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

To: Tradelite who wrote (11821)	7/28/2003 6:42:05 PM
From: NOW	Respond to of 306849

nope. it doesnt necesarily require that at all. that would certainly cause a real haircut, but changes at the margin in selling and buying could very easily trigger a slide if a bubble exists.

To: Tradelite who wrote (11821)	7/30/2003 3:53:49 AM
From: Amy J	Read Replies (2) \| Respond to of 306849

Hi Tradelite, RE: "Amy, for the "housing haircut" to occur... homeowners to suddenly ditch their homes" A house doesn't have to decrease in value, in order to experience a decrease in real value. Housing staying flat, would do just that. (I realize you know this.) New college graduates seem to be taking a pass on housing for a spell here in Silicon Valley. I'm actually seeing some 3yr NCG's plow their money into technology stock, taking advantage of the downturn, rather than our local RE. I personally think they are smart. Some of these 3yr NCG's are going to great extremes to do this too - cramming many people into one house in order to keep their expenses low, in order to plow 20%+ of their gross into the stock market. (Silicon Valley doesn't have NCG's < 2 yrs out of school for the most part, if you were wondering why I typed "3yr NCGs". It'll be a recruiting nightmare to find folks with 3yrs experience in say a year or two after things turn around - they won't exist.) But if they were plowing all of their money into some huge rental with nothing leftover for savings then they certainly would do better off if they had forced savings of a mortgage. RE: "What I have seen in my area in recent years does not have the characteristics of a speculative bubble. ...Cocktail party conversation revolved solely around how much more one guy had sold his house for than he had paid for it only 6 months before." Your area may not have experienced a local bubble. According to your definition above, Silicon Valley has. RE: "SCARCE" We have more people leaving the area, than coming. 5,000 departed one Bay Area city, 5,000 departed another Bay Area city, etc. RE: "They'd be happily owning it for a long time, which is what we're supposed to plan to do when buying real estate. " You seem to assume people will stay in the same area forever, as if their jobs may never take them elsewhere. You also seem to assume 50% of Americans do not end their marriages in divorce where many sell their houses -- I only know of one family where the divorced parents actually live in the same house even after the divorce. RE: "build equity" Real estate equity isn't the sole kind of equity one can build. Personally, I don't think one type of asset class is more right than the other after some amount of distribution between the two. I think it depends upon the person's age and their individual skillsets. Two of my brothers, who are nearly 20 years older than me, are both medical doctors (i.e. each of them has about the same income as the other) and they handle their investments quite differently - one invests in the stock market, while the other invests in real estate. You know which one has done better financially over time? The frugal one that spends less. Regards, Amy J