Real Estate Bubble

[lentinman]

death:

You also are missing the point - as those with their heads in the sand ALWAYS do when bubbles burst.

In the first place..."I agree with the author and obviously not you that renting is not a good deal usually."

I don't know what you are talking about. I have NEVER said that "renting" is "usually" a "good deal". If I have been a proponent of it, it is only RIGHT NOW. Out of the last 100 years, this may be the only time it is potentially true. I hardly consider that "usually".

You are missing the fact that just because YOU can sit in your home until the cows come home regardless of what your equity (or property value is) is 100% irrelevant to millions of other who CANNOT sit there while that happens. They have escalating payments and any potential that they can't make those payments coupled with a depreciating asset is curtains for them. Worse, it is curtains for their lender. Worse it is curtains for the economy.

You are confused as to what my argument is. You are looking at it internally - just as Laz is. You are seeing it from your own narrow world perspective.

I AM A MACRO PERSON. I couldn't care less about Joe Blow and the equity in his house. The fact is that it doesn't take very many millions of people going upside down on their homes to create some type of economic disaster for the country.

Once again, I point out that 70% of ALL economic growth in the US over the past 4 years has been directly, or indirectly, attributed to the GROWTH of housing ... THE BUBBLE. Even if there wasn't a collapse of housing, just the ending of the bubble would put an enormous anchor onto the economy. Since nothing compares with housing in terms of size or substance, then it is almost impossible to overstate the potential negatives from the bursting of the bubble.

On a slightly more MICRO level, my only other objective is to do my best to warn anyone to NOT speculate on any housing whatsoever at this point.

Len