Skip to Content.
Sympa Menu

homestead - Re: [Homestead] bubbles

homestead AT lists.ibiblio.org

Subject: Homestead mailing list

List archive

Chronological Thread  
  • From: Clansgian AT wmconnect.com
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] bubbles
  • Date: Wed, 1 Nov 2006 20:38:28 EST




> There can be a bubble in tech stocks and that bubble can pop almost
> overnight. But how many people need a tech stock?


Don,

RE is not tech stocks and it is quite true that a comparison of the two is
vague at best. Many have pointed out, as you have, that stocks can go to
zero
overnight and RE can't, not in the real world. But there is another side to
this. No one lent trillions of dollars to people to buy tech stocks on shady
ARMs and the like. No one lent money to buy tech stocks with the stock
itself
serving as collateral. In almost every case (but not absolutely every case)
it
would be impossible to be 'upside down' in a stock deal. Not so with a
house, with many of the ARMs people find that two or three years into the
loan,
they owe more than they originally owed and more than the property is worth.

When the stocks dived, there were no foreclosures and defaulting on loans
associated with it (except, of course, the idiots who hocked their house to
by
tech stocks).

The fact that tech stocks and houses are very different ought to be all the
more alarming.


>On the other hand how many people need a place to live??

That's not the economic question, the question is, how many of these people
have the means to pay for a place to live? At least the type of houses being
built now of days? Demographics change, preferences and lifestyles change.
Rather than slave to spend 70% of one's income on housing, the paradigm could
change in a twinkling to where very small houses, multiple generations living
in
the same house, and a host of other such things could shrink the "demand" for
new housing to nil.




Archive powered by MHonArc 2.6.24.

Top of Page