Part 2 in the Record Series on the Housing Bubble by Prashant Gopal..
Remember when the last big bubble burst?
Here are some notable snippets from the article:
…
With all the enthusiasm, it’s easy to forget it was only 1988 when the New Jersey market took its last hit.
“A lot of people investing in real estate are in their 30s and never saw a downturn. All they see is how much money they could have made,” says Ingo Winzer, president of Local Market Monitor, a Massachusetts company that tracks housing markets.
“There really hasn’t been a distressed real estate market in the U.S. in 15 years, so people think it’s not going to happen again.”
…
“This is not a normal marketplace,” Gumbinger says. “It’s fueled by cheap interest rates and the increasing availability of mortgage money. Basically, if you can breathe today, you can get a mortgage.”
If interest rates go up and homeowners start defaulting on loans, lenders will tighten requirements, and fewer buyers will be able to get loans, Gumbinger says. This could increase the supply of houses on the market, while decreasing the pool of potential buyers, a combination that could force housing prices down.
And speculators, who have bought homes in historic numbers in recent years, might sell off at the first hint of trouble, accelerating a downturn, some economists warn.
…
I still think there is a slight anti-bubble/pro-boom tone to the series. While there are some warnings mixed-in, the promise of easy money still seems to gloss over any negatives. I hoped for more of a warning to consumers against overleveraging themselves, oh well. The fact that the bubble is getting serious coverage is a step in the right direction. I need to keep reminding myself that psychology doesn’t change quickly, and the lure of easy money is not easily forgotten.
Caveat Emptor,
Grim
Oh man; this is so reminiscent of the dot-com era:
“Basically, if you can breathe today, you can get a mortgage.”
Back then, it was:
“Basically, if you know what a computer is, you can make $80,000 a year.”
HAH
That was the time when you were 17, just graduated high school, and opted to work for PETS.COM instead of going to college and educating yourself.
woohoo!!
-Richie
at least this 2nd part was much more realistic than the 1st part.
So when will the 3rd and 4th parts coming out?
Don’t expect an alarmist article from the record. The fact that it is getting any coverage is a positive thing. If it gives pause to 10-20% of people reading it, this will help the cause.
What do you mean by “last bubble?”
Real estate doesn’t go down. Duh!
The gains are permanent, etc.
d/n/t
Realtors are idiots that need to be held accountable for their negligent advice.
Lawyers are smacking their lips waiting for things to turn down. Class lawsuits will be flying in all direction. It’s gojn g to be a mess.
The internet bubble is going to look like a little zit when this bubble explodes.