re: RHK: Rest in Pieces>My leading housing bubble indicators are: Folks prattling on about real estate gains at cocktail parties (much like they touted gains in Gilder stocks in 1999); relatives offering condo-flipping investment opportunities; ugly-ass giant McMansions in the most uncanny places (like, on top of steaming trash heap or built on stilts in a swamp -- but hey, it's got granite counters!).
But the gains and crazy prices of bungalows are nothing new; that's been evident since the late 90s, coming off the housing downturn of late 80s and early 90s.
The problem with calling the housing market a bubble is that it's the fundamental fact is that land is a resource that is fixed and not growing and people want to own homes and there are good financial reasons to do so: investment and taxes. Why some prices in some areas are certainly overvalued, it's not based on false promises. In the absence of war, natural disaster, or Armageddon, real estate is a smart investment for the long run, whereas certain stocks or investment sectors are based on unsound fundamentals.
re: RHK: Rest in PiecesScott, for your housing bubble prediction: all regions at once? Or a domino effect? This a US only prediction?
If I read Scott's post correctly, he is limiting his prediction only to properties in north west Idaho and the French riviera.
I thought Scott was kidding when he made that prediction. But now I'm not so sure because others on this message board seem to be taking his proclamation seriously.
Anywho, I'm desperately waiting for that bubble to burst because all those articles that are predicting a post-bubble global depression are keeping me awake. It also doesn't help when Mr. Greenspan keeps poking it with his vague soundbites. Just stick a freaking needle in it and get it over with.
re: RHK: Rest in Pieces>I'm desperately waiting for that bubble to >burst because all those articles that are >predicting a post-bubble global depression are >keeping me awake.
Hey Jim, I agree. And say, I've fired up our own new housing thread. So pitch in here:
re: RHK: Rest in PiecesThe problem with calling the housing market a bubble is that ...
Yikes! We have a home owner amongst us who is living off his reverse mortgage!
Handle with extreme care. It's deja-vu all over again. It's like talking to a guy in 2000 who went on a spending spree in cuckoo land hoping that his dotcom options will eventually pan out.
Scott, you have been warned.
... real estate is a smart investment for the long run ...
Jonathan Clement, who writes for the WSJ, recently had a nice article that debunked the myth that buying a house is a good "investment."
Over the long run, buying a house is better than renting, but please don't call it an "investment."
re: RHK: Rest in Pieces>Here in NYC, they create real estate out of >thin air. Literally.
To bring it back on topic for telecom, there was a plot once for a "zero floor space 5ESS."
In short ... tip the frames over, put giant horizontal blowers on the side, and false floor over it. Craftspeople would have to crawl on their hands and knees to repair it, but you didn't have to use valuable office space for silly things like equipment racks.
But still fixed on a plot of land. Unless you fill in wetlands, use airrights above highways/railways, or have the ability to build structures that float on air, real estate is still attached to a fixed and disappearing resource.
Now space...that's an untapped area to build. </here>
No reverse mortgage here; bought in 2002 with a nice low rate and sizable downpayment.
Unless you benignly control volanic activity, coastal erosion, or tectonic plates, there isn't any more land creation going on. Land is being purchased for commercial or residential use or public space. It's a resource that is disappearing as a unqiue one to own, especially in desirable areas of the world.
Annual tax reductions, generally higher price at sale than at purchase, collateral for low interest loans, multiple ways to take money out,...sounds like an investment to me.
Buying a 1000sq foot shack in blighted area that has a tendancy for earthquakes for $1M may not be an investment, but great swaths of real state purchases are.
Just like LR message board postings are not the word of god, nor are WSJ articles.
re: RHK: Rest in PiecesDidn't LR also buy into the optical bubble? I mean isn't that why you created and named it Light Reading - to play into the optical market? (not accusing, just curious) Not that that's a bad thing, and certainly not related to RHK's role.
re: RHK: Rest in PiecesHe said land - as in Real Estate. Not Fake Estate, as in Condo. And as I recall the 80's housing bubble burst - it hit Condos the worst.
I lived in both the northeast boston area (which is bad) and the SF area sunnyvale (which is much worse). But as much as i kept thinking it was a bubble waiting to burst (who can afford those houses?), the problem kept being that the land is the limited supply, population keeps increasing in those areas, so demand won't let the price drop in the long run. I mean even after the 80's housing crash, the recovery was pretty quick (5yrs?), and we're way past those values today.
But the gains and crazy prices of bungalows are nothing new; that's been evident since the late 90s, coming off the housing downturn of late 80s and early 90s.
The problem with calling the housing market a bubble is that it's the fundamental fact is that land is a resource that is fixed and not growing and people want to own homes and there are good financial reasons to do so: investment and taxes. Why some prices in some areas are certainly overvalued, it's not based on false promises. In the absence of war, natural disaster, or Armageddon, real estate is a smart investment for the long run, whereas certain stocks or investment sectors are based on unsound fundamentals.