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

To: John Vosilla who wrote (59514)	8/9/2006 2:57:41 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Indeed, the profligacy of today's home lending was not even imagined in 1989. The problems the S&L's faced in the 1980s were the result of loans on commercial property after TEFRA killed off the syndication market. You recall the see-through office towers and the "white elephant" luxury hotels which went back to the banks and were sold at 10 cents on the dollar. Yet through all of this time period merry "real estate investors" were flipping homes and every year home prices reached new unimaginable heights. Then in late 1989, after a long period of declining sales while prices rose (just like today), we ran out of buyers and prices started to decline. Fred Sands, then owner of the largest real estate brokerage in Los Angeles said this was a rare opportunity for new home buyers to take advantage of this pause in appreciation before prices rocketed up again in Spring 1990. Instead, Spring brought a panic among home owners as prices slid faster. By late 1990 when the banks realized how bad the slump in home prices were, they turned-off the financing faucet - as will happen again shortly. Only a fool lends into an obviously collapsing market. .