Housing Bubbles don't pop; they deflate slowly

[lianxiang]

This is such a amazing video, totally right.

[RealtorAustin]

Selling real estate can be a pain in the ass. You're right!

[ComradeLibertarian]

This guy sure looks stupid now.

[deltapunk21]

Actually pre-1997 prices.

[VBioreactorBydlo]

Spot on!

Greetings!

[idigl7220]

I bet this guy feels stupid now

[jsmythib]

Very creative- ty for your efforts :)

[neanam]

Sound bout right to me

[alpertdon]

If you have a look at the japanese real estate bubble, it has been deflating for 16 years. the prices now are starting to level off, but back then prices of housing was bid up to the point that the mortgages spanned generations into the future. i think this guy is right on. the japs have been experiencing what he is talkng about. if you dont believe what he is saying take a trip to japan and ask around.

[LatinCross]

lol, n00b! Took about 6-12 months (2008) and the bubble popped!

[tike0rz]

LOL! Great video!

[strawjam59]

Yeah, they'll give ya loan modification, only with insane closing costs that stretch your loan out to its max again. and you can pay and pay and pay , meanwhile your home depreciates more and more and more till 2015 and all your money is wasted. Hand the bank your keys and tell them good luck with your new home

[cthelder]

what do you mean, eat his words? He was right on the money. This thing did not happen overnight. The air is still being let out as we speak, even with LOWER interest rates!

[ohio1998]

YUP!!!!

[crb4059]

Boy are you eating your words now

[dfjpr]

Like it, good explaination :)

[NoticeOfDefault]

yep, ready for that loan modification now ... the banks are ready to talk they are starting to humble themselves ...

[GanNepesure]

this video got my pusssssyyyy wweeeettttt!!! c me on cam! P

[stitchyman]

heh.. um, maybe they haven't popped, but the deflation is at the rate of letting the balloon go and its air out.. causing it to make a big fart sound while whizzing around the room flinging spit(from when you blew it up) back onto your own face. i think/hope australia is in for a normal steady deflation

[somme8]

Turns out they do pop you f*cking idiot.

[Fakanga]

fake

[snaxs2000]

this is an old video. We can officially say that the bubble DID pop. When Cali looses 28% value in 12 months, and there are 1300 foreclosures a day, you know this sucker imploded. POP!

[bauler]

Very good explanation of a specutive bubble. Remember it works both ways. Everyone now thinks it will never stop going down. Just like everyone thought it would never stop rising. A few years it will start all over again. Short oil now, you'll make a fortune.

[giemmeppi]

Rome Italy here. Prices are down about 15% since last year, but still they approach 25 years of incomes!!! At top of bubble, they were 30 years... In the US you are pretty lucky...

[YouMuseMe]

I noticed that some people have moved into my neighborhood in the last year - snapping up houses that were at roughly 2001 values. They thought it was a wise move. IMHO that was a mistake, because they wanted to get in before someone else did. The trend is still going down, and I wonder how they feel now.

[YouMuseMe]

This guy would make a good sub for a 3rd grade class.  Great props! ;-)

[jci10]

Y2K prices? Are you nutz? Even THOSE prices are wayyy, wayyyy to high. We are possible looking at the greatest asset lost in human history. Nobody can afford even the real-estate taxes, let alone the mortgage. Game over.

[ElCapitan1985]

dude, you crack me up everytime. very informative. keep em coming.

[cityhustler617]

Pricing property is tricky. In big cities the price of property is set by the rental income. I'm in Boston and property is price 10-12 times the yearly rental income. So for example a 4 bedroom condo near a college in Boston gets about $3000-$3400/month to sell it quickly it's about 10X the yearly income. Some usually price it at 11X or 12X the rental income if they're not motivated.

[mongobobo]

The question I have is how much is this housing inflation is caused by upgrading and how much by upgrading. Lower income areas or least desirable areas will drop sharply because people who should only rent were able to 'afford' creative loans. Then the people who sold at that inflated price were able to buy in a nicer area and so on and so forth. Therefore, is it possible that prices will just stagnate rather than sharply fall?

Thanks for any replies.

[mongobobo]

The question I have is how much is this housing inflation is caused by upgrading and how much by upgrading.

lol I meant to type:

The question I have is how much is this housing inflation is caused by upgrading and how much by 'new money.'

[beerytom]

what a wanker.... predictive as well

[crb4059]

How does one determine true market "fundamental" value?

[vmlinux]

With housing it's a lot easier finding the fundamental values. You look historically at what household incomes are vs what prices are. I think it's historically like 3-4 times annual incomes or something like that.

[EdwardRommel]

With Houses...according to a recent issue of Fortune Magazine, you use two barometers of fair value...price times rent or price times average income...both barometers were indicating a wildly inflated housing market in 2005...should bottom in summer 2012 per fortune.

[mongobobo]

not 3-4 times, more like 2.5-3.

As far as rent income, it is the annual come multiplied by 12-14

[antipovertycultz]

American democrats and republicans alike are fighting to create a slavery system through the creation of mass poverty and homelessness.

[deltapunk21]

@antipovertycultz ugh no there is no mass homelessnes inmbecile and there is no slavery suystem just atypical fascism out of the mouth of a tard. the only slavery is SS, wlefare, and etc. enslaving the working to the non the saver to consumer and the banks to consumer credit instead ot the way it should be business to free market producers to banks and and consumer to saver and producer who actually isn't distorted and malinvested becaus eof goiv regs, laws, taxes, incentives, deincentive,etc.

[antipovertycultz]

I ALSO consider it a social crime that a poor or middle class family be prohibited by politicians from getting decent modern housing by negating property ownership through politicaly engineered hyper-inflation. INFLATION rises rents and creates homelessness! any halfwitt economist and politician knows this.

[masakmerah]

eerrrr.......what about foreclosures? interest rates goes up, monthly payments goes up, people cant pay....deliquencies....foreclo­sures.....now thats really gonna plunge the price fast!

how about price dumpings by developers?

[mongobobo]

Sadly, since we obviously no longer live in a captilist country, the Gov. is going to give banks all money they need to keep things realitively status quo. Banks will most likely freeze rates, because after all 4-5% is better than nothing, right? And this will be a slow decline. Unfortunatley for me!!

>:(

[damnright4]

Any one who buys a house now is a sucker! House prices are still TOO DAMN HIGH!!!

[Thisisforme2]

@damnright4 Jimmy McMillan? Is that you? From The Rent is TOO DAMN HIGH party?

[MaverickCentricity]

Just hopes the bubble lasts long enough for my sister to get out of her house. All my bearish talk finally got her to put it on the market, and Dallas real estate market isn't bad right now.

[supercrunkalated]

right on...people freak out over the simplist things...the market goes through CYCLES...there is no bubble. if people can't buy, it becomes a renters' market...and then when they can afford loans again, it comes back...for more info on how to make money in down cycles investing, subscribe to my channel

[sharonafox1]

Awesome!

[JP5466]

Dude, you're awesome! You made this vid in March and you nailed it. Not just accurate, but funny too.

[lividmany]

That is what I like to see...economics boiled down to infantryman level language.  Hot air "owners" be ready for a long, cruel ride DOWN...

[LuciusBrutus]

S&P raises 31 classes of Bear Stearns issued ABS

NEW YORK, July 30 (Reuters) - Standard & Poor's on Monday raised its ratings on 31 classes of residential mortgage-backed debt sold by Bear Stearns Cos. (BSC.N: Quote, Profile, Research) between 2002 and 2004, citing low levels of delinquencies in the debt.

S&P upgraded classes from 14 Bear Stearns deals, with ratings ranging from "AA-plus," the second highest investment grade rating, to "BB-minus," three levels below investment grade.

[hamsterama]

That was an excellent, funny video! Now I understand better how the economy works.

[downwiththenwo]

Fantastic. Fantastic.

[InteriorCommando]

This guy ought to run for president!

[uSteltzen]

overqualified

[thobui27]

wow...this guy is so fucking funny :). 10/10 for making such a boring topic so interesting.

[rubantin]

oil your chair please...

[badgrammar]

yes! i couldn't agree more. i wish all of my stupid friends who got "exotic" mortgages watched this video before they signed on the dotted line.

[CreditTipVideos]

Real estate is like the stock market...

It always goes up an down.

[mmouillar]

"nothing can save people determined to grow suddenly rich"

[nagarner]

A few years ago - probably 2000 - there was an "expert" professor of something who had loads of coverage on the UK TV leardedly advising people that "now is the right time to sell your house". i.e. the bubble was about to burst. It didn't of course and I pity the poor souls who took this guy's advice seriously. They would have lost big money buying back into the market a few years later. The housing market (in the UK anyway) is a complex beast

[jjenson2006]

Yeah, why are all these people foreclosing; they should just hold on because we all know real estate only goes up!

[vsutube]

Excellent Video!! Keep 'em coming.

[gordong156]

Great educational tool - thanks for sharing. I also really liked the rollercoaster video. Brilliant.

[guslingus]

Great presentation,

Yep the idea that you can sit on your fat arse and make a million dollars just because the house you are in has trippled in value is such a false state of mind.

Here in Australia they claim price rises are due to lack of land. Yet only 0.3 % ,, yes not even half of one percent of the land is residential. It is like some kind of media promoted Drug...

That ballon is going to be letting out air for about 5 years...

[uricehe4]

Lack of land IN AUSTRALIA?? I thought it had the largest land/population ratio disparity of just about any country in the world. That's crazy if people were buying that nonsense.

[guslingus]

Its true, They just swallow the media crap and goverment spin.

[rmsmith1126]

Yes...keep it simple. Great clip!

[Nu7bsRD9]

Ha ha! Great!

[mmosieur]

Great video!! Right on the money!!

[louminatti]

This is outstanding.

[john67elco]

This is one of the best dead on videos about the bubble I ever saw.

[champo36]

Now that's nice now maybe i'll be able to buy i'm thinking 2009 or 2010 but for now rent til then.

[mongobobo]

My god, I hope it's quicker than that.

[44pullups]

i moved to california in 2002. felt pretty settled in 2005 and went house shopping. impossible! now it's 2008 and _still_ housing is 6-12x my salary (100K) so i guess it will either take an earthquake or patience on my part =)

[NickandThaisy]

I'm in Los Angeles, where are you?

I've been saving for 9 years now, my wife is pregnant, my rent is low but I need more space. I'm hopeful that prices in WLA come down 35% by this time next year, and I'll get in. Yes, the value will continue to go down I'd imagine but at least it will be more reasonable.

[44pullups]

i'm in san mateo (bay area) and there is a lot of denial here. i've heard that it will take until 2012 for reality to sink in so i may not be able to wait (would hate to leave california though, it's so nice and the multicultural is fun).

good luck with finding one next year - maybe LA is quicker in adjustment reality?

[john67elco]

You nailed it... The end result is the same, just takes longer.