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Old 01-27-2008, 03:57 PM
 
Location: Living in Paradise
5,701 posts, read 16,691,713 times
Reputation: 2843
All, discuss the topic and don't attack the fellow members. The whole deal today is a combination of many factors.. But if we are talking about purchasing a home, the responsibility goes to the buyer. Regardless of the involvement of the Realtor, broker, mortgage lender, etc, the buyer has to make a decision and many did over extend their financial limits because of the wonderful financial programs and the hope that the market will stay up.

In 1997 I purchased my first house. I did not use a Realtor and secured the financing, insurance and everything else on my own. I did purchased directly from the builder and avoided extras cost by doing so. BTW I made an offer $7K below the actual cost and requested fencing(6 ft for a 235 x 275 lot, full sod in the back of the house, sprinkler system and a finished 2 car garage for $99K on a 1875 ft under air. My finance interest was 6% on a 30 year loan, 3 year later I refinanced for 15 year at 5% and never used any services from a Realtor or finance expert.

After Ivan I was offered $250K for the house a net $150K profit and I did not took the offer, many in the area did and today they are losing their home due to taxes and insurance just because they over extended their financial position.

Now lets appreciate everyone opinion and discuss the issue.

Thank you...

Last edited by sunrico90; 01-27-2008 at 07:51 PM..

 
Old 01-27-2008, 04:17 PM
 
Location: Orlando FL
1,052 posts, read 2,635,703 times
Reputation: 386
Quote:
Originally Posted by Wild Style View Post
I agree with you to some extent but your view ignores certain factors in bubble creations. Govt does more than just lowers interest rates to pave the way for these things. They also start to pass legislation to make doing business with in these bubbles more conducive. With out bubbles our economy would be in dire straits to say the least. We in America have two choices. One is take our medicine, restructure our economic system and move forward OR create bubbles to keep 7 yr recessions turning into something worse. It seems our Govt chooses the bubble route.
By no means am I going to claim I know all the factors that cause "bubbles", I don't think anyone on earth can make that claim and be correct. And there is certainly no way i'm wasting my time writing a book about what I may or may not know on the subject here on the forum.

I am in agreement with your Govt views about interfering with the economy. I don't think Govt. has any reason for getting involved in economics in almost all cases. Give everyone the same fair rules and let the markets sort it out. Everytime they "change the rules" there are consequences they can't predict. The FED, In my Opinion, is a necessary evil that makes the U.S. economy more resilient and able to handle shocks better in the new global economy.

I never intended to be in this thread though (My first post was originally a thread on someone claiming the fed was completely responsible for the bubble and there was some kind of conspiracy...somehow it got onto this thread) So, I'll take my leave and let everyone else debate a moot point.....heck I don't even know what this thread is all about.
 
Old 01-27-2008, 06:33 PM
 
548 posts, read 4,462 times
Reputation: 126
Quote:
Originally Posted by Wild Style View Post
I agree with you to some extent but your view ignores certain factors in bubble creations. Govt does more than just lowers interest rates to pave the way for these things. They also start to pass legislation to make doing business with in these bubbles more conducive. With out bubbles our economy would be in dire straits to say the least. We in America have two choices. One is take our medicine, restructure our economic system and move forward OR create bubbles to keep 7 yr recessions turning into something worse. It seems our Govt chooses the bubble route.
Good post. This bubble was orchestrated by the government. There are no coincidences.

The housing prices went up since 1900 on a gradual slope, except for the world wars. 1900-2000 were very consistent. In 2001, everything changed.

In perfect coordination the FED cut rates to historic lows, the president gave speeches calling for every American to own a home, the lenders relaxed standards for buyers that had been in place forever, the appraisers started giving valuations all over the place that were 10-15% higher in 1 year...unheard of before this period, government agencies such as Fannie Mae and Freddie Mac supported tons of subprime loans...and the topper, Congress was silent while Wall Street started repackaging subprime loans and selling them as prime instruments.

There sure were a lot of 'coincidences', many by government agencies, that inflated this historic bubble!!

But I am glad I found the housing blogs in 2004, they got me to sell for the large profit in April 2005, buy gold at $400, get out of the stock market at 14000. I listened to them and not the real estate industry and have enjoyed the ride. I keep reading posts saying no one knew, no one knows what inflates bubbles, and so on. Well the housing blogs knew, all their posts are time dated. It is easy to prove they predicted the entire inflation and gave the causes...while things were happening.

Every time the realtor groups said one thing, the blogs pointed out the truth. All this is easy to research using any search engine.

Even though they have been wrong time after time...the real estate industry still has credibility? People still listen to realtors and ignore the bubble blogs...no matter how many times they have been wrong and we have been right. That amazes me.
 
Old 01-27-2008, 09:00 PM
 
Location: America
6,651 posts, read 10,128,345 times
Reputation: 1791
Quote:
Originally Posted by GregTraub View Post
By no means am I going to claim I know all the factors that cause "bubbles", I don't think anyone on earth can make that claim and be correct. And there is certainly no way i'm wasting my time writing a book about what I may or may not know on the subject here on the forum.

I am in agreement with your Govt views about interfering with the economy. I don't think Govt. has any reason for getting involved in economics in almost all cases. Give everyone the same fair rules and let the markets sort it out. Everytime they "change the rules" there are consequences they can't predict. The FED, In my Opinion, is a necessary evil that makes the U.S. economy more resilient and able to handle shocks better in the new global economy.

I never intended to be in this thread though (My first post was originally a thread on someone claiming the fed was completely responsible for the bubble and there was some kind of conspiracy...somehow it got onto this thread) So, I'll take my leave and let everyone else debate a moot point.....heck I don't even know what this thread is all about.
Not to show off or belittle your point but I have a degree in Economics. I assure you people (economist) know and understand 100% how bubbles are created. It isn't that complex to be honest. IF you are interested pick up this months "harper's magazine" from Barnes and Noble, it will lay everything out for you in about 10 pages. It is a great and must read.

Either way, discussing in this thread is good for those moving forward. Now they will know how to conduct themselves when these sorts of bubbles pop up again.

CJFlorida

I think if people took the time to research on their own they would know and understand these things. But people rather sit back and let the tide move them as it pleases I guess.
 
Old 01-28-2008, 08:45 AM
 
Location: Tampa
3,959 posts, read 6,597,269 times
Reputation: 1099
Florida Gulf Coast is a real estate litmus test | Chron.com - Houston Chronicle (broken link)

even with prices falling, I still dont trust flroida

one bug hurricane could sent property insurance thru the roof, and then where would you be?
 
Old 01-28-2008, 09:32 AM
 
548 posts, read 4,462 times
Reputation: 126
Quote:
Originally Posted by Wild Style View Post
Not to show off or belittle your point but I have a degree in Economics. I assure you people (economist) know and understand 100% how bubbles are created. It isn't that complex to be honest. IF you are interested pick up this months "harper's magazine" from Barnes and Noble, it will lay everything out for you in about 10 pages. It is a great and must read.

Either way, discussing in this thread is good for those moving forward. Now they will know how to conduct themselves when these sorts of bubbles pop up again.

CJFlorida

I think if people took the time to research on their own they would know and understand these things. But people rather sit back and let the tide move them as it pleases I guess.
60 minutes finally did a story on the housing bubble yesterday and for some people it was their first exposure. Well 60 minutes is a year too late.

It seems to me that buying a house is a huge financial decision. With the internet, people can do research and educate themselves very easily.

I just don't get how paying $300000 in 2005 for a house that sold for $150000 in 2001, in an area with incomes of $40,000 seemed like a good idea to so many people. But obviously from the foreclosures and numerous comments from stuck house sellers, it did.
 
Old 01-28-2008, 10:03 AM
 
Location: western East Roman Empire
3,602 posts, read 5,615,111 times
Reputation: 2276
Quote:
Originally Posted by CJFlorida View Post
I just don't get how paying $300000 in 2005 for a house that sold for $150000 in 2001, in an area with incomes of $40,000 seemed like a good idea to so many people. But obviously from the foreclosures and numerous comments from stuck house sellers, it did.
The $40,000 a year income partially explains the reason. With real inflation at around 10% and real wages stagnating or even declining, many people, even out of desperation, easily bought into the promise of ever-increasing capital gains on a leveraged investment. You know, real estate only goes up.

Too much television, too much bombardment with advertising, not enough, or not any, real research. You have the answers to your question in your question.

In any case, speculation and bust is cyclical in human behavior and this is only the latest episode. The trigger this time has been the gutting of the US manufacturing base and near-zero interest rates, completely depriving a massive sector of the population of the opportunity to increase productivity and riddling the monetary system as a store of value.

In other words, the price mechanism (including the price of money) has been signaling to people that, under the guise of investment, they should speculate in enterprises of dubious economic worth.

The result is skewed pricing, say between tradeable goods and non-tradeable goods and services (disinflation in cheap mass-produced goods, inflation in housing, health care and education, for example) and a glut in things like housing and even cars, for which many people find themselves over-leveraged (upside down on their loans).

In short, a huge misallocation of resources, both human and capital. It will take years to sort out, at least two years very optimistically.
 
Old 01-28-2008, 10:39 AM
 
2,141 posts, read 4,635,523 times
Reputation: 560
Quote:
Originally Posted by bale002 View Post
The $40,000 a year income partially explains the reason. With real inflation at around 10% and real wages stagnating or even declining, many people, even out of desperation, easily bought into the promise of ever-increasing capital gains on a leveraged investment. You know, real estate only goes up.

Too much television, too much bombardment with advertising, not enough, or not any, real research. You have the answers to your question in your question.

In any case, speculation and bust is cyclical in human behavior and this is only the latest episode. The trigger this time has been the gutting of the US manufacturing base and near-zero interest rates, completely depriving a massive sector of the population of the opportunity to increase productivity and riddling the monetary system as a store of value.

In other words, the price mechanism (including the price of money) has been signaling to people that, under the guise of investment, they should speculate in enterprises of dubious economic worth.

The result is skewed pricing, say between tradeable goods and non-tradeable goods and services (disinflation in cheap mass-produced goods, inflation in housing, health care and education, for example) and a glut in things like housing and even cars, for which many people find themselves over-leveraged (upside down on their loans).

In short, a huge misallocation of resources, both human and capital. It will take years to sort out, at least two years very optimistically.
This post is very true, I would say we have to get past the 3 and 5 year ARM's to even start to see daylight from this mess. Unfortunately the fed is crashing the dollar and most people can't refinance due to lower appraisals. I would say 5 years but that is very optimistic.
 
Old 01-28-2008, 12:13 PM
Ten
 
163 posts, read 152,503 times
Reputation: 67
Quote:
Originally Posted by firemed View Post
Unfortunately the fed is crashing the dollar and most people can't refinance due to lower appraisals. I would say 5 years but that is very optimistic.
Exactly. To also followup on my previous post in this thread, let's note today that we're probably now in economic positive feedback as regards the Fed and housing, maybe more. "Positive feedback" is an unstable system where the input (new policy, new actions) cause greater and greater undesirable symptoms at the output. Positive feedback systems are unstable.

In this way the Fed and a dependent economic system are analogous to a heroin junkie, ever salving the pain at the "output" with added new bad "input".

Wikipedia describes positive feedback this way:
Positive feedback is the feedback loop system in which the system responds to perturbation in the same direction as the perturbation (It is sometimes referred to as cumulative causation). In contrast, a system that responds to the perturbation in the opposite direction is called a negative feedback system. These concepts were first recognized as broadly applicable by Norbert Wiener in his 1948 work on Cybernetics.* [1]

A system in equilibrium in which there is positive feedback to any change in its current state is said to be in an unstable equilibrium, whereas one with negative feedback is said to be in a stable equilibrium.

The end result of a positive feedback is often amplifying and "explosive", i.e. a small perturbation results in big changes. This feedback, in turn, will drive the system further away from its original setpoint, thus amplifying the original perturbation signal, and eventually become explosive because the amplification often grows exponentially (with the first order positive feedback), or even hyperbolically (with the second order positive feedback). Indeed, chemical and nuclear fission based explosives offer an excellent physical demonstration of positive feedback. Bombarding fissile material with neutrons causes it to emit even more neutrons, which in turn affect the material. The greater the mass of fissile material, the larger the amplification, resulting in greater feedback. If the amplification is great enough, the process accelerates until the fissile material is spent or dispersed by the resulting explosion.


Both positive and negative feedback are closed systems, because the system is closed by a feedback loop, i.e. the response of the system depends on the feedback signal to complete its function; without such a loop, it would become an open system. In contrast, a feed-forward system is an "open system" since it does not have any feedback loop, and does not rely on feedback signal to function.

Examples of positive and negative feedback, open and closed systems can be found in ecological, biological, social systems and in engineering control systems such as servo control systems.

Italics mine. Note "social systems". I suspect our fiat money economy also qualifies as a feedback system.

Note too the "explosive" or "exponential" nature of a system run out of control via positive feedback. Does the graph I posted previously of the money supply hint at exponential growth?

Today's news contains two alarming indicators. Stimulation is our new economic drug of choice.
"The Census Bureau reported that homebuilders slashed new home prices by ten percent in December but sales volume fell by five percent anyway - to the lowest level in 12 years." (Source: The Mess That Greenspan Made.)
Wall Street expects the Fed to cut interest rates to 3%.
 
Old 01-28-2008, 12:33 PM
 
10 posts, read 16,281 times
Reputation: 12
Default Florida Housing Marketing

We are in the process of looking for a second home in SWF and have decided on the Grandezza community in Estero, FL. We are looking at a villa (which is attached housing 4 pack) and have been in negotiations. Our main concern is that the club in Grandezza is being transferred back to the owners in the community since the developer was running the club. How will this impact the social fees of the club and also is anyone familiar with this community and what have you heard about it. Any comments would be greatly appreciated.
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