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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (12102)	4/17/2004 4:08:10 PM
From: ild	Read Replies (2) \| Respond to of 110194

<<<what do you think will happen in the 6th year let's say if prices are up from here and rates have gone up 2-3 %? >>> Who cares? Everybody knows the houses will continue appreciating 20-25% a year. People who don't own real estate are losers and deserve their fate. Many folks here get cash outs, second mortgages or HELOC to buy a second better house. They keep the old one, so they will be twice as rich as the guy with just one house. Everybody knows there is a severe housing shortage in California. Some even say there is a land shortage as well. Seriously I'm in asset deflation camp. I expect rates to stay low, even very low, but housing will collapse under its own weight. Right now housing bubble is self feeding. Construction employs a lot of people. During each RE transaction about 5-10% of house value gets spent (wasted) on services (agents, title, financial, escrow, etc). Who can't afford to buy a better house just keep upgrading/remodeling existing ones. When appreciation stops and it will, because nothing can go up indefinitely, it will be very deflationary IMO. Here are the charts from latest CI that Russ referred to: idorfman.com idorfman.com idorfman.com idorfman.com EDIT: I do expect some intermittent inflationary panics, like the one we are witnessing right now, but IMO the main course is big bad asset deflation. I think canonical meaning of words "inflation" and "deflation" will fail to describe what we'll have in our future.