Given the continuous melting of glaciers worldwide, the increasing release of methane gases from the now-not-so-perma permafrost and other factors contributing toward global warming, some are thinking twice about purchasing on the coast. Location, location, location takes on a whole new meaning. read it
So the insurance industry may become an unlikely ally in the effort to reverse this deadly trend. The stakes are high as scores of homeowners suffer catastrophic damage from the effects of climatic change. read it
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It is official now. The housing bubble really does exist. Turns out it is not just an “unimaginative metaphor.”
The United States Senate has recognized the existence of the housing bubble and will hold hearings next week:
Wednesday, September 13, 2006
Banking, Housing, Urban Affairs and Transportation Subcommitee
Economic Policy Subcommittee
To hold joint hearings to examine the housing bubble and its implications for the economy.
SD-538
Diane,
Being one of your newer fans, I am missing the spirited banter on your site the last couple of days. I suggest you give us some of that “it will never happen in Reno” “retirees from California” to get your regulars going again. I enjoy reading their zealous opinions regarding the current state of affairs. Enjoy the site, keep it up!
Waz
Hey, Rkybarl, I still think it’s an unimaginative metaphor. I mean, really, can’t we come up with something different, something more dramatic? How about The Housing Implosion, or The Housing Apocalypse, or The War on Housing. You people are far more creative than I… make something up!
Wazzup, yes, you’re right. I guess global warming isn’t enough to get these guys all riled up. Destruction of the planet? No way, not here, not a problem, not in my lifetime, so who cares? Anyway, Reno is too special to be affected by climate change because we’re near Lake Tahoe. It’s a great time to burn more fossil fuels.
The term “bubble” is well known in the economics literature. The word appears frequently in the works of economists. It is anything but a slang term or an “unimaginative metaphor.” However, it would require some rudimentary familiarity with basic economic theory to know that the word has existed in both academic and everyday usage for decades. For those whose understanding is negligible, and for those whose so-called “expertise” is based upon 5 or so years of selling in a bubble market when not even realizing it, I offer the following definition, from Wikipedia:
“An economic bubble (sometimes referred to as a “market bubble”, a “financial bubble”, or a “speculative mania”) refers to a market condition in which the prices of commodities or asset classes increase to absurd or unsustainable levels (that no longer reflect utility of usage or purchasing power). It occurs when speculation in the underlying asset causes the price to increase, thus encouraging even more speculation. The bubble is usually follwowed by a sudden drop in prices, known as a crash or bubble burst.”
Rkybarl, if my understanding is so negligible, as you put it, why do you bother reading this blog?
Lets see. A market condition in which prices “increase to absurd or unsustainable levels” …that no longer reflects purchasing power.
You mean like when people buy houses for any price at all because they know they will always go up in value, a lot. When their stated income nothing down interest only mortgage is an “investment.” When debt is wealth.
But enough of this bubble talk.It’s getting annoying, and it is hurting commissions. We need to go back to 2003 and 2004.
I believe the realtorindustry, not these downer talking folks.
It is a new paradigm, and everybody who does not buy now will be priced out forever. Anybody who does buy now will be rewarded with a lifetime of riches, as their house(s) (think 2 or more) will continue to generate 10-15% price increases into the sunset.
Anybody born in a future generation will not be able to afford a $2,000,000 starter home in 15 years. They will live in tent cities, and Subarus.
This market is different from all others in history. It is a new paradigm. It will never slow down, or stop. The gains are forever!!
Hey rkybrl and gotlots-
Since you guys are obviously smarter than everybody else in the entire world, why don’t you go invent a cold fusion reactor, reverse global warming, and make enough money so this pesky unimaginative real estate bubble metaphor won’t bother you at all. Then you could create your OWN blogs to tell the handful of people who would actually care just how great you are.
And just for you rkybryl-
Your pompous rant actually proves Diane’s point that the bubble metaphor is unimaginative…as you put it, “The term “bubble” is well known in the economics literature.” (Incidentally, what is “the economics literature” exactly? Is it a box set you bought on Amazon and conspiculously placed on your bookshelf to impress your family members when they come over for tea?) But I digress - according to dictionary.com, unimaginative is defined as:
adj 1: deficient in originality or creativity…2: dealing only with concrete facts 3: lacking spontaneity or originality or individuality.
In other words, an unimaginative metaphor, by definition, is one that people use all the time. Or, as you so eloquently state, it “appears frequently in the works of economists”. So you see, genius, by your own logic the bubble metaphor is indeed unimaginative.
All of this leads me to an inescapable conclusion - you’re not as smart as you think you are. Have a nice day, Aristotle.
“KB Homes, the 6th largest US homebuilder, and Beazer Homes USA, Inc., said profit will fall short of earlier forecasts as demand wanes. ‘The housing bubble is breaking pretty hard here’ said analyst Michael Bungo.”
“Short term housing investors, so-called ‘flippers’ are exiting the market in droves and putting their properties up for sale making for ‘an increasingly challenging housing market’ KB Homes Chief Executive Bruse Karatz said in a statement that detailed the builder’s 43% drop in new orders.”
Bloomberg.com
September 7, 2006
“In July, Mortgage News reported that an unidentified lender took a random sample of 100 stated-income loans, looked at the borrowers’ tax returns and discovered that 90% of the borrowers had lied. Thirty exaggerated their incomes by between 5% and 49%, and sixty borrowers had puffed up rheir income by 50% or more. Just ten told the truth.”
Bankrate.com
9/6/06
Why on earth would someone lie about their income? Holy cow!! How could they sleep at night? I would greatly worry about getting caught and how I would pay the huge mortgage that I supposedly could afford.
And Gotlots–as a first time homebuyer that depends upon solid information that Ms. Cohen shares, I find your post offensive and it made my heart beat faster as in “crap. I’ll never be able to buy a house.” Thanks for attempting to crush the American Dream for me.
Frankly, I am waiting for the housing bubble to burst here in Reno. Prices are stupidly ridiculous, thank you California. When I’m ready to buy, I’ll be sure NOT to hire you.
Uh, Elaine. It appears that my poor attempt at sarcasm was lost on you. You must not have read any of my previous comments lest you would understand. Thank goodness Jury and Judge understood, and so elegantly chastised me.
But Elaine, you are absolutely right. Prices in Reno are stupidly ridiculous.
So sorry, Gotlots. I guess I take the American Dream much, much too seriously. After being so frustrated with our ridiculous market for so long, the humor just goes right over my head at such high speeds I don’t even notice it.
Forgiveness?