Housing Insanity

This is a good article on the housing bust, and a good site to check out what has been happening in the housing market, but while the article was well written, the actual stories being told left me with several no so good thoughts, such as “stupid idiots” and “wake the hell up people, what do you really think is going to happen” kind of thoughts.

Half-a-million dollar houses are always going to be grossly overpriced (why should it take a half-a-lifetimes income to buy shelter? Who in their right mind would pay such sums?), and in an inflated market, losing your shirt on such an ‘investment’ is a likely option. Bemoaning the fact that you made a terrible decision is rather pointless too. You should be blaming yourself, not the market.

Houses or any real estate, do not always go up in value. This is a cherished belief among homeowners, developers, real estate agents and mortgage companies. There is a ceiling to the worth of anything, just because it’s real estate doesn’t mean its always going to be a good investment.

I’ve waited a long time for prices around here to fall, they never did. But I’ve seen many real estate companies and agents pack up shop and leave, since the market is locked up tight and nothing is selling. Some owners are still holding out for ridiculous prices as other owners are forced out of their homes in foreclosures.

What really gets me about the article linked above is the disconnect from reality. Many, many people are still stupidly believing that we’re going to have prosperous times again and the old economic model of constant growth and increasing investment values are always going to go up, up, up.

This isn’t even possible anymore, this past week should have made that abundantly clear. Oh yeah, it might cost $10,000 for a loaf of bread in two years, and a $99,000,000,000 for a house, due to our devalued dollars, but that doesn’t mean that the actual value of things will have increased, it only means that your purchasing power was vaporized in a flash of political stupidity.

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8 thoughts on “Housing Insanity

  • October 14, 2008 at 6:59 am
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    When we rented this house, just over a year ago, the owner/landlord couldn’t understand why we weren’t just buying a house. I tried to explain the housing bubble, the credit bubble, etc – he didn’t get it.

    We have a business partner who just moved to Atlanta for a new day job. She left behind a not ‘yet’ sold house they had had custom built for themselves three years ago (when she already knew she HATED the job she was in) and have bought a house down there. Her husband has yet to find a job down there. Instead of having one mortgage and two incomes, they now have two mortgages and one income.

    Are they going to drop the price of the house up here so it will sell faster? Of course not [yet]- they’d get less than what they owe on it. So I guess they will hold out, as housing prices go lower and lower, and end up getting even less of what they owe when they give up.

  • October 14, 2008 at 8:51 am
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    Over at theautomaticearth, it’s obvious where this is all going. Greater centralized control, fewer banks, more government say, consolidated power. By re-capitalizing only ‘healthy’ (read cronnies) banks, you have triage. Picking the winners will also be the banks (link) whose executives are directors of the Fed.

    Remember the fight in Congress, and all the petititons, over the Paulson bail-out plan? Guess what, they’re going to use the money for purposes that Congress never meant to give it for. Just like that. Paulson’s Goldman bus-boy Neel Kash&Karry is going to buy direct stakes in banks, and not their casino toilet paper.

    Which means the paper will still remain in the vaults, and the lies about the value can continue. And Congress signed away all oversight. Word is that the money will be put only into “healthy banks”. Uh … If they were so healthy, they wouldnâ’d need it, would they?

    Another Goldman acolyte, Robert Zoellick, became the head of the World Bank after Paul Wolfowitz became too much of a profile risk. The World Bank is now taking it upon itself to “salvage” banks and economies in developing countries, together with the IMF.

    Both institutions are of course, and have been for decades, nothing but US weapons designed to wage economic warfare in the poorer parts of the planet. They have never seen a crisis they didnâ’t like. Just watch what theyâ’re going to do, and you will understand the true meaning of the term “disaster capitalism”.

  • October 14, 2008 at 12:28 pm
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    Some good advice on merging with the community wherever your crashstead is: The Art of Survival, Taoism and the Warring States

    Because the best protection isn’t owning 30 guns; it’s having 30 people who care about you. Since those 30 have other people who care about them, you actually have 300 people who are looking out for each other, including you.

  • October 14, 2008 at 2:24 pm
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    @ aft – true
    OTOH, if you’re in a remote situation, coming up with 30 people period) is a challenge. To say nothing of trust, competence, sanity, etc.

    Around here, I’d have to go to a 6 mile radius to come up with 30 people total and of those there is a only one I’d trust with even a partial roll of toilet paper for 10-15 minutes (and he’s leaving). To find just one person I’d trust someone to protect my back while gathering firewood, I’d have to go 60 miles and provide the weapon and ammo. Good luck with finding informed rational responsible trustworthy simians – anywhere.

  • October 14, 2008 at 5:30 pm
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    I’m still trying to figure out when the ceilings in houses went from 8 feet to 24 feet and why. It’s so stupid, 20/24 ft ceiling and then they have to put a $200 fan up there to push the heat back down.

    Growing up in the 50’s/60’s my parents house was a middle class cookie cutter 3 bedrm/1 bath house, maybe 1200 sq. ft. if you count the basement and the 4 of us did just fine, now for the last 20 years it been like you have to have a 3,000 sq. ft home for 2 people and a dog. Nuts IMO

    Oh and by the way if in case you all are wondering, there wasn’t any 2,000 mile long ‘light ship’ today…maybe they had a flat or ran out of gas… Oh well! LOL

  • October 14, 2008 at 8:35 pm
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    That’s not true — I took a ride in the lightship today, all by myself! It was great, hated having to come back to this place…

    About ‘community protection’. It’s a nice concept, but it’s not realistic, not in my experience. It means having to feed 30 x an unknown number of mouths, and also have 5 people do the work for 50 lazy slobs.

    Trust is a huge factor too, and little demagogue / prophets / dictators will always step forward to demand obedience and your slavery.

    I have yet to see where the idea takes hold that we are “all in this together” and I do doubt very much that this will suddenly become a common theme. It hasn’t yet, and we’re at relative peace now. I suspect it will degenerate into what we have today — every man for himself, but much worse.

    Theoretical models are fun on paper and for discussion, but I have not seen much evidence of their reality in real life. Not when people are hungry, at war or in fear for their lives.

  • October 15, 2008 at 5:35 am
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    It would appear Hobbes had it right after all (The Leviathan):

    “Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.”

  • October 15, 2008 at 7:06 am
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    Being just under 5 feet tall, I used to wear a button that read “nasty, brutish, and short”.

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