To: Oblomov who wrote (52113 ) 12/29/2000 1:20:19 AM From: chic_hearne Read Replies (2) | Respond to No, not debt free, but I'm not really talking about myself. I'm talking about the general real estate market. In past, I believe bubbles were somewhat area specific, so supply/demand could dictate how low prices went. If they went too low, that would draw in buyers from other parts of the country. But now we are in a situation where from New York to California almost everything is grossly overvalued. Gains should not be 25% a year for years in a row repeating. That's a recipe for disaster. To help, banks are giving loans with 5-10% down. Probably a problem specific to the middle class and upper middle class. You know where that money that's not in the house is, the market of course. What's worse is so many people have become accustomed to supplementing their income on investment gains. Maybe not a monthly allowance, but that new car or big trip or.... The gains are going to end and these people are going to find out just how far their incomes can carry them. Not a good situation when consumers are already overextended on credit. I think a recession is a dead given. Anyone living off ClownBux is done spending, or at least slowing down. Baby boomers are sure slowing on the spending. Two years ago my parents pulled 50k from the market to buy toys for their lake home. This Christmas my dad was saying he wasn't so sure about retirement in a few years. Only way is to cut spending. The forces in all economic groups are going to force slower spending for everyone. In my opinion, the market has become so much of the economy, that it will cause the recession itself. The shakeout should lead to a drop in real estate prices. It should be pretty nationwide in the overvalued areas, but who's going to be there to buy the dip? I don't think it will take much to bring things back to reality in the places where things are truly out of whack. We'll see....
