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Yesterday an interview with the "well-known bear" Peter Schiff was posted on www.kiplinger.com entitled "We're in the Early Stages of a Depression". He talks about many other things in addition to the real estate market, but claims that real estate prices are still too high and must come down before things can stabilize. Hardly a striking new opinion, but interesting nonetheless.
Yesterday an interview with the "well-known bear" Peter Schiff was posted on www.kiplinger.com entitled "We're in the Early Stages of a Depression". He talks about many other things in addition to the real estate market, but claims that real estate prices are still too high and must come down before things can stabilize. Hardly a striking new opinion, but interesting nonetheless.
We have been in the early stages of a depression for a while now -- a couple or so years by my watch. The artificial appreciation is what is making the fall extreme and depressing. We have been through several false booms.
A depression was coming once the lid was blown off the boiling pot. No one could hold the lid on it anymore, because it got too hot. Hot...(extremely hot)
Many consumers were buying property in the last decade that wasn't even the real value at the time of their purchase. When you hear people say, "my house isn't worth what it was in 2002, 2003 or 2004 or 2005" -- ask yourself, was their house worth market value when they bought it in 2002, 2003, 2004, 2005 or even 2006? Cruel question to answer, but you may be surprised of the answer.
Just because I only mentioned an initial year of 2002, doesn't mean that is when the false booms and artificial appreciation started at a dangerous level.
Many consumers were buying property in the last decade that wasn't even the real value at the time of their purchase. When you hear people say, "my house isn't worth what it was in 2002, 2003 or 2004 or 2005" -- ask yourself,was their house worth market value when they bought it in 2002, 2003, 2004, 2005 or even 2006? Cruel question to answer, but you may be surprised of the answer.
I understand what you are saying. I also understand that people don't pay more than market value at any point in time.
I also understand that people don't pay more than market value at any point in time.
Incorrect. I practice Real Estate Appraisal.
I don't speak to Realtors and real estate market consultants on this forum. However; I will make this one exception so I can let you know that you are extremely incorrect. As I said, I don't speak directly to certain professionals on this forum, so this will be the last reply.
I understand what you are saying. I also understand that people don't pay more than market value at any point in time.
Exactly.
Market Value: Highest estimated price that a buyer would pay and a seller would accept for an item in an open and competitive market. (Businessdictionary.com)
By definition, a buyer CAN'T pay more than market value, no matter when, because what the buyer is willing to pay (along with what the seller is willing to accept) defines market value.
Yesterday an interview with the "well-known bear" Peter Schiff was posted on www.kiplinger.com entitled "We're in the Early Stages of a Depression". He talks about many other things in addition to the real estate market, but claims that real estate prices are still too high and must come down before things can stabilize. Hardly a striking new opinion, but interesting nonetheless.
DEFINITION OF MARKET VALUE
"...The definition of "market value" in its strictest sense is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
buyer and seller are typically motivated;
both parties are well informed or well advised, and each acting in what he considers his own best interest;
a reasonable time is allowed for exposure in the open market;
payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto;
The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Market Value, which is the standard, represents a knowledgeable, meaningful, competitive market behavior portraying a sale with an explanation of those terms.
(The above is basic in Real Estate)
Source: The Dictionary of Real Estate Appraisal. The definition (and more importantly, the true meaning) is used by all Independent Real Estate Appraisers.
Many consumers were buying property in the last decade that wasn't even the real value at the time of their purchase. When you hear people say, "my house isn't worth what it was in 2002, 2003 or 2004 or 2005" -- ask yourself, was their house worth market value when they bought it in 2002, 2003, 2004, 2005 or even 2006? Cruel question to answer, but you may be surprised of the answer.
Although not in fundamental disagreement with you, I would say that the prices during 2002, 2003, etc. were in fact the true market values at those times. However our different ways of looking at it probably merge when we consider that the market had forces operating that skewed the values into an unrealistic and unsupportable level. Those forces were utilization of the honor system in qualifying mortgage qualifications and the creation of a mortgage derivatives market that sucked all those imaginative mortgages into a vacuum thus creating greater demand for honor system mortgages. In the end it's arguable what those market values actually were or were not.
Or as you said,
Quote:
The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
It seems to me that the above applied to virtually everybody involved in the process including seller, buyer, lender, agents, appraisers...
Although not in fundamental disagreement with you, I would say that the prices during 2002, 2003, etc. were in fact the true market values at those times. However our different ways of looking at it probably merge when we consider that the market had forces operating that skewed the values into an unrealistic and unsupportable level. Those forces were utilization of the honor system in qualifying mortgage qualifications and the creation of a mortgage derivatives market that sucked all those imaginative mortgages into a vacuum thus creating greater demand for honor system mortgages. In the end it's arguable what those market values actually were or were not.
Hi Love hound,
I agree to disagree with you. In those years, there some locations that were not completely chewed on. Sure, I agree that there are always market forces. However; I do find it hard to argue with the experts across the country on a per location basis over the prior decade. I wish you could spend a few months with me You would have fun; after speaking to you more than several times, I feel as though you would have fun.
Any who; let me show you one of my favorite clips. I have many articles and clips, but this one is my all time favorite.
Edited to add: this interview was in, I believe,the latterpart of 2007
That clip, in my view, seems to lay the blame for the run up squarely at the feet of the crooked appraisers that played the game the lenders asked them to play. After all, if they wouldn't have falsified values, nothing else could have followed. Is that your view?
Lovehound and I are in agreement with at least some of the participants, however I think the political and cultural / demographic factors were FAR AND AWAY the biggest factor in the artifical expansion and subsequent OVER BLOWN COLLAPSE of the real estate expansion.
Further I completely disagree with any one that sees Peter S as anything other than a self promoting, make-it-up-as-go, hypzilla, charlatan who, like every stopped clock is correct twice a day but worthless for 99.7% of the minutes in a day...
The sickest part of cases like him is, as we saw with irresponsible commentators calling the blow up around '08 elections "the worst financial disaster since the Great Depression", if the shouting is loud enough people believe it even if it ain't even close to true.
People with short / no memories forget about things like the pre-Iaccoco Chrysler, OPEC oil crisis, Texas S&L crisis, Barrings Banks and dozens of other "black swans" that seem to happen a whole lot more frequently than people want to accept.
The massive over reaction that was triggered by the Dem's dominance of White House and both chambers of the legislative branch has already been partially undone. The judicial branch has barely had a chance to exert its restorative forces. States are responding to the outrageous methods employed by the previous Speaker of House with equally hamfisted moves in the opposite direction. Advocates for rolling back regulation and increasing competition are gaining stretch in the face of the hot air, not wilting in the face of any temporary swing toward the wacky college lefty side of things.
The demographics of American are still better than that of any other nation on the planet and if efforts to improve our edge in knowledge and innovation there is nothing but foolish pessimism to fear.
Trust me, 10 or 15 years from now the Chinese will be dealing with turmoil that makes the former Soviet Union look like a harmonious example of progress. Fast growth will equal faster decision cycles and the only way HUGE groups of people move QUICKLY is toward freedom and away from authoritarian rule ...
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You would have fun; after speaking to you more than several times, I feel as though you would have fun. 
