Housing Bubble in Puna?

[aprild]

This is a good article on this subject:

http://www.newsweek.com/id/118914

"Let Home Prices Fall"

A couple of the reasons for the bust were 1. Housing prices far outstripped incomes/wages and 2. the subprime, interest-only, ARM's began kicking in with higher costs and people could no longer pay their mortgages. Then housing prices began falling and voila! people owed more than their homes were worth. Bad news. Many of these people had put nothing down, so walking away from the loan and the house was their best bet. Lots of people had no choice but to walk away no matter that they lost money. Foreclosed upon.

I think that our government is not showing or encouraging fiscal responsibility and that is a not very good example for the populace. We have lost our values. Also, there is no oversight to keep people in the money business (bankers, mortgage co.s, et al) from letting run-a-way greed overcome them. A lot of these lenders didn't just verge on being crooks, they were unethical.

I think that property values will return to historic rates of increase UNLESS extraneous forces like global warming, the war and rising fuel prices intervene to cause an on-going upset in our economic well-being.




april

[bystander]

quote:

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Originally posted by Punamom

Guess your not reading the news either thanks for not answering my ?.
I guess folks emotions have nothing to do with the markets either.
Maybe you can give your analysis as to why the stock market is crashing.

Weren't you gonna buy cheap property in Royal Gardens?

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There's lots of reasons. I think the main one aside from the all the talk about subprime and altA mortgages is that a real bubble did form when prices shot up amazingly over a short period of time. Now as you say it is correcting. And yes fear does play a part and so does greed. The greed of the speculators helped create the bubble and now fear is helping deflating it. However it's not just fear itself or some sort of self-fulfilling prophecy which is what you seem to believe.

Ultimately market prices are determined by supply and demand. There is less demand and more supply now than there was a year ago so prices have come down. There is less demand because buyers are greedy and waiting for prices to come further down before buying. There is more supply because the greedy speculators over built and over bought vacant lots thinking they could quickly turn around and sell them for a huge profit. IMO the real fear hasn't come into the market yet. This will happen when the speculators get scared at even lower prices and begin selling at big losses. Right now they are still sitting on their properties still hoping the prices will come back up. Watch out if they don't.

As for the stock market, I say the recession everyone is talking about is real. It is fear too but the fear of something very real and just fear itself. Lots of companies are guiding down on future revenues. AAPL recently tanked after releasing great earnings news but lowered guidance. But hey I only have a bachelors in economics and am not a PhD so what do I know?

Royal Gardens? One would have to be crazy to buy in there.

[JerryCarr]

My Econ 101 professor said all markets are confidence games. Lots of confidence gives you rising prices and equity values. Lack of confidence brings them down. The drop in real estate and stock prices may have already passed beyond the correction phase into something much worse. We'll see.

Meanwhile, Mr. Bernanke, our Federal Reserve chief is not exactly showing the free-market instincts that might encourage confidence. He actually suggested a few days ago that the banks write down the loan balances of homeowners having trouble keeping up their house payments. Talk about rewarding people for making poor choices! Such a policy could easily result in the need for a bailout of the whole banking system far in excess of the cost of the current crunch. Yes, there were some crooked mortgage originators out there, and many did not make too much of an effort to make sure their customers were aware of the downside to those exotic loans, but what happened to personal responsibility? If you don't understand the contract you are signing, either don't sign it or get some help with it.

I have seen some of these folks expecting rescue in TV interviews. One couple got a very sympathetic take from the reporter despite saying that they knew the payment was going up 30 to 40% after two years. How did they think they were going to deal with the increase? Well, the value was going to keep rising and they would borrow against the equity or refinance to stay afloat. Duhhhhhh.

I hate to see people lose their homes, but except in cases of outright legal fraud, we need to be careful about rescues. Otherwise, there will be no incentive for financial responsibility.

Cheers,
Jerry

[aprild]

I don't support bailing people out. I'm not sure that's good policy.

But that said, the corporations always seem to get bailed out. How about the S & L's? I would sure like to see the little guy get help rather than all those mega wealthy guys who probably caused the danged problem to begin with. Wouldn't you?

Not only the lenders are to blame--I do believe in personal responsibility. BUT these people probably trusted their realtor and didn't know they needed a lawyer, for god's sake. Not everyone is smart or educated. It still doesn't make it right to take advantage of them.


I don't see any of this as a self-fulfilling prophecy. It's a market, but a market fueled by incredible greed and some unethical behavior and I doubt that makes for a healthy market.

And where the heck was the gov't or oversight when all this was going on? I think this admin. was just happy not to have a bad economy at any price. Now those chickens are most likely going to come home to roost.

I was told over and over by a friend that housing prices could not so far outstrip wages and he was right. It only makes sense. Most people work for a living.


april

[bystander]

quote:

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Originally posted by John S. Rabi

I put my money where my mouth is. I bought/sold 40 properties since 1982 and I lost money on one only. (If I factor in that I lived there for seven years and my mortgage payment was about 50% of what the rents were in the area, I actually made money on that too.) Sorry, nobody can convince me that real estate is not a good investment.

The median price declined about 20% in the past three years on the Big Island. Anyone want to call that a bubble? (Maybe by bystander standards.)

I made a very public bet on that well known "other forum" in 2000 and I predicted property values will increase 50% by 2003 in certain subdivisions. (Discovery Harbor, Leilani Estates, HPP, Volcano and Kapoho.) I was wrong, there were more subdivisions and some more than doubled! I just made an offer on another lot and I am willing to bet I will make more money on it in 3-5 years than the bystanders will make.

Aloha,
John S. Rabi ABR,CM,CRB,FHS,PB,RB
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

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I never said RE is a bad investment. I actually agree with you that in the long term it is a good investment. I just dont' believe it will keep going up year after year or try to convince people that it will. Can't you see this is the problem I'm having with your posts? In 2006 you said it would keep going up in 2007. You made lots of money in past but that was the past. To keep blowing your own horn on your profits is in bad taste. You admit to a 20% decline recently and I say it will decline further. Actually I know lots in HPP were going for 80K and now you say the price is aroung 40K? By my math that's 50% I would call that a bubble bursting and many other would agree. Your prediction of 2000 may have been correct but your latest has been way off. Why can't you just admit that?

BTW how's that investment in CFC doing? []

[Guest]

quote:

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Originally posted by John S. Rabi
....PS. Resort property prices increased 7% in 2006 and 14% in 2007. Do your homework.

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Oh man if I could just sell one Resort []

Rabi... did you have your hands on any resort sales? Jealous minds want to know[8D]

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Today in History
The Supreme Court ruled in Dred Scott v. Sandford that slaves were not citizens, 1857

[bystander]

quote:

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Originally posted by Damon

quote:

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Originally posted by John S. Rabi
....PS. Resort property prices increased 7% in 2006 and 14% in 2007. Do your homework.

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Oh man if I could just sell one Resort []

Rabi... did you have your hands on any resort sales? Jealous minds want to know[8D]

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Keep posting Rabi. You are very entertaining for me and others too it seems.

[StillHope]

I don't know but the whole thing started to look like personal attacks.
I am sure John Rabi can defend himself,but to my understanding it's against forum rules.
BTW,bystander,you mentioned jealousy yourself...

[Guest]

quote:

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Originally posted by John S. Rabi
It has been personal from the beginning Hope, however, I never really cared about it.....
PS. As to the "resort properties" and their prices, yes, I did sell resort properties. In fact, I sold many properties at Dere Bay Resort and I just put one in escrow in Waikoloa today too!

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Ok to clarify on my behalf.... I hope Rabi doesn't think I was personally attacking him.

My comment on the Resort... was thinking he sold a "Whole Resort" and dang I sure would love to do that just once. [^] I'm not jealous... but would love to sell a whole resort.

Now that I see it's just "resort properties," it's really no big deal.



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Today in History
The Supreme Court ruled in Dred Scott v. Sandford that slaves were not citizens, 1857

[StillHope]

[quote]Originally posted by Damon

Stillhope -

I wasn't personally attacking anyone fyi.

Remember your post you wrote earlier?

A thick skin is often needed to participate on message boards.

I don't think anyone was attacking... only conversing and asking questions.

Hope your Still hanging in though... cause there is Stillhope [^]

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Damon,I was talking about "bystander".
You like quotes?
Here is one for you from the Greek Mythology:
" JUPITER,YOU ARE ANGRY,MEANING YOU ARE WRONG!
And ,BTW,Hope is my name.So StillHope is like signing:
See you.Still (yours).Hope.
So I am not offended by your "philological attempt".
And there is a difference between personal attacks and "conversation".
You saw this difference when one of the members was personally attacking Rob.I(and most of the people here) was with you on it.Why can not you see that Bystander is doing the same?
Or is it personal for you in this case?