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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: John Vosilla who wrote (81129)	4/25/2007 8:41:07 AM
From: orkrious	Read Replies (1) of 110194

I've been expecting the scenario to unfold in Florida the most likely of the current bubble markets to show some of the same stress you see in your market. The same friend who is being shut down owns a house in south FL. He's been trying to sell it...so far without luck. He paid cash for it and is not desperate yet. A friend of his is in the same position. He bought one house in an upscale golf community, then he decided it wasn't big enough so he bought a second figuring he'd have no trouble selling the first. No luck so far. Both guys think the market will bounce back soon although my friend, after listening to me, is starting to think differently. Since prices are set at the margin it's not set by these guys but by the speculators and the overleveraged. I think it takes longer for the problems to spread than most of us imagined. First, the banks have to foreclose, credit conditions have to tighten, and then people have to get cut off from their other sources of credit. It's going to turn out that people will spend until they get shut down. The layoffs in both construction and mortgages have started. The process is underway. It's just going to take time. You should check out the prices being asked plus all the new development at ski resorts out in the Rocky Mountains. I spent a week at Vail in February. Mrs. Ork and I stayed in a hotel; my brother stayed in a condo where a few of the units were for sale. I've forgotten exactly how much they were selling for, but I think it was over $1,000 per sq. ft. Based on what the units were renting for I don't think it would have paid to buy one even if they were rented 360 days/yr, which they weren't.

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