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.
“The suburbs have not reached their lows yet. Not even close (no bottom in sight).”
According to the experts quoted in the NY Times last week, the outer suburbs are already down 15% and may drop a total as much as 19% at the worse. That means a max of a 4% drop to come.
If you’re buying a $1 Million house, you have saved 150K compared to 2 years ago and at worse the place may drop by 40K before prices go back up. sounds like a good deal to me.
you posters are great – attack on RE topics that you know nothing about, then attack saying that since you dont know how to make money in RE than no one can, then finally when all else fails – ATTACK their spelling.
11:55… get back to work or you’ll lose that raise.
…and “their”
brokers posting here are obviously not too busy.
sales are way down and so are your commisions
hope you saved for alot of rainy days
the who
11:58, that’s “too” busy
“someone that can’t spell “warrior” shouldn’t be allowed to own eight properties in NYC.”
don’t you mean, someone WHO??
LOLOLOL. Dumbasses all of you!
some retard posters are to busy spelling and not counting . i just wished they would return to thier term paper.
The What, I suppose you were just quoting others when you repeated the other grammatical abominations in your posts here and everywhere else:
“The are bubbles in everything”
“Ask your self was the economy was great”
“I know you have a old 486”
etc…
I know it’s like shooting fish in a barrel attacking your speech, but it seems to be the only way to converse with someone whose most creative insults include “bitch”, “dickchewer” and the like.