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.
Sorry, 11:20. The mere reference to 1031 does not convince me that the 1.4 is not gross. Please elaborate.
The What do you know what a 1031 is?
Obviously your questions mean you dont know jack about real estate finance and taxation.
No wonder you cry that no one can make money in real estate, you have no idea how to do it yourself.
Please keep sending your rent check on time.
“But there is one place is not a bubble, WAGES!”
Absolutley. Businesses and government will not tolerate wage inflation. When inflation trickles down to wages, interest rates will be taxiing to the runway while Ben Bernanke lands his helicopter. Cash will be King.
Ahh the Vegas house is a vacation property. I live in Manhattan and own 8 more properties in NYC.
Also to the pompous Eco warriers who are so much better than everyone else, the Vegas property is completely off the grid, zero effluent, green built.
How is your apartment more environmentally friendly than that?
11:12 #2, good one!
11:05 AM Ok then Assfuck! Oil was trading at 66.00 a year ago now it’s at 102.00 now. Ask your self was the economy was great or we had a increase in the money supply (inflation). Look at M1, M2 and M3 FED Money supply. They have gone parabolic for the last 6 years and with Greensperm lowering the rate to 1% sent every asset class to the moon.
“What is your omnipotent brilliance have you done recently to make money?”
Well I’m trying to save it but, Too low interest rates are fucking everything up.
” sold a duplex in Manhattan for $1.7 that I bought 5 years ago for $400K. Had a $300K mortgage. So I netted $1.4 million.”
You are a lying fuck. You have Broker commission, Capital gains and transfer taxes. 1.4 gross, get your lies right troll.
The What
Someday this war is gonna end…
NEW JERSEY IS BANKRUPT! THE WHOLE EFFIN STATE!
prices there still have another 10-20% more to drop!!!! YOUR FRIENDS WHO BOUGHT THERE ARE FOOLS!!!!
new jersey is a cesspool.
11:05…
so you love vegas so much, you are reading and posting on brownstoner at 8am?
cool beans.