Tom ...regarding CGE and NW, most of us lost but jsut be glad you aren't like these idiots who haven't a hope in hell of using their brains. A bit OT but it makes my heart glad to see this unfolding this way:
"Comment by Chrisusc
2006-09-02 08:55:27
History does support your contention that the upper end of the market falls harder and faster.
An example would be the ASUwest2’s comment in regards the lady that was moving to LV to be an investor. If her friend has small units (1 - 2 br’s) he/she may survive this. They can find plenty of recent immigrants working in the casinos and/or burger joints who can keep him/her afloat, even if the properties are upside-down (although the option ARM’s may still do the person in). However, if the person is like most idiot R.E. agents in LV, the person probably bought $400,000 + homes in places like Redrock and will be trying to rent them out for $3000 a month to cover the adjusting ARM’s. Trust me there are whole developments in that area that were purchased by R.E. agents for flips, that are still vacant. In this case the person is toast and the prices in that neighborhood will drop pretty quick.
I lived in LV a year ago, and in mid 2004, my wife an I were looking at POS Pulte homes in Redrock. The salesperson told my wife “this will be the new Irvine”. My wife replied “I grew up in O.C. and this ain’t Irvine. There’s no beach, no nearby mountains, just miles of desert, and low wages”. They were selling those homes for above $600K for less than 2,000sqft. I felt it my duty to inform the new salesgirl (in private) who was a fellow USC alum, that she should get out and find a real job before its too late.
The interesting thing is that my landlord’s property manager (also an USC alum) was building three homes in Redrock for $700,000 each. I tried to tell him that he was making a mistake, but he said he was an experienced broker and that investor loan money would continue to come in from China and keep the easy financing going. I am going to LV soon and I will survey the damage. I am sure this idiot will be bankrupt soon.
One other thing, when we moved into the townhouse we were leasing, I pulled all docs from title co. Turns out the owners (our landlords) had purchased the property just a year earlier with a World Savings option ARM. I calculated that they were already upside-down by $200 a month, and the ARM hadn’t even adjusted yet. But they were told R.E. always goes up in value…
So back to the original question, whether higher priced homes fall faster. Well just look around at all of the formally “educated” (not street educated) people with degrees from good schools, out becoming R.E. investors. And they are buying in the upper price range. Everyone knows you make your money off the working class, they have the most stable income levels (doens’t go up much but they can ususally get another $10 to $15 hr job). Its the people temporarily making $80,000 to $150,000 in some sort of sales job that are the most susceptible to economic changes. Thus homes in those price ranges usually are affected the greatest.
The job number just came out and think about how many people you know are in an industry that sells some product or service that is not a staple (i.e. milk and cheerios). Those people are getting laid off by the thousands (Intel, Dell, Ford, GM, the list goes on and on).
I am not an expert but this will be my third downturn and every time I have learned more from others’ mistakes. As others have mentioned, most people under 40 dont know squat, especially when it comes to investing (see dot com bubble). I am just now going to turn 40 and I have learned quite a bit from this blog. As I get older, and become more well-read, I realize that I know less than I thought I did. This blog has reinforced a lot of my thoughts on investing, personal finance, trying to show off to your neghbors when you dont have sh*t, etc.
Hopefully more people will tune in before they get royally screwed, I doubt it, but you never know…" |
