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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (51767)	5/26/2006 11:49:15 AM
From: benwood	Read Replies (1) \| Respond to of 116555

The Seattle RE market is still hotter than heck, mostly due to very short supply. Yesterday on my bike ride in, I saw a house in my neighborhood for sale -- hadn't noticed it the day before -- and it was already sold. I think the bubble came to Seattle late, and consequently, there's a lag effect here. Plus fewer people here want to "get out" because that means you have to go live somewhere else. I do anticipate prices to crest this year. My house is already worth 2.4-2.5x what I paid in late 1993, and there's just no way prices could stay this high without easy mortgages, because people's wages haven't been going up 10% a year all that time.

To: Earlie who wrote (51767)	5/26/2006 11:57:18 AM
From: valueminded	Read Replies (2) \| Respond to of 116555

Earlie: I have no doubt that speculators will be burned - as will home builders who overextend and can not manage cash flow. Of course builders who can not manage cash flow go under even in good times. The path I see is that houses will be left unfinished and that will lead to a drop in new supply. The unfinished houses will be owned by banks who believing they will be worth the loaned amount won't sell for less since they would have to take a write off. Since most builders do not strictly manage flow and most banks let builders get by with loose controls, it will be an issue - but not one which will depress real estate prices since supply wont go up - banks can't build houses and an adroit builder wont touch a partially finished home unless it is severly discounted something that occurs in fits and spurts as banks realize they have to sell at 50c/dollar to get someone to take over the mess. Your strategy of buying puts on builders/mortgage lenders may work out. I have never done well on puts, so I will be buying calls but not now. In terms of interest only loans, I think they are a great deal. I have one and would do it again in a heartbeat. Makes perfect sense since I can (now) earn money in CD's at a rate more then my interest payment. I just take the principal I should be paying and stick in CD's/Bonds every month. Seven years from now I will make a lump payment to principal. Maybe I am naive, but I think far more people do this then just make the minimum and not worry about tomorrow. On the inflation front, I just increased my billing rate 8%. (personal rate of inflation) My clients didn't blink. Inflation is here. Maybe ?? years from now we see deflation, but for now I think purchasing power of the dollar keeps going down.

To: Earlie who wrote (51767)	5/26/2006 4:47:44 PM
From: Webster Groves	Read Replies (3) \| Respond to of 116555

<I think the coming decimation of the amateur real estate speculation crowd creates two kinds of concerns> OK, that's it. The language police are pulling you over -- for incorrect use of "decimation". Yes, I know everybody uses it incorrectly, and you were only using the word as it commonly is done - but it's still wrong. Let's read the code on this: Decimation was the Roman practice of counting off soldiers by 10's for the purpose of administering punishment. One in 10 was executed, so that left the other 90% with a lesson. 90% was enough to carry on the army's mission. Today I read in the paper that a poor fellow in Indonesia is the only survivor of his family of 8, which was "decimated" by the bird flu. Where did this writer go to school - probably in the States. wg