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[WILLIAM <billymegab AT yahoo.com>]

Real Estate (and most other commodity)  prices go up and from time to time 
they back off.    Fortunately for most of us,  trend in real estate is higher 
and if you are prudent, over time you have built a nice little nest egg in 
that the value of your house has increased since you bought it and you have 
steadily whittled down the mortgage (hopefully to zero).  Historically that 
has been the pattern for most people. .  
   
  Ever since the Fed lowered interest rates the cost of borrowing went down 
and the amount you could finance increased immensedly.  Prices (especially in 
high demand urban areas  and vacation spots)  responded by going up 
proportionately.  
   
  This proceeds merrily until the interest rate party is over and the Fed 
starts tighening.   Now if you are buying you can afford less house (keeping 
the monthly paments equal). If you are paying a variable rate mortgage your 
payments go up!  If you have to sell you have to accept less.  Works just 
like the Bond Market.  
   
  It really was only a question of time till the bubble burst.  
   
  Never pays to treat you house like a piggy bank.  Owning your home, debt 
free is a really good feeling and should be every homeowner's goal.  
Sophisticated investors  leverage the value in their house to fund  other 
investments but there is obviously a risk involved.          

Clansgian AT wmconnect.com wrote:
  In a message dated 9/12/2006 7:53:58 AM Eastern Daylight Time, 
genegerue AT ruralize.com writes:


> An item with which most are not knowledgeable is that Lereah bought a 
> Florida condo as an investment about a year ago. That would appear to 
> indicate that he believed what he was saying.

It would. I didn't know that and I can't imagine anyone making that big an 
investment while not thinking the prices would remain high, not even for 
cheerleading's sake.

But whether Lereah's predictions are based on deception, honest 
miscalculation, or just buying into his own hype is a moot point to those who 
made 
financial decisions based on his recommendations.

The thing that surprises me is that raw logic would say that housing prices 
can't go up that fast and that much out of line with income and there not be 
consequences. Also there's the epitome of foolishness of our time of viewing 
a 
rise in equity in your home as if it were dollar bills oozing from the walls. 
My nearest neighbor is a good example. She bought her house for $95K some 
seven or so years ago. It was appraised 18 mo ago at $165K and so she refied 
and took $60K cash which she spent. Now her ARM is readjusting and she can't 
make the payments. If she sold the house to meet the loan, she'd have no 
place 
to live. And yet, you can't give away remote rural property here right now 
because people are spooked that gas prices will go way back up ... and so her 
house may be actually worth the original $95K or even less.

There are a million people like her. It is said that what gave the economy 
such an upturn was the perception of wealth. People viewed themselves as 
wealthy because the theoretical value of their homes kept going up. People 
who 
see themselves as wealthy spend money. There was also the perception that ate 
at people that they might be missing out on the "boom". The strongest 
criticism leveled at David Lereah is the advice in his book Are You Missing 
the Real 
Estate Boom? (subtitled) The Boom Will Not Bust and Why Property Values Will 
Continue to Climb Through the End of the Decade - And How to Profit From 
Them. 
In this book Lereah says that if you have a paid off home mortgage (or never 
had one) you are financially unsophisticated and are missing out on money you 
could be accumulating. We've all heard from real estate investors that those 
of us who didn't take out equity loans on our homes to invest in other real 
estate were just jealous of those who did and were making money.

But many looked at the illogic that wealth, spendable wealth, wealth for 
investing was suddenly appearing out of thin air for every property owner in 
the 
country. The blogs that Lisa quoted in a post to this thread have been around 
for more than two years warning that the bubble was going to burst. Lereah's 
and NAR's sudden surprise that the market has gotten a lot worse than they 
thought still smacks to me as somewhat disingenuous.

> 
> >As for national housing stats credibility, what source do you recommend?

Single source? I doubt that there is one. It's much easier to point out the 
picadillos of a source than to come up with one that is credible. "Thus let 
it be with Caesar .." as Brutus said. (The lack of credibility lives after 
them, the accuracy is often interred with their bones... as it were). The 
point 
is that with the modern phenomenon of blogging, it is exceedingly difficult 
to get away with much. When, as in this case, the NAR reports rosey, or not 
so 
dismal, stats, there are 1000 people with access and knowledge of the skewing 
who immediately report it. For example to make the time that existing homes 
on the market are taking to sell seem shorter, the NAR allows members to pull 
their MLS listing and then relist the property as if it were a new listing. A 
clear deception.

Now we are beginning to experience the opposite of the wealth effect of the 
past few years. The idea that you might miss out because real estate prices 
keep going up and up and up is rapidly giving way to the idea of why buy any 
real estate because prices are going down. Who knows how low they may go? 
Fewer 
people buy which depresses the prices further which makes more people shy 
away and wait which depresses the prices further etc. The effect on consumer 
spending might turn out to be grim.

I've gleaned the blogs from which Lisa quotes and other sources and, like 
many, come to my own conclusions. Foremost is the debunking of the notion 
that 
it's only a local phenomenon. Worse in some places, I suppose, but happening 
all over. The blogs mainly consist of newspaper blurbs, radio and TV 
interviews, and the like. The thing as a whole reads like the script for 
Stevem 
Martin's 'The Jerk':

The housing market is sound. Prices keep going up, sales keep going up, and 
demand is high.
Except Florida of course.
But other than Florida, prices are high and sales are good.
Excep Southern California.
Other than Southren california and Florida sales are good and values are 
increasing.
And Washington.
But sales are good, except Florida, Washington, and California.
And the midwest.
(Etc. etc. until finally now of days)
Sales are good. Equity continues to go up. Except in Florida, Hawaii, 
California, Alaska, the South, Eastern Seaboard, Wyoming, Seattle, Texas, the 
MidWest, Arizona-New Mexico, expensive houses, beginning houses, condos, new 
homes, 
existing homes, New York, the Great Lakes area, and Atlanta. 
But other than those places equity is up and sales are brisk. So you see 
it's just a local phenomenon.
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>From billj AT harborside.com  Tue Sep 12 17:52:58 2006
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Don Bowen wrote:

>At 9/11/2006, you wrote:
>  
>
>> It was originally used as a hedge but spread
>>into places where it was hard to kill -- swamp, for example -- where
>>it made an impenetrable barrier to most moving creatrues bigger than a
>>possum.
>>    
>>
>
>In the mid fifties it was given free to farmers to plant as wind 
>breaks.  Now it is a weed.  There are many examples, it is not just granola 
>eating hippies who fight this, it is real scientists who know the down sides.
>  
>
Absolutely, Don, that's part of the problem.  I've been on many 
botanical field trips, and it's much like birdwatching.  The goal is to 
see as many "natives" as possible and as few starlings.  Most people 
wouldn't know the difference as long as the environment is healthy as a 
whole.

It's much like anthropologists or linguists who lament the loss of 
language and culture, only with a loose screw, so that they start 
imagining that they can dictate to everyone what must be, so that they 
can have a rewarding botany walk.  It's not possible to make up for the 
sins of the European imperialists by social engineering (or is it?...), 
but with the dawning of more and more specific weed killers, and the 
dumbing down of a populace that now accepts any emotion-based lie that's 
promoted to them, there's a chance that in the botanical realm, at 
least, they could prevail, especially with agribusiness on their side.  
A whole new world cleansed of imperfection may finally be within their 
grasp, paid for by me at gunpoint, as I'm told to "clean-up" my 
"non-native" grasses or lose my home.

Bill
S. Oregon coast