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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Tradelite who wrote (4557)	8/20/2002 8:09:01 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 306849

<<I'm wondering if a more accurate term for this alleged bubble would be "credit bubble" rather than housing bubble.>> Well the two are inextricably linked. The hub of both bubbles is FNM/FRE and the other GSE's. As long as the risk of mortgage lending can be easily off-loaded away from loan originators, assessment of credit quality of borrowers will suffer, and loan pricing will be incorrect as a result. The whole phenomenon has been made worse by erosion in the requirements for ample down payments/equity on the front end, and by cash-out refinancings on the back end. In the end, borrower/homeowners late to the party (especially in the most speculative markets) AND lenders who end up holding the mortgage paper (money market funds, insurance companies, pension funds, Fannie and Freddie through their retained portfolios) will suffer. As well PMI's of course...

To: Tradelite who wrote (4557)	8/20/2002 9:52:41 PM
From: bozwood	Read Replies (1) \| Respond to of 306849

Almost every bubble could be termed a "credit bubble" by your definition. For example, the tulipmania or the tulip bubble of the 1630s used futures, referred to as windhandel, and most transactions were expedited with personal credit notes. People do not refer to that bubble as the great credit mania, even though credit exacerbated it. Real estate is just the particular asset class that the potential bubble is being created in. I know how much you hate it, but, if this is indeed a bubble, it will be referred to and remembered as a real estate bubble.