Wednesday Open Thread
This is your open thread for today. Please post random links and off-topic discussions here.
Off-topic comment? Interesting link?
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9 comments:
We hear it all the time - the people stating "the market will have a soft landing and return to normal appreciation". I'm always puzzled by their logic.
I found a great post at MessThatGreenspanMade that takes this to task and explains what I couldn't put in words myself. A small snippet:
"If the boom is indeed over, after a huge run-up in prices in recent years, why would price appreciation return to normal?
Isn't it more likely that prices would return to normal, as in a regression to the mean?
In probability and statistics, regression to the mean describes the tendency for things to return to normal, whatever it is that normal might be. In the case of housing, a regression to the mean would imply a return to long established price trends based on historical levels of appreciation."
I encourage you all to read the entire article. Great stuff!
http://tinyurl.com/yx6qp6
Prices returning to the historical norm of 2x-3x income would be a breathtaking sight (picture Bainbridge Island with a median home price in the high 100s.)
Rental houses returning to a cap rate of 7 would shave about 3/4 off the price.
Rental houses being able to cash-flow (normal investment parameters), would also reduce the price that amount.
Interest rates returning to 'normal' rates in 8-11% range would gut housing prices. The FEDERAL RESERVE knows this, which is why rates are so low.
If the REIC wants to say that returning to normal is a soft landing, then they are welcome to it.
Does the "equity train" ever go in reverse?
Kaleetan,
Nice tongue-in-cheek response.
As a "bubblehead," let me say what I would like to happen (if I could control all the different parameters).
I actually FAVOR the madness of the homebuying crowd. I WANT people (as a group) to overpay, and use extraordinarily kinky financing to make it happen. I HOPE that maximum leverage is used.
That way, when the bubble pops, there will be absolutely no safety net on the way down.
The lumpeninvestoriat learns a painful lesson, financial sanity is restored, and housing is historically cheap without a buyer in sight, but lots of inventory.
I guess that would be the "equity train wreck."
...and the number one reason why apartment living sucks is..
Peepers!
Good point. Because no one can possibly peer into your home with binoculars when you live in a house or condo.
I want to say for the record that I'm sick of all of the personal attacks and arguing on this blog lately, to the point that I rarely even visit any more. It's really dragging this place down IMO. I'm all for contrary opinions, but personal attacks only detract from your position and make you look childish. For people wanting actual discussion, it's a waste of time.
Is today the day that I am going to be priced out forever?
No flopfolder, you won't be priced out and why? Well, you got the memo that Seattle's experiencing robust job growth, so just go out there and get one of those robust jobs and you'll be able to swing it... what's so hard about that? But you better hurry quick, I'm giving you a month or so before you'll be priced out forever, then you'll have to get a new robust job, etcetera...
robust job growth... er... come on... robust job growth
//dice roll
Man, what's left? limited land? ...er... hmm... heck I give up.
Icos sale a blow to local biotech
The takeover means the Northwest will lose many of the jobs at Icos — the sort of high-skilled, high-paying jobs that local officials have touted in recent years as the reason to cultivate the biotech industry.
Icos has 700 employees, 500 of them in Washington state
I still have a long way to go in my understand of the stock market, economics, etc, but it's obvious we are poised for a serious correction in RE, equity markets and the global credit bubble.
Obvious enough to economic newbies like you and me. I'm always up for discussing investments, but right now I'm into international and high-dividend ETFs, gold mutual funds, home energy investments and paying off the mortgage by 2014. Microlending looks good too -- it avoids major banking centers.
(In case any jeers come my homeowner way, I'll mention I bought last millennium and have over 50% equity. And I have room to take in foreclosure casualty renters.)
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