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Adding this: it isn't doing me any good. I'm not selling so all it has done for me is to raise my property taxes. I just got reappraised by the tax man and everything is about $50,000 more than last year. My son's house was reappraised for $100,000 more than last year.
You've just described the vast majority of people, me included.
We have a bubble like before 2008. Will it pop, why and when is the question.
Bubbles are exceedingly difficult to see except in hindsight. Indeed, it is not even clear if bubbles even exist in the first place. Gene Fama won the Nobel Prize in Economics in 2013 (and was my grad school advisor). He's known as the Father of modern empirical finance. Gene's view is bubbles do not exist.
Trying to spot bubbles before they happen is useless, said economist Fama, a Nobel Prize winner known as the father of the efficient market hypothesis. Speaking at the University of Chicago’s Booth School of Business, where he teaches, Fama reasoned that predicting what investment trend will implode isn’t knowable because its weaknesses aren’t measurable.
“People see bubbles where there are none,” Fama told the group, in an appearance that was live-streamed.
To bolster his point, Fama cited a celebrated experiment in a faculty lounge at Stanford. A bunch of professors were presented with charts of agricultural prices. Their charge was to identify any bubbles. The profs did so, and then learned that the data were randomly generated. No patterns existed.
Bubbles are apparent only after the fact, Fama contended. “The way I interpret it is: You must be able to predict the end of it,” he said. “A bubble has to be something with a predictable ending.” And he added: “What’s the testable proposition?”
When people see patterns in asset prices - including real estate prices - and say "it must be a bubble" it is much like seeing familiar objects in the sky when you look at clouds.
Pareidolia (/ˌpæriˈdoʊliə/,[1] US also /ˌpæraɪˈ-/[2]) is the tendency for perception to impose a meaningful interpretation on a nebulous visual stimulus (so that one sees an object, pattern or meaning where in fact there is none).
Common examples are perceived images of animals, faces, or objects in cloud formations, or lunar pareidolia like the Man in the Moon or the Moon Rabbit. The concept of pareidolia may extend to include hidden messages in recorded music played in reverse or at higher- or lower-than-normal speeds, and hearing voices (mainly indistinct) or music, in random noise such as that produced by air conditioners or fans.[3][4]
Pareidolia was at one time considered a symptom of psychosis, but it is now seen as a normal human tendency.[5] Scientists have taught computers to use visual clues to "see" faces and other images.[5]
Location: In a city within a state where politicians come to get their PHDs in Corruption
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Quote:
Originally Posted by RationalExpectations
Bubbles are exceedingly difficult to see except in hindsight. Indeed, it is not even clear if bubbles even exist in the first place. Gene Fama won the Nobel Prize in Economics in 2013 (and was my grad school advisor). He's known as the Father of modern empirical finance. Gene's view is bubbles do not exist.
When people see patterns in asset prices - including real estate prices - and say "it must be a bubble" it is much like seeing familiar objects in the sky when you look at clouds.
Reversion to the mean. Any behavior that deviates significantly from behavioral norm, and the further it gets from that historical norm, is a good descriptor of bubbles, and bursts at the same time--as behavior overcorrects as well.
I don't have to predict a bubble. I just have to look at the behavior of the players/prices in the market.
Lumber is a prime example. Down almost 50% in six weeks. Oil in 2008. RE today and in 2008. Tech in 2001. Behavior so far removed from historical norm being explained away by "supply/demand" or any other "rational" explanation is also a good descriptor.
Reversion to the mean. Any behavior that deviates significantly from behavioral norm, and the further it gets from that historical norm, is a good descriptor of bubbles, and bursts at the same time--as behavior overcorrects as well.
I don't have to predict a bubble. I just have to look at the behavior of the players/prices in the market.
Lumber is a prime example. Down almost 50% in six weeks. Oil in 2008. RE today and in 2008. Tech in 2001. Behavior so far removed from historical norm being explained away by "supply/demand" or any other "rational" explanation is also a good descriptor.
You’re forgetting about supply and demand, lower interest rates, and higher construction quality/standards
Location: In a city within a state where politicians come to get their PHDs in Corruption
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Quote:
Originally Posted by MrHoover
You’re forgetting about supply and demand, lower interest rates, and higher construction quality/standards
As, I've said before here, "the new normal" never actually materializes in such a short period of time. Human behavior doesn't change so rapidly. $1,711 lumber was being explained away by such things as supply and demand, mill capacity, tariffs, yet somehow all those constraints "went away" in six weeks. It doesn't work like that.
As, I've said before here, "the new normal" never actually materializes in such a short period of time. Human behavior doesn't change so rapidly. $1,711 lumber was being explained away by such things as supply and demand, mill capacity, tariffs, yet somehow all those constraints "went away" in six weeks. It doesn't work like that.
You can chop a tree and open a mill to make more wood. You can’t do the same thing for
Housing especially in places with limited room for development like the Bay Area. I agree,
Places like idaho in the middle of nowhere are bubbles but Bay Area markets are different
Location: In a city within a state where politicians come to get their PHDs in Corruption
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[quote=MrHoover;61293238]You can chop a tree and open a mill to make more wood. You can’t do the same thing for
Housing especially in places with limited room for development like the Bay Area. I agree,
Places like idaho in the middle of nowhere are bubbles but Bay Area markets are different[/QUOTE]
No it isn't. It just has a higher price point. Plenty of foreclosures and price drops in Bay area last time around. I know, I bought one.
And, if we didn't have trillions of dollars worth of liquidity pumped in the market, Bay area would have dropped significantly this time around as well.
You can chop a tree and open a mill to make more wood. You can’t do the same thing for
Housing especially in places with limited room for development like the Bay Area. I agree,
Places like idaho in the middle of nowhere are bubbles but Bay Area markets are different[/QUOTE]
No it isn't. It just has a higher price point. Plenty of foreclosures and price drops in Bay area last time around. I know, I bought one.
And, if we didn't have trillions of dollars worth of liquidity pumped in the market, Bay area would have dropped significantly this time around as well.
No. Unless you magically make the weather become ****ty and make all the jobs go away and take away all the nature beauty which frankly won’t happen.
Location: In a city within a state where politicians come to get their PHDs in Corruption
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[quote=MrHoover;61293308]
Quote:
Originally Posted by tolovefromANFIELD
No. Unless you magically make the weather become ****ty and make all the jobs go away and take away all the nature beauty which frankly won’t happen.
Then how do you explain big drop last time around? Was weather not the same then?
As, I've said before, "this time is "different", or "it's different here" crowd has made me a **** ton of money.
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