Housing Bubble Bursting?

[Austin]

NPR News-6-16-06

On the way to work this morning I was listening to NPR news. Guess what the topic of discussion was? Positive thinking. Its going me a soft landing-maybe. It all depends. Somebody somewhere is really concerned about this subject.

Along a related line of negative thinking: The AI is coming out with a new class on appraising convenience markets. I am a beta tester for the course. In the first session basically what it says is that Wal-Mart is expected to wipe out C-stores in the coming years. Wally and other big retail centers are opening hyper retail center gas service operations and selling gasoline below cost to create traffic to the retail area. This is not against the law apparently and these operations are growing like morning glories in my garden. They are popping up everywhere.

The good news is the real economy appears to be doing well subject to inflation caused by increasing costs. The local Goodyear plant here in town is renegotiating their union labor contract. I wish you could hear what Goodyear is proposing. You wouldn't believe it. Bye-bye middle class. Things like no cost of living increases, outsourcing, lower wages, no seniority for recalling from a layoff. The offer basically indicates that three Goodyear plants in other areas are on their last leg. Its either take it or leave it.

 

[Steve Owen]

We're half way through 2006 and it's time to place our bets. What say you...are we going to have to stomach Housing Bubble 2007? Are we bored yet?

-Mike

Of course, if the bubble pops in '07, there will be a lot of people claiming to have been tne first to predict it back in '03. :new_argue::new_bigcrowd:

 

[JSmith43]

Things like no cost of living increases, outsourcing, lower wages, no seniority for recalling from a layoff. The offer basically indicates that three Goodyear plants in other areas are on their last leg. Its either take it or leave it. /QUOTE]

I remember being asked what the difference is between 365 condoms and a tire.

One is a Good Year and the other is a Great Year

Do potential tire plant workers have no other options? I think not. Let me put in a word for productivity. The fact that our work force is not entrenched, the fact that we are free to form businesses that are RELATIVELY unimpeded by government regulation, saves our butts from a far more grim reality than someone being forced to remain flexible in job choices or pay the price by not playing the market to their advantage.

Soapbox time for me I just got back from another 3 week trip to the Ukraine, hiking with my wife in the Crimean Mountains and doing real estate deals, which included an exchange. She is the expert.

The biggest variable in that market is will the current government and court system defend your claim to the property you allegedly own. It's no big deal if you are just talking about apartments (at current values), but the resort owner with 20 acres (roughly) overlooking the Black Sea, where we stayed, has reason for concern.

Does he plunk in $19,000 for a tennis court & upgrade amenities or stick with the tacky cabins and primitive accessories built on an area prettier than The Black Hills, if they were located along a sea?

We are worried about a bubble??? Apartment prices have tripled in Kerch in the last 2 years. Sudak is much more desireable and probably, the prices have quadrupled. Yet they are a relative bargain for what they offer. Darned income and lack of financing are the limiting factors. New rich Russians are driving the market in the southern Crimean region, not the locals, who would be new rich if offered that Goodyear job.

I will post some photos including a typical apartment floor plan and Soviet era construction examples, if there is interest, in the Lounge. Do those guys like low grade limestone, or what?

 

[DTB]

On the way to work this morning I was listening to NPR news. Guess what the topic of discussion was? Positive thinking. Its going me a soft landing-maybe. It all depends. Somebody somewhere is really concerned about this subject.

Along a related line of negative thinking: The AI is coming out with a new class on appraising convenience markets. I am a beta tester for the course. In the first session basically what it says is that Wal-Mart is expected to wipe out C-stores in the coming years. Wally and other big retail centers are opening hyper retail center gas service operations and selling gasoline below cost to create traffic to the retail area. This is not against the law apparently and these operations are growing like morning glories in my garden. They are popping up everywhere.

The good news is the real economy appears to be doing well subject to inflation caused by increasing costs. The local Goodyear plant here in town is renegotiating their union labor contract. I wish you could hear what Goodyear is proposing. You wouldn't believe it. Bye-bye middle class. Things like no cost of living increases, outsourcing, lower wages, no seniority for recalling from a layoff. The offer basically indicates that three Goodyear plants in other areas are on their last leg. Its either take it or leave it.

I believe Illinois and Wisconsin have minimum gasoline mark up laws.

 

[Randolph Kinney]

People who claim to know if a bubble exist or does not exist, is going to pop or not going to pop, are like people who worry about earthquakes; sooner or later, there will be an earthquake. Then these same people will argue about the magnitude of the quake and whether that particular magnitude is large enough to really constitute or qualifies as the earthquake they were talking about and about the location.

Here, we have people that go so far as to say any housing bubble correction has to be on a national level and the decline has to be in the average price that is greater than 20% over 3 years. Others will settle for something less or more or whatever affects their local market or their particular business.

History is what it is in the financial markets. There have been "corrections", "bubble industries", and "collapsing asset values". Values go up and they go down over some period of time.

Some people go so far as to redefine the meaning of "down". There is no "down" if you have a time horizon that is long enough. One simply waits out the market until the asset value increases past the previous high value whether on a local or national scale. Voilà! There never was a bubble and if there was, it never popped.

 

[Steve Owen]

There is no "down" if you have a time horizon that is long enough. One simply waits out the market until the asset value increases past the previous high value whether on a local or national scale.

Yes, but don't try doing that trick with buggy whips, spats, wagon wheels, or plow collars. Fact is, some assets decline and never reach their previous highs... like stock in worldprints.com.

 

[JSmith43]

"Patrick Henry did not say 'Give me safety or give me death.'" - John Stossel

I am envious of that tag line:icon_idea:

 

[Randolph Kinney]

Yes, but don't try doing that trick with buggy whips, spats, wagon wheels, or plow collars. Fact is, some assets decline and never reach their previous highs... like stock in worldprints.com.

Or ... you can add that Love Canal housing, home of the first super fund EPA site, was not the disaster that it use to be if you waited long enogh. :new_smile-l:

Of course, someone will add a remark that there are ghost towns around today. But then, you haven't waited long enough, have you? h34r:

 

[JSmith43]

Or ... you can add that Love Canal housing, home of the first super fund EPA site, was not the disaster that it use to be if you waited long enogh. :new_smile-l:

Of course, someone will add a remark that there are ghost towns around today. But then, you haven't waited long enough, have you? h34r:

It's easy to be a pessimist. We are born, grow old, die and worms crawl out of our eyeballs & ears. The sun will become a red giant and incinerate us. Eventually, it will form a black hole and suck in the ashes/gasses.

But then what? See! You can still be an optimist. The miracle of life is enjoyed by all of us as a result of one gigantic bubble defying event after another. We are flying through space on a crusted surface of molten rock, warming our tootsies via a nuclear chain reaction.

One heck of a joy ride, an opportunity of a LIFETIME, or, merely the opportunity to fret about the downside. I say, prepare for downsides that are reasonably within your control......unless you just want to go for it all

 

[Steve Owen]

I am envious of that tag line:icon_idea:

Okay, now I'll make you salivate. I didn't read that somewhere and pick it up, I heard him say it with my own ears when he was in Kansas City recently.

http://www.nytimes.com/2006/06/16/nyregion/16housing.html?pagewanted=1&th&emc=th

Seems that the housing bubble might help some folks if it pops.

For those of you who are too conservative to sign up for NYT, a little teaser:

There are multiple reasons for the recent rise in rents, economists and others say. The population is growing, and housing construction is only beginning to catch up. Many new arrivals make more money than people already here. Much of the new housing has been for people with higher incomes, and most of it has been for sale, not for rent.

And this:

"You might expect in places where housing gets really expensive, it will have a negative impact on economic growth," he said in an interview. "That's a kind of received wisdom: If a place gets too expensive, people move out and it shuts down. The logic doesn't hold together too well. Because why does a place get too expensive? It's typically because of high demand for that place." (Andrew F. Haughwout, a research officer at the Federal Reserve Bank of New York)