Friday Links

The Post article made me laugh. It starts with “in a slap to the growing predictions of a real estate market crash” and goes on to tell of increases of 20-40% in one quarter for no apparent reason (no salary increases, no new jobs, interest rates low but have been low for the last few years), etc… How is this a slap to the predictions? Unfounded increases in very short periods of time are a great indicator that an asset is out of control, idiot investors are starting to jump on the bandwagon late and a readjustment is around the corner. They go on to quote only the REBNY representative who, of course, sees increases of this magnitude in a quarter as a sign that it will only continue to go up – very well researched! I have no personal stock in the real estate market going up or down but being a semi-educated business person, these articles make me choke on my corn flakes. Are people really this naive? After so many people have lost there shirts in similar situations in the past, I am no longer going to feel bad for them. The coming readjustment (and it may take a year or two to get here, I concede and be started with a stall before things start to fall) is so obvious, if a party is buying now, they are just asking for it. We live in New York, where, unlike many other parts of the country, there are tons of rentals we can live in. Again, unlike most of the rest of the county, NYers have the option to wait a few years to buy instead of throwing away their life savings on a down payment that will disappear very quickly with only a 10% adjustment. Even if I am wrong (along with Warren Buffet and 90% of the analysts who are not also real estate brokers or spin doctors), when you have the option to rent, why would you risk it buying at these prices now? I will have no sympathy!