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

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To: Elroy Jetson who wrote (48754)	1/7/2006 4:57:37 PM
From: GraceZ	Read Replies (2) of 110194

You are fond of that chart. They took out approximately 300 billion up to 2004 according to your chart but according to the drunks at the Joint Study for Housing Studies at Harvard they put 1.06 trillion into their houses in improvements and repairs between 2000-2004. Count it up yourself page 31. Houses have been sucking in money faster than people can pull it back out. I guess you could try to convince me that 1.06 trillion was all repairs....but I already know that the repairs amount to about 10-15% of the total. That leaves around 850 billion in improvements. Let's be generous and say that 850 billion maybe only adds 60% to the value of the house. That leaves around 500 billion in equity added back in, approximately 60% above the figure your chart says they withdrew. jchs.harvard.edu Your alleged equity drawn down can be shown another way: mywebpages.comcast.net See the little blip at the top where the amount of equity diverges from the trend? Amounts to around 300-400 billion in cashout re-financing, trading up and HELOCs. All of which was put right back into houses and then some. Equity is higher than it has ever been. Money flow into RE is decidedly positive, not negative as you try to imply. Hey, but maybe you are right that people have been spending less of their incomes and savings on houses since 2000, that the house has become a source of income! All I know is that people keep calling me up and asking me my opinion on them selling those stocks and bonds that aren't doing anything to use the money to put in a new 150k kitchen or (gasp) pay down their mortgage. The other thing I get asked about all the time is my opinion on them taking out a home equity loan to put in a new addition that will double their square footage. The thing they say over and over is how much value it will add to their house when they are finished. So far they have been mostly correct in that calculation even though I always try to talk people out of throwing even more of their savings into a freakin house.

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