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

To: Paul Senior who wrote (4739)	8/27/2002 5:48:12 PM
From: larry	Read Replies (4) \| Respond to of 306849

Paul, In Boston area, we see high activity in houses ranging from 300-400k. Those that are priced over 500k are not selling well. I can understand your point, but I am not sure that you understand my point. Lots of people that I personally know who bought houses recently are stretching themselves to the limit. I am in my early 30s, and feel that there is a huge generation gap between us as far as spending is concerned. They can not afford to have one of the couples getting laid off. And they have heavy credit card debts and even need to pay tuition fee loan. These guys are betting on making 100 k in the next two years or so from their houses and one way bet always ends up in bad situation. I have lots of friends who live in CA and NJ suddenly found themselves in bad economic situation after either the husband or wife got laid off. Cost cutting can only help you to a certain level. If the housing prices drops significantly, and they need to relocate, they will be in trouble. I brought up Tokyo REIT bubble because everyone, even most of the brokers have never heard of the story, or the severity how the housing prices can drop. I also want to remind people that the housing price can remain high well after the stock market peaked. In the case of Tokyo, it peaked 3 years after the Nikkei peaked and went on a death spiral for 6 years and then remained in the bottom for 3 years (still counting). And I brought up AG because I want to point out that the majority won't believe that a bubble is there until after it's burst (even someone as smart as AG). And I always believe that we will be in a double dip sooner than everyone recognize. The second one should prove to be much worse than the first. The Fed is trying to flood the nation with easy money so as to save the economy. I guess that they clearly understand the consequences - either a recovery or a fall from the cliff and send us to hell. Based on the fact that the most dramatic rate cut in the last 70 years failed to produce anything significantly positive after 20 months, the prospects are not good in the foreseeable future. larry