[FoRK] Does this real estate boom remind you of the dot-com boom?

Eugen Leitl eugen at leitl.org
Tue May 17 13:06:26 PDT 2005


On Tue, May 17, 2005 at 12:24:21PM -0700, Jeff Barr wrote:
> Fellow FoRKers,
> 
> Back in 1998 and 1999, hallway and lunchtime conversation would quickly
> turn to "the market" and the latest hot stocks, the newest IPOs, and how
> wonderful, ever-lasting, and "different than last time it all was." The
> attitude was "jump on quick, this train is leaving the station."

I've always regarded that as a craze. IIRC I'd be gotten out some 6 months
before the crash, had I played.

> Suddenly (at least here in the suburbs of Seattle), real estate feels
> the exact same way. Everyone is talking about it, everyone is sure

Well, duh.

> that the prices will go up forever, and more than half of the
> families we know are in the process of moving to larger homes (after
> relative stability for the past 5 to 7 years). People express
> amazement at the value of their current homes, mortgage offers flood
> my mailbox, and so forth.
> 
> The interesting questions are: When and how is this all going to
> end? Will it be with a bang (sudden devaluation) or with a whisper
> (longer time on the market, little or no appreciate for an extended
> period of time)?

Not to channel Beberg, but the global situation is rather dismal. The US is
deep in debt, and spending like crazy. Private households are up to their
ears in debt as well, and are gambling on further real estate rises via 
refinancing & Co.

This isn't exactly new, and I'm surprised you missed that bubble:
http://www.google.com/search?hl=en&q=real+estate+bubble&btnG=Google+Search

I don't think the situation will resolve itself smoothly either, so if 
you're one of the gamblers: get out. Now. In worst case, you'll only lose some
slight money -- if it has to be real estate, invest it elsewhere. 

Yours is not as shitty demographics as EU (over here 15 years of stagnation,
and developing into a nice depression), but otoh brain gain is effectively
stopping (and brain drain elsewhere stopping as well), technology leadership 
slipping, and energy prices are up up up, and this is only a beginning. If I
was a foreign investor, propping up the dollar I'd be cutting losses, and
pulling out, yesterday. (I haven't listed all the nasty items, btw).

As far as I can see the only mid-term winners are developing countries with
low labor costs, low environmental protection, good demographics and a need
to build local infrastructure. If you're lucky, they're your market for a while
(before the technological leadership torch passes on completely, and you have
to import the neat stuff from elsewhere).

So what do the talking heads on TV say?



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