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

To: Tradelite who wrote (37514)	8/10/2005 10:02:04 PM
From: mishedlo	Read Replies (3) \| Respond to of 306849

Mish, you're not going to like this answer, but it will definitely reflect why I said what I did, why I believe what I believe, and how I know what I know. A "lot of people" include the many people I sold homes to over the years, who often put down huge downpayments that came from many different sources. You probably wouldn't believe me even if I cited each case in detail and told you where the money came from, but simple observation of what has happened with U.S. real estate over the years should confirm what I say. You still did not answer the question (so yes you are correct that I do not "like" the answer) although "like is not the exact word. I fail to see how PYRAMIDING a 200,000 house into a 400,000 house to provide "payment" for a 1.4Million house is anything other than a giant ponzi scheme. When that 1.4 million house shrinks back to 700,000 the person will owe $1M on a house worth 700,000. That is about to happen. Now if one owned 5 houses and sold 4 of them totally cashing out then great. That is certainly not the majority. People are "house rich" FOR NOW. It will all soon come to a crashing end as dream after dream goes up in smoke. Even if "MANY" had enough to pay cash for houses out of savings or other investments or inheritance or whatever, that is an enormously small % of transactions one would think. Even if it is higher than I think, pyramiding that investment into bigger and bigger more expensive houses is going to wipe out all of the gains on the VAST MAJORITY of people "trading up". Mish

To: Tradelite who wrote (37514)	8/11/2005 12:56:03 AM
From: John Vosilla	Read Replies (3) \| Respond to of 306849

"I've said it before--we might have to stage a funeral for the newbie investors and speculators who have made some bad decisions-- but the real money behind U.S. real estate just simply amounts to .....a....lot....of.... available cash (i.e. REAL MONEY)." Yes, we are all certain there will be a funeral for the speculators and highly leveraged late to the party folks and yes a lot of people seem to be out their spending a ton of money as anyone who flies on a airplane can attest to. However, where was all this cash 10-15 years ago when the RE market was depressed and no one other than a few folks like me thought it was a great opportunity? I think RE has made way too many people rich this cycle. I just wonder how many are foolish and will lose it all like they did in prior downturns. What seems to make this one so much worse is the overvaluation levels pushed by financial engineering in an economy that depends on RE, immigrants from third world countries and our federal government spending to keep growing. If things were really so great interest rates would be much higher and the DOW would already be at the 36k predicted by Harry S Dent.