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Ten Facts about the Real Estate market you need to know

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  • #31
    Re: Ten Facts about the Real Estate market you need to know

    Thank you for that article Sean,

    However I could not disagree more with you about what the problem is. Let's be careful to distinguish the problem and the result of it.

    The only way to avoid problems like this in the first place is to have those who caused it pay for their mistakes instead of bailing them out.

    How many consumers, home speculators, builders, investors, banks and speculators have made millions in this process that we now recognize is the source of this mess?

    And you want to bail them out?

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    • #32
      Re: Ten Facts about the Real Estate market you need to know

      the difficulty is figuring out ways to help the innocent [whoever that might be] without simultaneously bailing out the guilty. sometimes the vehemence around here makes me think of the albigensian crusade, in the early 13th century, aimed at rooting out the cathar heresy. when a town was taken, a soldier asked how to tell which inhabitants to kill:

      [the] famous reply... was "Caedite eos. Novit enim Dominus qui sunt eius." — “Kill them all, the Lord will recognise His own.

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      • #33
        Re: Ten Facts about the Real Estate market you need to know

        Originally posted by jk View Post
        the difficulty is figuring out ways to help the innocent [whoever that might be] without simultaneously bailing out the guilty. sometimes the vehemence around here makes me think of the albigensian crusade, in the early 13th century, aimed at rooting out the cathar heresy. when a town was taken, a soldier asked how to tell which inhabitants to kill:

        [the] famous reply... was "Caedite eos. Novit enim Dominus qui sunt eius." — “Kill them all, the Lord will recognise His own.
        good one! and you can bet that while that was going on the guys who ran the cathar schools at a profit were in a ruler's castle splitting up the money.

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        • #34
          Re: Ten Facts about the Real Estate market you need to know

          Originally posted by Tulpen View Post
          However I could not disagree more with you about what the problem is.
          Nothing in the article says anything about what I think the >cause< of the problem is.

          Originally posted by Tulpen View Post
          And you want to bail them out?
          The 4 ideas at the end seem to have really fired people up. I fully realized they would seem shocking, in fact I said so. My point was that it would take pretty extreme measures to stop this thing from snowballing. Whether it should be stopped, and what I think should be done are entirely separate issues.

          I understand your, and others, desire to stick it to the bastards that "caused" this. Problem is that the folks that truly profited from this boom are already out - so while your desire to stick it to them is noble, all the real risk has already been transferred to pension funds, taxpayers, and perhaps even your money market account.

          I also understand many think we should just let Adam Smith's invisible hand sort it out. Perhaps. But I'd personally like to see a lot more discussion about what role government and the fed should play now, and should have played in the past. Especially given their role in the creation of this bubble with the effective elimination or reserve requirements, the 1997 taxpayer relief act, and the 2001 rate cuts.

          Ultimately I believe, that regardless of what "fixes" might be put in place we'll see a return to reasonable cap rates. In the areas that appreciated the most this will either require a doubling of rents, or a halving of prices - either of which also happen to be pretty close to a reversion to the mean in inflation adjusted home prices. I expect we will see a portion of this correction in continued price declines, followed by a portion due to rent increases (which is well aligned with Eric's KaPoom theory). I also believe it will be worse in outlying areas than metros (Eric's geographic cascade theory).

          Sean

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