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Schemer: Alan Greenspan and the Fedeal Reserve Board with artificially low interest rates. Not every Ponzi schemer is without influence to avoid jail time. The Social Security Administration runs a very elaborate Ponzi Scheme with Ida Fuller (SS #1) being the biggest recipient (getting a handsome 23K for only putting $24 into the system), yet noone need be arrested.
If invsters were not promised such a high rate of return, why the sudden spike in flipping among noobs?
Investors were never promised anything and they know it's a risk. If anything it came in style because of HGTV. You're accusing Greenspan of being in on a PS with investors all over the country? Is it just me or does that sound ludicrous to anyone else?
Investors were never promised anything and they know it's a risk. If anything it came in style because of HGTV. You're accusing Greenspan of being in on a PS with investors all over the country? Is it just me or does that sound ludicrous to anyone else?
We didn't take it on the chin after 9/11 and dot bomb like we should've. Instead, Greenspan flooded the market with cheap money, punishing savers with laughable interest rates, a depreciating dollar to punish people who enjoy traveling abroad or like buying imported French/Italian/Greek/etc items, and encouraging spendthrift attitudes at home with a get rich quick real estate, you guessed it, PONZI SCHEME!
I laugh at the idea that would-be flippers weren't promised instant equity. This is one of my favorite (I REALLY like the techno mix just after the appriaser pulled a number out of his rear):
I strongly disagree that it was localized to television.
It's actually less ludicrous than you think for MANY individuals, especially on the Libertarian and Constitutional side of things (but of course this is not meant to be a discussion on politics).
We didn't take it on the chin after 9/11 and dot bomb like we should've. Instead, Greenspan flooded the market with cheap money, punishing savers with laughable interest rates, a depreciating dollar to punish people who enjoy traveling abroad or like buying imported French/Italian/Greek/etc items, and encouraging spendthrift attitudes at home with a get rich quick real estate, you guessed it, PONZI SCHEME!
I laugh at the idea that would-be flippers weren't promised instant equity. This is one of my favorite (I REALLY like the techno mix just after the appriaser pulled a number out of his rear):
I strongly disagree that it was localized to television.
It's actually less ludicrous than you think for MANY individuals, especially on the Libertarian and Constitutional side of things (but of course this is not meant to be a discussion on politics).
So if as you contend Greenspan did indeed create a Ponzi Scheme, how did he benefit by selling goods with inflated value? Buyers chose to pay a price for home of free will. The vast majority of sales are primary residences with investors having a relatively small share. The prices will come back eventually so it's not like houses have been totally devalued where they are a worthless commodity. Investors can make money in any market.
So if as you contend Greenspan did indeed create a Ponzi Scheme, how did he benefit by selling goods with inflated value? Buyers chose to pay a price for home of free will. The vast majority of sales are primary residences with investors having a relatively small share. The prices will come back eventually so it's not like houses have been totally devalued where they are a worthless commodity. Investors can make money in any market.
The Ponzi scheme allowed the spike in mortgage securitization. benefitting the Boyz on Wall Street to create overleveraged hedge funds with Fannie/Freddie at the helm as fallout boy. The implicit backing of the gubmint allowed for these securities with low returns become very lucrative indeed. Greenspan has the perfect alibi...he had to juice the economy to avoid a REAL recession. People feel richer because they have more of these paper dollars. Meanwhile, China with their impressive savings rate is biding their time and generating massive returns in the stock market, which have only been ever so slightly given back, relatively speaking.
Houses will never be worthless. They're just worth less. The space in between makes all the difference.
Of course, I benefitted greatly when my advisor had a special short position holding for CMOs. It was the first and last time he shorted. When the CMO market collapsed, I think the returns were something like 10x, similar to my short of Beazer 2 years back. More than anything one got buying real estate, even in the Bay Area/Vegas/Orlando. One just has to look at the macroeconomic trends and avoid the noise and hype.
I agree with Ourdreamhouse that you can't turn this into a CA vs. everyone else discussion.
There are/were plenty of bubbly markets not in CA.
Lived in one of them, I know.
The funny thing is some of the same points I've seen made here about the health of markets that were/are not affected by the real estate bubble, or ponzi scheme, or whatever else you want to call it; like CA... are the same things I'm hearing from folks who ARE in the epi-center of sub prime, bubbly CA.
So the whole applying general arguements to very localized situations, where they probably don't apply, works both ways.
Quoted directly from a RE agent e-mail, dated June 2008, regarding South Orange County, CA:
"The market right now is interesting. We've seen a real uptick in activity
the past 6 months in south Orange County, and believe it or not, inventory
levels in some communities are getting tighter, returning to normal levels.
Were it not for the short sales and foreclosures, we'd be looking at a normal market right now in most south County cities.
I think any time between now and next summer will be an excellent time to
buy. It's impossible to predict the bottom of the market, but I think we've already seen the bottom, in terms of sales volume, and I think we'll be seeing the pricing bottom this year."
Love the part about the fact that if it weren't for short sales and foreclosures we'd be looking at a normal market.
Honestly, buying right now in the price range/areas the realtor above is specifically addressing makes no sense at all IMO.
'I am only giving my opinions and information on our area and the rest of the nation as I and many others are experiencing it. What nerve did I hit?'
That I am trying to do the same for my area CA, give my opinion, and you get upset everytime we do. That's the nerve.
'I'm am simply tired of this continous "bahsing" of the real estate market from a "disgruntled buyers standpoint".'
fyi..I am a home owner and landord. Looking to buy a 3rd home sometime when my area hits bottom. What's this? A new breed? A homeowner doomer? Oh th humanities.
You see, another insult. And I need to back off? I already KNOW you are a homeowner, have known for quite a while. I have said, over and over, many of your posts are generalized to leave impression that the WHOLE nation is in trouble where real estate is concerned and that NONE of us have hit bottom, while you wait to buy your next property in CA. And I even said if I was wrong to accuse you of not caring, that I was sorry. What you HAVE done is insult with your sarcasm whenever someone says they dont' think things are from from bottom or that they have already hit, even in your state. You're gambeling on the unkown, just like everyone else at this point. And at least PART of the problem is this continuous mental persuasion from many who insist that things are only going to get worse, leaving fear in the minds of those that were ready to buy. People BUYING is what will turn this mess around. But why should they if the idea has been inbedded in their minds, over and over again, that as soon as they do any time soon, they will begin to LOSE, LOSE, LOSE $$$. Also, I find it interesting you are a landlord since I am quite sure you have posted MANY arguements about buying a home as an investment, stating that was "part of the problem". So which type are you? Just curious. And just for the record, I think there is nothing wrong with being both. We have been, a few times in our lives and glad we did buy real estate for investment at one point. I don't think I'd do it now, though. It's REALLY tough getting reliable tenants these days, at least around here.
Hey, in your discussion with SoCal Bottom Rider, you lose points by claiming that the real estate crisis is CA vs. the "rest of the nation." Most of Florida is just as bad as most of California, Nevada isn't far behind, parts of the midwest are dropping, etc. etc. Even in my area, prices have dropped by 10-15% already, and more is on the way.
In fact, Case-Shiller's reports show that the vast majority of the markets in the country are in a severe price decline, perhaps unprecedented since the Great Depression of the '30s. If it were only California, there wouldn't be this much fuss about it. Recall that 15 years ago, there was a real estate pullback in CA, but it was pretty much limited to that state and so wasn't nearly so worrisome as the current, much broader problem.
To all who complain that "all real estate is local," and that not all areas are experiencing price declines, fair enough. That's true. But not to recognize the broader context of mostly falling markets across the country is just a form of wishful thinking.
Good point, although I find case-shiller to be a joke. Anyway, I see what you are saying and do know the other 3 problem states and have mentioned them in the past. I think FL and NV were grossly overbuilt with new construction, which is a whole different problem. Over valued property was a far second to that. But I think FL has had a lot of buyers in the 2Q and now into 3Q and their inventory has fallen considerably. A lot of people have taken advantage of this "vacation" state to buy a second home.
investors were never promised anything and they know it's a risk. If anything it came in style because of hgtv. You're accusing greenspan of being in on a ps with investors all over the country? Is it just me or does that sound ludicrous to anyone else?
Here in the San Gabriel Valley,the upper end homes are doing real well. We had two listings one for over 1.5 million and the other over for 2.5 million was in escrow on the same week
Many properties in the $400-600's have multiple offers as well.Some are sold above listing price
Last edited by VillageLife; 08-25-2008 at 02:57 PM..
I purchased both my homes pre-bubble during the last bottom out HERE IN CALIFORNIA. If I was only interested in the money aspect I would have sold my rental at the top of the market but my intentions were and are to hold long term for retierment, children and all that good stuff. If I were to buy a home now IN MY AREA OF CALIFORNIA, i would definitely lose money no question about it. But I better stop talking about CALIFORNIA or will you get upset?
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