No thanks. I can’t afford that price of admission.
February 23rd, 2009 at 9:22 pm
At time of this it’s easy to be hysterical. There will be an article to be published in tomorrow’s cbsmarketwatch.com explaining why the dire predictions are wrong, and why the so-called “stress test” on banks are silly. These tests are based on an assumption that this recession will last 2-3 years, and that unemployment will reach 12%. No credible economist thinks that would happen.
February 23rd, 2009 at 10:12 pm
Yes, because home prices returning to their historical norm is pure hysterics. #62, agree about needing to factor in inflation.
February 23rd, 2009 at 10:36 pm
Nouriel Roubini is clearly not a “credible economist” then.
On hysteria, we’ve already seen select RBA properties very close to nominal 2001 prices. I’m only arguing for real, but I’ll refer you again to 1039 Ramona and the 1/31/02 sale of the much smaller 1037 Ramona. In case you need a reminder, you described 1039 in January as “well worth buying in any market” (when it was listed at 300K more than its close).
I’ll also refer you to the comps for 190 Pasa Robles, still on the market at <$1M. Interesting, here is what you said about this street 1 year ago:
If any house in those cities is listed in the low 1M range, it would not last more than 1 week on the market. The open house would be swamped, and the price would be bid up way over asking.
You were right then, but we all agree things have changed. Obviously, plenty of houses are doing much better than this house which can’t move at 30% off, but the global recession is just getting started. I really don’t think 2001 pricing for an average RBA property is out of line.
February 28th, 2009 at 5:18 am
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