[falser]

$this->bbcode_second_pass_quote('pup55', '')$this->bbcode_second_pass_quote('', 't')he seasonally adjusted percentage of credit card accounts 30 or more days past due rose in the April-to-June quarter to 4.81 percent. That followed a delinquency rate of 4.76 percent in the first quarter and was the highest since the association began collecting this information in 1973.

[smiley]

$this->bbcode_second_pass_quote('', 'I') would say the real estate is still a good investment. You have to remember that it's not the real estate that is appreciating; it's your money that is depreciating.

[FairMaiden]

Houses are not a good investment. They make sense bc you will live in it and save the opportunity cost of renting. If you factor in maintenance, property taxes, etc - you don't receive a real return and you'd actually be better off investing in something else. Of course, you need a place to live so buying makes sense. With anything tho, the smart money buys low and sells high. Real estate DOES go up and down. In my city we have had 4 RE depreciations in the last 25 yrs...in the waterfront downtown housing prices dropped as much as 50% and it took 7 yrs to recover 40% of that...

RE always goes up - or is always a good investment is false.

[JBinKC]

Lets say I am very spooked I transfered all of my 401 K stock holdings into a GIC about 3 weeks ago and hold 65% cash in my Roth IRA where I am riding my huge winners in energy, specialty metals and building supplies cos. I have a feeling the party will be over in those strong sectors soon as I feel there too as investor sentiment will become negative so nothing will

Yes the figures from the credit card companies coupled with all of the equity borrowing as pointed out in Greenspan's speech yesterday leaves me to believe we are in for a crisis from a huge spike of loan defaults in 2006 .

I believe the economy will collapse as the bills from the winter heating season begin to become due.


.

[Eli]

Don't leave out 3.00 gasoline.


Remember a lot of these poor fools went out and bought a brand F 150 truck because it was such a good deal.

[FairMaiden]

The interest rates are predicted to hit 4% by spring. With higher gas prices & higher loan payments it will be interesting to see how the economy fares...

I'm spooked too. I've considered selling my place (its appreciated 115%) and renting until the markets crash. I could probably pick up a nice home in 2 yrs time - but my place won't be worth much as its only overpriced due to the housing bubble here...decisions, decisions...

[FoxV]

lets also add to this wonderful mix the dumping of SUVs for smaller import cars. This is basically the deathknell for detroit (which was half dead already).

In the long run its a good thing (less consumer spending, less fuel usage), but oh man is it going to be rough when the top two US employers go into bankruptcy protection.

This may be the saving grace to killer home heating prices this winter when there is enough demand deconstruction to make bills affordable (for those that have a job). However home heating costs will never return to the lows seen at the end of the 90s

[falser]

$this->bbcode_second_pass_quote('FairMaiden', 'I')'m spooked too. I've considered selling my place (its appreciated 115%) and renting until the markets crash. I could probably pick up a nice home in 2 yrs time - but my place won't be worth much as its only overpriced due to the housing bubble here...decisions, decisions...

[Eli]

Falser I would not say it is a bad idea to sell now and cash out for Fair Maiden.

The market has peaked and if she has a lot of built up equity cashing out is good idea. Especially if she is in a market with a lot flippers. If people are aggressively flipping properties in her area the bubble will burst and prices are going to come down fast.

If there are a lot of people taking out interest only loans it might be good idea, rents also come down a lot faster than home prices so she might come out good there as well.

When the banks are stuck with houses that won't sell the will be desperate to off load them driving the prices down in a hurry. Banks are in the money lending business note real estate.


I agree with what you said about the auto industry. We have the auto industry and the airlines already on the edge. If the auto industry tanks as it will for GM and Ford then the airlines are not going to be far behind.

[FairMaiden]

Eli - I am in a market with alot of flippers & alot of no-money-down mortgages. If I sell now, then I gain $160K in equity due to the increased prices. It would be $100 cheaper to rent per month - and that cancels out the $1200 per year my principal is decreasing by...so I'm basically no better or worse if I invest that $100 per month (I've calculated in property tax, maintenance fees, etc). Since I have some extra savings, if the market doesn't crash - I can still afford a nice place with my $180K downpayment. So basically, I don't see a down side unless prices increase more than 10-15% in the next 2 yrs. Highly unlikely given I'm in a suburban area (high transportation costs) and interest rates will be climbing...

[Eli]

Yeah I would cash out I mean that is a huge profit to pocket 160,000.

Do you live in Ca?

It really is a no loose situation, so you rent for a while betting that the market goes down. If it does good for you and if it does not you are still not in bad shape.

Meanwhile stick the cash you make in strong crash proof investments and make money that way.

Worst case is you have to buy another house later.

Really there is not one thing that is looking positive for the US economy IMHO.
The increasing interest rates alone are going to slow the housing market. And all those poor fools that are taking no interest loans and flipping houses are like the people who bought stock on margin back in 1929. It is all good until it goes bust.

[strider3700]

I've been watching prices around here since 2001. until 2004 I was Waiting for the prices to come down. Last year I found a good deal that was only 50% more then it would have been in 2001. It's now worth another 50%. Yes the bubble has to pop eventually but trying to time the top is pretty much impossible.

[Eli]

Oh yeah it is a gamble and there is risk involved.

But that is how you have to do it there is no reward without taking some risk.


But the cracks that are starting to show in this economy are really not good. The credit cards are getting maxed out consumer confidence is in the toilet and huge changes are coming to the bankruptcy laws.

There is a perfect economic storm brewing, but what the heck do I know.

[falser]

$this->bbcode_second_pass_quote('strider3700', 'Y')es the bubble has to pop eventually but trying to time the top is pretty much impossible.

[Eli]

Falser the fundamental thing that I think can't be ignored with this current housing bubble is the liberal lending practices banks have gotten into.

In the past it was hard to buy a house you had to have at least 10% down and have good credit, now you can be an illegal immigrant with a bad third party out of state pay invoice and they will put you in home.

This housing bubble has been driven by banks just wanting to sell mortgages.

[falser]

Oh I understand the situation well enough. The loose lending practices certainly cannot go on forever. Fannie Mae for example is under investigation for overvalued assets, underreported losses etc. And that's the biggest mortgage broker of all. Long term interest rates will rise one way or another and this will force many people to default on their loans. It's going to be a domino effect that will take all these risky loans off the market. Banks just won't be able to offer them. How fast this has an effect on the price of homes is debatable, but there's little question this style of lending isn't going to keep going and going.

[jdmartin]

$this->bbcode_second_pass_quote('Eli', '
') Time for old peanut head to run again and time to stock up on Billy beer.

[Chaparral]

$this->bbcode_second_pass_quote('EnemyCombatant', 'B')TW, an excellent peak oil job is being a RE investor.

[rogerhb]

One of the claims against socialism/communism is the idea of a managed economy, that a top-down management of an economy is in-efficient and not dynamic.

So can you honestly claim that the US does not have a managed economy? However, alas, the economy is not managed for the benefit of the masses, or even the nation, but for the rich. Additionally it's not managed compentently.

Discuss, disprove, rant, whatever...

[jaws]

There aren't really any truly free market economies in the world right. There are economies where the government intervenes a little and economies where it intervenes a lot. Americans like to pretend that they live in a free market country because the rampant government intervention is hidden by the bureaucratic and institutional maze the country is administrated with. Since people can't tell how things are run, they assume that they aren't. People with the right connections who understand how the system works pull the strings in their own direction whenever they get the chance.