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Quick Housing Math for President B.O.

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February 26, 2009 – Comments (28)

OK, B.O., I suspect you're not going to pay attention to basic, third-grade stuff, because you don't bother to use object pronouns following prepositions. Your willingness or capacity to absorb third-grade lessons aside, I offer this simple math, based on today's new-home numbers.

We will leave aside, for a moment, the usual criticism of the brain-dead press, which cannot report the real numbers (YOY ignored) and can't comprehend the idea of a margin of error (the month to month sales volume change is is within the margin of error, and therefore may not be a drop at all.) No matter, YOY, new home sales are down 48%, with a 7% margin of error. Get yer numbers here.

To summarize (and simplify, for the sake of easier math), these numbers put a (median) new home price at about $200,000, about a 10% drop from ONLY ONE MONTH AGO. That means, in this climate, those who bought last month are already in the hole $22,000. (If you lose 10% to get to $200,000, you started at $222,000.)

Your tax credit is a maximum of $8,000. People who get that and buy a median new home in such a climate are thus still out $14,000, after one month.

Assuming they put 20% down (a big assumption, because, remember, this scnario assumes they're getting a tax credit, and to qualify for that they have not been home owners for 3 years, and thus must have this money ready in savings) they laid out $44,000. Half of it is already gone, and your tax credit didn't even cover it. Another month of this, and these new buyers will be in negative equity turf. Sadly, the $8 grand you sent them will probably just barely replenish their checking accounts to cover the closing and financing costs, plus escrow deposits. So basically, these folks have just flushed $44,000 worth of down payment down the toilet, along with pre-flushing the $8,000 you're going to send out of my pocket when they get their tax return.

How many median families out there do you suppose can afford to donate $52,000 to the Fraternal Order of the Sewer Rat? Not many, is my guess, even if you give them a chunk of it. And when they start to do the math (people aren't that stupid, at least not anymore) they're going to do what I'm doing: wait for the prices to drop so the sucker selling the house takes the cold-water bath, instead of the buyer.

The moral of the story, B.O., is this: You cannot stop the fall of house prices. Not with giveaways. Not with low financing. Not by stamping your feet and declaring that home prices should stop falling. The overpriced housing out there will revert to the mean, and likely "undershoot," because that is what always happens, especially when the economy is as bad as it is.

Tough news, to be sure, but it should help you to stop throwing good money after bad -- at least if you'll do the math.

Get the U.S. economy back on its feet by stimulating consumer spending and business investment. Let the overpriced assets take care of themselves.

Sj

28 Comments – Post Your Own

#1) On February 26, 2009 at 11:50 AM, smersche (37.65) wrote:

So you're contending that houses are losing 10% of their value per month?  At that rate, a $200k house would be worth $57k after a year.  I don't think we're seeing prices drop that quickly.  Certainly it's not the average for the nation.  

If you really believe that, then you should hold on to your money and buy like crazy in Febraury 2010.  

You don't need math figures to understand that an $8000 tax credit will increase demand for houses.  There is a certain number of people that were on the fence, and the tax credit will push them to the buy side.  

Good luck timing the bottom of the housing market for your purchase.  

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#2) On February 26, 2009 at 11:59 AM, DemonDoug (32.31) wrote:

+1 for SJ.

-1 for smersche, repeating the same tired arguments that are basically talking points for the most corrupt "trade" group in the USA, the National Association of Realtors.  I'm sure SJ has been holding onto his money, and not buying into what is still the biggest most speculative large scale ponzi scheme ever perpetrated, the US housing market.

Are there a certain number of people on the fence?  Do you know these people?  The only people buying houses are ones who feel they have little choice, like a doctor who is newly married and is starting a family.  Even then he is making a dumb decision investing wise.

And I love the snarky comment at the end.  "Good luck timing the bottom."  Well, seeing as how SJ has one of the highest scores in all of CAPS, I believe if he ever buys a house, he will be buying it at an appropriate value, not the stupidly overinflated prices that houses are STILL at.

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#3) On February 26, 2009 at 12:05 PM, djemonk (< 20) wrote:

OK, B.O., I suspect you're not going to pay attention to basic, third-grade stuff, because you don't bother to use object pronouns following prepositions. Your willingness or capacity to absorb third-grade lessons aside, I offer this simple math, based on today's new-home numbers

Wow. This is what passes for critical thinking at TMF?  Are you involved in any of the TMF newsletters that people pay for?

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#4) On February 26, 2009 at 12:15 PM, BigFatBEAR (29.22) wrote:

Ugh. While I agree with most of your argument, your tone totally put me off here.

No rec today - let's keep it more civil, please.

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#5) On February 26, 2009 at 12:20 PM, smersche (37.65) wrote:

DemonDoug -

I don't know what arguments the realtors are using, but do you think housing prices will continue falling at 10% per month in the future?  If not, do you think the whole blog post is at the very least a little biased and exaggerated to make a point? 

Do you disagree that an $8000 tax credit provides an incentive to buy a house?  Do you agree that incentives increase demand?  Do you think that some time in the next year, housing prices might be at a low point where the $8000 incentive makes the investment worthwhile?  

The argument of the blog post seems to be against the $8000 tax credit based solely on numbers from January, with no look to the future.  

I think the $8000 tax credit will reduce the size of the "likely undershoot" that TMFBent says will happen when the market bottoms out.  

You ask who the people are that are on the fence?  You say it's only people starting new families.  Well, don't those people have the same rent/buy option that everyone else has?  Depending on rent/purchase prices in their area, wouldn't an $8000 tax credit influence their decision? 

I'm not trying to encourage people to buy.  I'm just questioning the figures and conclusions in the blog post.  

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#6) On February 26, 2009 at 12:59 PM, Billullo (< 20) wrote:

They will fall 10% or any other percentage until they find the price correlated to the demand and the price that people will be able to afford to pay. it wont just keep coming down 10% everymonth simple economics the right price will be set when demand crosses supply at the right price or the price the buyers are going to be able to pay

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#7) On February 26, 2009 at 1:09 PM, blake303 (29.31) wrote:

smersche has it right. 

-1 to Bent for his childish letters to Obama.

-1 to DemonDoug for foolishly believing that a high CAPS rating (Bent doesn't have one - no active picks) has any correlation with investing acumen, foresight, or intelligence. 

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#8) On February 26, 2009 at 1:32 PM, BGriffinFlorida (27.29) wrote:

TMFBrent,

Do you really think thePresident lacks the 'ability to absorb third grade lessons'?  Being such a learned man yourself, you must realize you have declared open season for criticizing your inaccuracies and misunderstandings....

.      .

 

 

I'll take the low hanging fruit:

.       .

 

#1  OK, TB  (T.mf B.rent: if Barack can be Body Odor, then you can be Tuberculosis): if you are going to call someone's grammar into question, you should give specific examples. Otherwise (in the words of Chruchhill), this is the type of nonsense up with which I will not put.

 .        .

 

#2  Do you feel your understanding of statistics and of the report is strong enough that it is reasonable for you to ridicule the understanding of other people???  Let's consider two examples:

.      .

 

     A.  Thinking you can extrapolate, based on this report, that people who bought one month ago are now $22,000.00 in the hole, suggests you have some serious misunderstandings.  This report does not provide that information.  Even simplifying you cannot get to your point.  These are NEW home sales. This report does not speak to at what prices the houses that sold last month might sell for this month (you do realize that houses differ and are not all the same, that also might be a third grade subject). 

The report more directly notes the distribution of sale prices.  Note that in the report the percentage distribution of total houses sold in the $300-400K, $400-500, and $500-750K ranges dropped from December to January from 15 to 10%, 7 to 5%, and 3 to 2% respectively.  This reduction in higher cost homes selling probably has a much larger effect than the decrease in price of an induividual home.

 .       .

 

     B. Your question beginning 'how many median families out there..' is absurd, and suggests you really don't know enough about statistics, to be taken seriously.  How many median families? At most one, because there is only one median.

.   . 

 

 The moral of the story TB, 'it is better to keep your mouth shut, and be thought a fool (little 'f') than to open it and remove all doubt.'.

Before you get all huffy, TB, remember this is exactly what you did to BO, but you have the ability to defend yourself, whereas I doubt he even knows about your affront.

 

.      .

 

As a side note, i'd be interested in knowing what special third grade math you have devised to determine that houses are still overvalued assets.  My calculation suggests that we have already overshot to the downside.... when you cannot sell a house for what it costs to build the house, then prices are too low.

.      .

Perhaps you will argue that the cost to build a house should fall... but the only major component of the cost to build a house that can easily be reduced is the labor.... you aren't arguing that wages are too high, are you, TB?

 

 

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#9) On February 26, 2009 at 1:35 PM, DemonDoug (32.31) wrote:

I hate being defensive, especially when i'm defending someone else, but I feel the need to in this case. 

djemonk  This is a blog.  You are going to ding SJ for pointing out something in a sardonic way?  He's mad, and he's not holding back.  Maybe you'd prefer he'd just lay over and accept everything that his government tells him.  I DON'T.  It's the awful zombie financial media that has been hand-in-hand in letting all this bailout crap get out there without any real questioning, and if Bent wants to hit below the belt, I say keep pounding away, because hardly anyone else is.  But the point is this is a blog, not a news article.

BigFatBEAR  I'm not sure why you are put off by the tone.  The guy is PO'ed, and he's letting it be known.  Would you prefer instead he just point out the facts without any emotion behind it?  Go read Bloomberg if you want that type of reporting (and I'm giving Bloomberg credit, they do a better job than anyone in terms of financial reporting from all I've read).

smersche I will take your completely off-base arguments apart one-by-one, just for you.

I don't know what arguments the realtors are using, but do you think housing prices will continue falling at 10% per month in the future?  If not, do you think the whole blog post is at the very least a little biased and exaggerated to make a point? 

First, I call BS on you don't know what arguments realtors are using.  Is it exaggerated and biased? Sure.  Will home prices fall at a regular rate of 10% per month?  No, but they will continue to fall, and it might not take 2 months to wipe out a down payment, but year-over-year, sure.  And who cares? It's a blog, not a reasonable debate.

Do you disagree that an $8000 tax credit provides an incentive to buy a house?  Do you agree that incentives increase demand?  Do you think that some time in the next year, housing prices might be at a low point where the $8000 incentive makes the investment worthwhile?  

It provides no more incentive than to anyone who was going to buy a house anyway.  No, I don't think housing prices will be low enough to make the $8000 credit worthwhile, specifically because of all the other bailout nonsense that has gone on that continues to keep the prices of homes artificially inflated.  Do incentives increase demand?  Only for those foolish enough to think that it's a good idea to buy a house, and those people can no longer get credit to buy a home, because they were the ones who bought at overinflated prices to begin with in 2002-2007, and alt-a and subprime are done.  Those of us with good credit (if we are smart) will refuse to pay for an overpriced asset that is guaranteed to fall and lose us money.

The argument of the blog post seems to be against the $8000 tax credit based solely on numbers from January, with no look to the future.  

Median home price needs to fall by at least another 50k, based on historic metrics of median income to median home price.  If anything this blog is looking very presciently into the future.  Of course, in lala land, buying a home at 10x income with a subprime mortgage so you can sell in 3 years is still considered normal, but here in the real world, that model is dead.

I think the $8000 tax credit will reduce the size of the "likely undershoot" that TMFBent says will happen when the market bottoms out.  

Of course it will reduce the size.  Not enough to make the investment profitable though.

You ask who the people are that are on the fence?  You say it's only people starting new families.  Well, don't those people have the same rent/buy option that everyone else has?  Depending on rent/purchase prices in their area, wouldn't an $8000 tax credit influence their decision? 

How many people do you know that are on the fence?  Here is my answer to that question: zero.  In fact most people I know would like to get the hell out of their house as it is much more of a ball-and-chain.  As far as the rent/buy option, no, it will not influence their decision.  Buying a home is much more emotional for most people, that's why the NAR is so nefarious, and those of us who are smart and haven't bought will continue to not buy until we can buy a home at 2x annual income or less.

I'm not trying to encourage people to buy.  I'm just questioning the figures and conclusions in the blog post.  

I again call BS.

The only thing this tax credit will do is sucker some more stupid home buyers into losing more money in a vain attempt to prop up home prices at currently unsustainable levels.  If Obama wants to save people 8k, he can do better by letting banks fail and we have real price discovery, then it will save people a good 50-70k per home.  Now THAT would be a real incentive to buy, an actual free market with real price discovery.

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#10) On February 26, 2009 at 1:48 PM, BGriffinFlorida (27.29) wrote:

In re-thinking my criticizm of your 'how many median families'  question,  I now realize that there could be more than one family.  The group is still very small.  Your question remains, none the less, absurd.

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#11) On February 26, 2009 at 1:53 PM, BGriffinFlorida (27.29) wrote:

Oh, and one more error on my part.  I misnomered you as TMFBrent instead of TMFBent, sorry about that, TB, or SJ.

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#12) On February 26, 2009 at 1:56 PM, smersche (37.65) wrote:

Is it exaggerated and biased? Sure.  Will home prices fall at a regular rate of 10% per month?  No, but they will continue to fall, and it might not take 2 months to wipe out a down payment, but year-over-year, sure.  And who cares? It's a blog, not a reasonable debate.

Well, since this is a blog and we shouldn't expect any reasonable debate, I'm wasting my time here.  

The whole point of my original comment was that the points the blog made were unreasonable.  Since we have that all cleared up, I have nothing else to add.  

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#13) On February 26, 2009 at 2:10 PM, REITDUDE (85.54) wrote:

Agree with BigPhatBear...and DemonDoug

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#14) On February 26, 2009 at 2:47 PM, RonChapmanJr (33.19) wrote:

I think Obama understands the math but is doing what he can to cripple the average American so that he can enact as many "government is your savior" type policies as possible.

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#15) On February 26, 2009 at 4:51 PM, Zanibel17 (97.08) wrote:

Man, sure are a lot of touchy Obama supporters around CAPS these days, no?  TMFBent gets a rec strictly on the basis that he doesn't buy into the obamarific hype.

Thumbs up to RonChapmanJr and DemonDoug. 

Thumbs down to blake303 for not knowing why TMFBent doesn't have picks on CAPS right now.

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#16) On February 26, 2009 at 5:01 PM, kparcell (< 20) wrote:

No offense, but you're substantially misunderstanding the situation.

The stats just out are on new home prices, and we're only building about 500,000 a year of new homes, down from a peak of 2 million in January 2005.  But 4.5 million existing homes were purchased last year  at a median price in the 4th quarter of $180,000.  The stats for January on existing home sale prices are down to $170,000 in January, which is ungood of course, but the good news is that $170-180,000 is a healthy price when measuring by historic trends or median houshold income.  And 45% of recent purchases of existing homes were distress sales, which means that most people (55%) were willing and able to pay market price rather than hunt in the basement.  Clearly, beyond refutation, the housing problem is not proceeding from overpriced inventory but from oversupply:  we have 3.7 unsold homes, 2 million more than a healthy 3-4 month supply.  The glut keeps prices tumbling, which keeps buyers waiting for a bottom and banks unwilling to finance.  We can not have it both ways: we can not tell banks that they are bad for making undercollateralized loans and then expect them to do exactly that.

So sure, a $200K median price for a new home is a lot more than the median household can afford, but that's because builders aren't building for them, they're building on order for folks fortunate enough to be able to spring for a new pad.

My point is that you are wrong when you assert that prices are dropping because prices are too high, and understanding the actual facts is critical to understanding the real solution.  Your solution of letting the overpriced assets take care of themselves by stimulating spending and investment will not work because the incredible glut will only grow as foreclosures increase due to debt exceeding home value.

The solution is simple: now that prices have fallen to a healthy level, lets commit $340 billion to purchase the 2 million excess homes.  if you want to read the details of this strategy visit http://twomillionhomes.net, and then feel free to offer criticism...after you've got your facts straight.

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#17) On February 26, 2009 at 5:15 PM, blake303 (29.31) wrote:

Zanibel17 - Thumbs up to me for not caring. Actually, I am fully aware of Bent's excuse for ending all of his picks and frankly it is a weak one. He has plenty of time to write immature drivel. He surely has time to make seven CAPS picks.

By the way - criticism of TMFBent is not support for Obama.

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#18) On February 26, 2009 at 5:41 PM, Zanibel17 (97.08) wrote:

It's OK, blakey.  I misunderstood you.  I thought since you referenced TMFBent's CAPS score in your first post that meant you cared about it.   Also, the 'obamarific' quip wasn't necessarily directed at you. Guess you got caught in the crossfire.  Apologies.

Hurry up and defend yourself, TMFBent!

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#19) On February 26, 2009 at 8:01 PM, AntiRL (< 20) wrote:

The line has been drawn...

His anti-Obama tone is kind of a turn off, but I just kind of brush it off and just get to the jist of the article.  Politics is a topic that will never have a right side (kind of like abortion / religion / etc...)

I can see bent's POV.  Granted, it is kind of a scued assumption to see a continued drop of 10% / month in housing prices, but you can be sure as hell you won't see a 10% increase / year in real estate in the near future.  I am renting right now and in order for the market to stabilize, they need to entice people like me (good credit, low risk) start buying at these free falling prices.  Good luck with that GOV't.  There is a reason these people are on the sidelines and it is in their best interest not to buy keep this downward momentum going.  Only a retard would be dumb enough to buy a house when they are enticing you with a measly $8,000 credit.  But there are gonna be alot of suckas out there I guess.....

Let me ask you something Smersche, BGriffinFlorida, If you had a younger relative who was thinking about buying a house today, what would you really say.  We're not talking about people you casually know.  That timing the real estate bottom is not possible and now with this $8,000 credit now is the time to jump in.  My money is on that it keeps dropping and will drop.  Just look at the economy.  It ain't gonna do a total 180 any time soon.  But with this Obama Administration fixing this mess on the burden of all taxpayers with this ridiculously huge plan, who knows.  If your answer is yes, I feel sorry for them.

 

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#20) On February 26, 2009 at 10:28 PM, smersche (37.65) wrote:

AntiRL - Something is missed here.  The $8000 credit, as far as I know, is in effect for a while going forward.  So several months down the road it's possible house prices will bottom out.  And then I would recommend someone I know to buy, and snatch up the $8k tax credit. 

Also, people seem to forget that real estate is a very local thing.  My house has actually not lost any value.  The local economy is strong and houses that do go up for sale in my neighborhood, sell quickly and for the asking price.  

All of that seems to miss the point.  The real question is, does the $8k credit stimulate the economy?  After all, that is the purpose of a stimulus bill.  I don't think it matters if suckers buy houses and the $8k becomes an immediate unrealized loss.  Whoever the seller is gets out of the deal at a higher price and can go spend the $8k immediately.  Meanwhile, the $8k unrealized loss stays in the house until the new owner sells.  I think, given that, it's pretty hard to argue that this tax credit is not a short-term economy stimulating move. 

Anyway, I could care less about the political arguments, and I'm not a realtor, nor could I care less if people buy, sell or hold right now.  I'm just trying to make sure I understand basic economics without bias or error.  I don't think the blogger does.  

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#21) On February 27, 2009 at 4:19 AM, TMFSpiffyPop (99.44) wrote:

Maybe I'm the only one, but I personally would like to see a respectful tone even in extreme disagreement. I believe our discourse loses value when it particularly veers off into namecalling -- which is too easy, almost always dull wit, and adds little. If you want to incite people to notice you, it works. I saw Ann Coulter do it well when I sat next to her on Dr. Phil. You will get a portion of the crowd behind you, some of them fanatically so. So it does build constituency, while at the same time making your viewpoint toxic to a larger crowd. However, often the attention-getting namecaller doesn't care about being viewed as toxic by man, as he/she at least has gotten everyone's attention.

Meanwhile the topic itself, and often greater insights to it, loses out.

I have no dog in this particular race, other than to encourage each of us to treat others as we would want to be treated. Doesn't mean others aren't wrong or have "stupid" viewpoints -- but when you're treated poorly, does that help you, and perhaps even more subtly, does that help the person dishing it out? Almost always not; maybe rarely, as an occasional one-off. But as a habit? It only hurts the disher, and long-term, probably worse. Fool on. --David

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#22) On February 27, 2009 at 11:01 AM, outoffocus (23.49) wrote:

I agree with BFB in that some of TMF Bent's great points are lost on the highly condescending tone of his opening comments.  I'm not drinking the Obama koolaid either.  However, I do believe that he is an intelligent man who is making the best decisions he can based on the facts and advice presented to him. Further, he feels as though he is fulfilling the promises that got him elected.  Thats way more than you can say about most politicans we've elected over the past century.

Having said that, the BO is not an economist and neither are the majority of the people who voted him in office.  Most people who elected BO got most of their knowledge of economics from the likes of MSNBC, CNBC, CNN, and FOX news.  The majority of Americans don't understand how this massive spending is going to hurt us in the long run. All they know is that housing, healthcare, and the economy as a whole is in trouble and that something should be done.  That sentiment is reflected in our political leaders.

So yea, it may be obvious, blatantly obvious, to us TMF members and subscribers that what our political leaders are wrong about the solutions to this economic mess we're in.  But the rest of America doesnt have a clue.

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#23) On February 27, 2009 at 11:22 AM, jgseattle (29.69) wrote:

I have no problem with buying in todays market.  The reason is I am looking for a house to LIVE in which happens to be an investment.

I will live in my house, hopefully, for the next 30 years so any short or even long term down is ok because I am getting the utility of the house.  (living in it)

I have no problem with the government bailing out individuals, well some, but I would like the government to put some serious restrictions of the resale of the house when/if prices recover.

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#24) On February 27, 2009 at 12:47 PM, loneranger37 (< 20) wrote:

there are more components to this than discussed here.

too many houses were built right on what premise?

growth ad infinitum .

You have to remember flipping homes was a big business.

what else ? Well  CRA was used as a template for all loans,

ie. The dems were controlling this  through Fannie and Freddie.

The Bankers weren't going to do this for nothing. They were

going to get rich, or be put out of business, Turns out both

ways were the end result.ie breaking, not braking  the bank,

should have been the policy.

Affordable housing ,loans were the iceberg, under cra they

were only 1-3% - but with the pressure to loan more they

assumed  a greater percentage of the loan portfolio,

 $ billions of worthless mortgages from phantom buyers.

Well those mortgages for new or old construction are that

iceberg that is seemingly bottomless. This whole fiasco is
a monument to political correctness.one of the architects of

this debacle Andrew Cuomo will probably be your new

Senator from New York.

you know about G. Santiany(sp) those who do not remember

the mistakes of history are doomed to repeat them.

Regards

reggie55

 

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#25) On February 28, 2009 at 3:59 PM, BenGriffin71 (28.24) wrote:

AntiRL,

1. Is it a good time to buy a house?

2. What at the probablilities for the market to fall signifiancantly further? ... What is the probability that it is near or has reached a bottom? ... What is the probability that it will be higher than it currently is in two and ten years?

3. Are housing prices currently valued fairly? undervalued? overvalued? How significant is the price mismatch?  Which direction if the mismatch headed.. growing or shrinking?

 

If i amto hassard a speculation on question #1, I need to analize  question #2 and question #3.  The thing to note is that question #2 and question #3 have significantly less bearing on each than in the past.

My advice, to a relative, concerning question #1 would have to encompass not only that, but also the relative's specific situation.

I feel sorry for any relative given advice that does not have their specific situation as a pivotal variable.

 

 

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#26) On February 28, 2009 at 8:53 PM, AntiRL (< 20) wrote:

I'm not that stupid to base a real estate decision on the simple premise that I treat it like a stock.  If I had a relative who in the past have been priced out of their dream home or the area they want to settle down in, I would definitely encourage them to go for it especially if the area doesn't have much houses on sale, if the area has a good school system, etc.  There are many more factors to consider, too numerous to list.

However, the fact you are dissing on Bent who for the past 2-3 years pretty much warned about this real estate debacle irked me a bit.  I myself never bought into the crazyness and decided to sit on the sideline.  I had to seek solace in Bent's Blogs and some sources to keep my head and rational in check.  You know how may individuals and entities (Buffett, Gross, Robert Kiyosaki, both Fed Chairmans, NAR, Harvard, Wallstreet and many MANY more well respected economist and finance people) said there would be no housing bubble and the economy is sound.  How many people would bet against that group.  You now know how many people are genuinely hurting right now because of their sound advice even if it was their god honest opionion (but if you ask me - most had self-serving interests).    Now those same people are eating their words and I feel it ironic that all of the sudden they can provide us insight on the direction of the economy and how we can get out of this depression. Plzz...  Now they have more to gain with this porky stimulus. That money is gonna go somewhere and is gonna make alot of undeserving individuals rich.

I'm no economist and far from it, and just an amateur stock investor at best, but even I know that housing can't go up 10% per year.  You can't have those sustainable gains without hurting the younger generation.  Are they supposed to pay $300 Gs for a house that was work $130 Gs in 2000.  Hell no!  Now that the crap has hit the fan, now it's everyone responsiblity to put a drop in housing?  I really do care for my future and my children's future and I must say it's bleak.

Yeah, I guess the materials to build a house now exceed what a house is really worth, but wasn't it too long ago that people and builders were making money hand over fist.  You can't have it both ways.  Housing really is a commodity (i'm talking about a primary residence) if you ask me, not an investment.  Like a commodity that is in excess, you either go sell for a loss or sit on it and try to tide the storm.

Here is a list of my Heroes by the way...

(1) TMFBent:  open my eyes up to the real estate mess.

(2) David Merkel:  Helped me understand what the hell was going on with Wall Street and explaibed the mess they made with real estate.  Heres the article, note the date...

http://www.thestreet.com/p/_rms/rmoney/investing/10323832.html

(3) SpecBear:  making even the most Epic investors look like amateurs. His 2 most popular Blogs save me some dough.  I pulled out a good amt of money and put it in uber consertive funds.

(4) Robert Schiller

There is a list of Villians and clowns I can create too but that may take take weeks....

 

 

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#27) On March 01, 2009 at 1:22 PM, tonylogan1 (28.24) wrote:

I think the OP is just ahead of his time.

Think about the tone used anti-Bush in his final years (deserved or not is up to reader to decide)

Obama willl get re-elected in 2012 even though he is horrible for the country, but by 2016 when the country is either running low or is out of "free stuff" people will commonly be using "bad tone" about him. Not just on blogs, but main stream media that to this point laud him as a saviour that can do no wrong.

Propping up home prices is an absolue waste of the peoples money, and would be better spent on investment in our futures. All this money should be spent on medical research to actually "cure" diseases that corporations with profit motives will only "treat", energy creation to lower our countries cost of production to stimulate our manufacturing thereby stimulating the middle class, and plenty of other worthwhile endevours like a strong national defense (actual "defense", like strengthening intellegence and tactical operations.

 ok enough rant. 

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#28) On March 13, 2009 at 7:17 AM, BenGriffin71 (28.24) wrote:

AntiRL:

>>>'...you are dissing on Bent who for the past 2-3 years pretty much warned about this real estate debacle irked me a bit...'<<<</em>

I am not 'dissing on' the previous good advice TMFBent gave you. 

For the record, I am against goverment intervention attempting to prop up housing prices. Foreclosure moratoriums and payment subsidies are as counterproductive as bailing out automakers whe there is so much over supply.

I am displeased with TMFBents blog, in part because it weakens the argument.  The misunderstanding and misstatements of the implications of the new homes sales data, along with the schoolyard quality taunts do a disservice to the debate needed concerning this subject.  While the crowd may roar for this demagoguery, their opinion is fickle.  An opportunity to provide vital information to the considerate few has been lost; their attention just a little harder to catch with this subject, the next time around.

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