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

To: Tradelite who wrote (14857)	11/6/2003 8:34:39 AM
From: russwinter	Read Replies (3) \| Respond to of 306849

Housing IS NOT in short supply. I was a large apartment owner in Tacoma until a year ago (sold, I know a bubble when I see it). I recently spoke with one of my comrades in that business, and he owns some fine mid-level vintage buildings. This is what he told me: 1. his insurance costs are up sharply , property taxes are up sharply, services (plumbing, etc) are up sharply because of the housing construction bubble, gas bills are up sharply, just about every material he uses is up generally, etc, etc. 2. He has more vacancies, then at anytime in the last decade. He can't raise rents. He feels two things are causing it: every higher end tenant with two nickles to rub together has gone out and bought starter houses, and the lower end crowd (usually young people starting out) are losing jobs and moving in with mom and dad in their four bedroom homes. Tacoma is no worse or better off than elsewhere, in fact it's been a hot home market. 3. Every month some speculator with access to "cheap" financing comes along and offers him a great price for the buildings. Each offer is higher than the one three months ago. Translate lousy fundamentals= even higher prices. It's ALL credit induced. I asked him, "don't you recognize a bubble when you see it?"

To: Tradelite who wrote (14857)	11/6/2003 9:47:48 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Indeed the housing bubble did begin in 1996, the same year that Greenspan started a coordinated expansion of the world's money supply to contain the Asia Crisis. He rapidly expanded the growth of our money supply - it has doubled since that date. That's a growth rate of 10.4% per year compounded. Your alternate theory is that we suddenly developed a peculiar world-wide "land shortage" with resulting higher prices. This explains in part why people picture you as Mr. Haney, the crooked real estate agent from Green Acres. It's interesting to note that previous "land shortages" have occurred precisely when there has been a rapid growth in the money supply: the boom of the 1880's (gold from Australia and California); the 1960's (money supply expansion to pay for the Vietnam war); The 1980's (money supply expansion to pay for increased oil prices).