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.
11:05 is bragging about appreciation on a vegas property?
when will this war end already?
stfu asshat
the who
11:01 – 11:03 – where did i mention “bigger”
I used the word “nicer” referring to location, wooded lots, histroic details, etc
Never said anything about bigger. You should try reading and not projecting your negativity on others.
Also do you realize that there is a lot of Green environmentally friendly building and rennovating going on? Especially in NJ where you can write off an entire solar bank array?
Pompous uninformed Asses.
Interesting how some folks can’t seem to make a point without using profanity or is it that perhaps they believe it gives more weight to their meager thoughts?
Interesting how some folks can’t seem to refute an argument so they chastise one’s use of profanity. Or is it they have absolutley no weight to their meager soft landing argument.
The What – hear some some numbers.
I 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.
I went out to Nevada and bought a brand new house on a Lake, fully loaded that was listing for $2 million a year ago. I paid $1.4 (in a direct 1031 roll over) developer paid all closing costs – a delta of $600K off the asking, 30K in closing and another $150K in upgrades.
I have had 3 offers in the past 3 months for $1.6 – another $200K increase.
What is your omnipotent brilliance have you done recently to make money?
“They were able to get much more for their money as the NYC RE sold at top price, and the suburban properties were softer.”
The suburbs have not reached their lows yet. Not even close (no bottom in sight). Your people just jumped back into the fire and will follow their property values down even lower. If you want to take profits, you gotta get out and stay out until the smoke clears. Why do you think Jim Cramer, the clown that he is, claims he sold all his real estate and is now renting. You think you have more market insight then him. Appreciation from this all-time high is RIP.
Otherwise, if you’re not relying on your home equity as part of your net worth (like a car purchase) or you bought well before 2006, then sit back, relax and enjoy your home. Maybe rental income is working out for you.
“these people were able to buy a suburban property that was significantly nicer than they were able to buy over the past several years.”
Not all of us are disgusting Americans. BIGGER DOES NOT EQUAL NICER!
Hadn’t people who observe the housing market been issuing warnings for years? How then can bankers now say that they had no idea? If you lend money to people who obviously not afford the debt they are assuming, then you are asking for trouble.
10:48…one problem….
you’d have to live in the suburbs.
not too many people interested in that around here.
ever heard of a little thing called the environment?
new jersey is bankrupt. plan to spend those extra savings on your house on taxtes, $4 gasoline and home heating.
“Naysayers like The What only cry that the sky is falling, while others see opportunity and are making great deals on prime properties.”
Ok then… Show me the metrics. Show me where the numbers make sense then, I will show you a crashing market.
The Assfucks need high valuations to justify the insanity. The are bubbles in everything (Oil, Gold, Housing and Food). But there is one place is not a bubble, WAGES!
Very soon, very soon.
The What
Someday this war is gonna end..