Herd About the Housing Bubble?
Yesterday econ/real estate guru Robert Schiller penned an article for the Times examining why Greenspan, market experts and individual investors didn’t see warning signs of the disastrous housing bubble: The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United…
Yesterday econ/real estate guru Robert Schiller penned an article for the Times examining why Greenspan, market experts and individual investors didn’t see warning signs of the disastrous housing bubble:
The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks. Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble.
Schiller concludes that the lack of foresight about the bubble has to do with “herd behavior” and “information cascade,” whereby rational investors’ individual decisions add up based on incomplete info. The phenomenon helps explain why an entire nation would be under the thrall of the notion that housing=a great investment. A cascade is possible when a whole country buys into the same belief despite individual analysis that refutes prevailing wisdom. The result? Rising prices and a big bad bubble. So what’s next? “It is now possible that a downward cascade will develop — in which rational individuals become excessively pessimistic as they see others bidding down home prices to abnormally low levels,” writes Schiller.
How a Bubble Stayed Under the Radar [NY Times]
Collage by Amy Jaz.
9.05 and 9.08 are both sneaky pete. he seems to think he only has one attacker. he has some obsession with the concept of “making money” like it is some kind of agreed upon technical term (i.e. renters dont make money). whatever. pete, i am posting at odd hours b/c i happen to be in japan on vacation. looking at real estate priced at $300k that sold for $1mn 10 years ago. that is no lie. wanna call the bottom here dude? welcome to nyc 2015 and vegas 2008. dumbass.
can we go back to housing bubble topic?
I watch the sales data like a hawk for the heights & cobble hill. Is it my imagination or is NOTHING selling right now, but yet the brokers are pricing places 20-40% over 2006/2007 prices? am I right?
10:46 – please provide proof of your statement.
sneaky pete is a big liar.
and you are a moron for believing him 9:08.
I find Sneaky Pete consistent on both this blog and curbed. He actually gives examples and some of the deals that he is working on or has closed.
I am buying a LES property, and we connected via curbed. He was very helpful offering info on the 197a zoning and how it would effect the property that I was interested in.
2:45 – I am glad that you are such a real estate expert and as you state on curbed you are unbeliuevabley wealthy. All that success must make you lonely since you are awake at 2:45 am, on a blog and attacking others.
I noticed on curbed that Sneaky pete offered to bet you that his Vegas place would be of higher value next year. You went silent never answered him.
From your posts it seems that you are a bitter renter that ads nothing to the conversation.
Is it your belief that no one is making money in the real estate market? You are so convinced that since you cannot find a way to make cash in this market than no one else like Pete can?
I used to read Curbed but gave up after the continual horrible spelling mistakes in the stories. I started to distrust the whole shebang. I suspect its being run by teenagers.
dear brownstoner readers: i am surprised that more of you are not also curbed readers. this 1.4mn vegas guy is none other than “sneaky pete”, the bitter little “investor” troll who posts all day long on curbed about how RE prices will be up 20% in 08 and pleading for you to get in now before it`s too late. please. he claims to have picked the bottom on this 1.4mn “bank appraised” POS in vegas and then claims it is his vacation home, but now suddenly he rents it out. it`s hard to vacation in a home you are renting out – awkward~~. now he`s claiming that he got two 1.6mn offers. in the foreclosure/excess inventory capital of the US meltdown, his place increased 14% while the rest of the market is deteriorating at an increasing pace. right. stupid pete, if that were true, you should have taken the offer. your next credible offer will be $0.6mn. this guy spends all day pom-pomming the nyc market and adding his cute little line to send your rent check on time. if he were really such a mogul, he wouldn`t have time or the need to troll blogs all day. the truth is that he is probably way over-leveraged and wakes up in a cold sweat every night fearing what would happen if the market went down 20%. pete, dreams really do come true, you pathetic little loser. no amount of trolling will change that. also, brownstoner readers, he likes to harp on people posting anonymously over at curbed where he is registered, but has no problem doing so here…
guess what everyone! I made $50,000 today at my 9-5 job in midtown!