patrick.net

Because people think real estate is cyclical and prices will eventually be flying high again.

I'd have to say yes. The bubble mentality is alive and well in OC too. I guess it depends on what you think a starter home is to some degree BUT in my neighborhood we are just about at rental parity at 500K. Does that mean that rents are in a bubble too? All housing in general?
I do know that it's quickly becoming cheaper for me to buy even though I think that prices are too high. I'm afraid of ending up stuck and unable to sell if I had to, so we haven't bought yet. I don't know what the answer is but I am not convinced it's going to make sense to rent for too much longer

From my perspective, I can't find the land and build at less than $500,000 for starter house, A rental is gonna cost me close to the same as buying. But with buying I control that my kids can go to same school(my school is very strict you move out of boundary your kid is out even parents moving into neighborhood with kindergarteners the school is full and they have to use adjacent school), don't have to move, my toilet is having problems I can fix it I don't have to convince a broke landlord to do it now broke me does it, can hang up pictures and paint anyway I want. My concerns are what if rents drop because nobody has the money to pay well then it would have been a better decision to rent than buy. In 30 years I will own the house, who knows? I think the stock market and housing market go hand in hand and really can trigger eachother, but maybe stocks lead the charge because the sales are daily so if I see a huge stock correction maybe I sell into it with the house to get out of the way. I don't see the inflation coming that has been predicted. If anything I see deflation. People are tighter than a frogs a** with money and restaurants are closing or empty. Pretty soon we will be like japan hoarding money in safes that float away unidentifiable in the tsunami.

As long as there is an NAR and its regional counterparts...
"Real Estate will always go up!" and they "won't be making anymore land" and "don't get priced out!"

bubbles are fueled by exuberance - the NAR is out there to stoke it.

We've had bubbles for quite some time and some people will always believe that things will not change.

I still meet some that act like the dot com crash/tech crash didn't happen. Back then you could breath and get something in IT...now it's much fewer people and venture capital dropped like a rock.

Some think the stock market will come back but yet the NASDAQ is still 50% lower than what it was in 2000 (early 2000).

We had such a long period of national housing wealth that some automatically think they go up in value.

You are right, mentality is still there, greed has always been there. Another 5 to 10 years and I think all these pretend investors, late night crowd might subside back to being irrelevant.

I think that the key to this is understanding that the mentality is what leads to prices. Some people might think 500k for a house is ok. To me that price will never be ok unless I suddenly get a 50% wage increase and I'm already making 6 figures. Its only "ok" to pay that much because others decided its ok. I recall a really good article on the Dr. Housing Bubble blog the other day and in it he mentioned that some people resist and some have been resisting for years and finally give up and dive into a big mortgage anyway.

While staying with a italian family their house which used to be one house they divided up into 3 living spaces and their children with spouses and own kids lived in the other 2 units. Their yard was converted to orchard and they had a nearby separate field and grew their own polenta they had this huge pile in a room downstairs which was replenished yearly. One of their kids was a lawyer and another made a descent living also. They lived on the outskirts of town and that was how the family lived combining resources housing, labor, money.

On oahu I noticed a trend of adult kids(with kids) moving in with parents and the kids would pay for add on cost 2-300,000 and would create their home unit adding onto parents small house, pretty big lot sizes ~10,000.

I wonder if instead of prices going down on houses per square foot. I wonder if building codes will be slackened and these huge houses built in housing boom will be turned into multi unit dwellings. New lot construction never makes the big comeback. I believe really builders need to build much smaller smarter community sharing resources(ie garden space, park, pool etc) if they do new land.

Edvard - but there's the rub...If houses are selling for less than they are renting AND there's not a lot of rentals to begin with even though 500K seems (and is) ridiculous what else are you going to do? Its the same $$$ at the end of the month only with buying you might own a house someday. I don't think house prices are going to fall much below rental parity although I agree 500K for a 3/2 2000sq ft home is silly.

Many in the bay area are out of touch with reality. Yes, it is pretty much going to stay more expensive than most of the U.S. If rents are staying at, say, $2000-$3000/mo the houses are "worth" $500k.

That said, my next door neighbor sold their townhouse, all cash buyer, first day on the market, $939k or some such. Rents are under $3000/mo. Another one nearby (these are all nearly identical) is on the market in the high $800's and doesn't seem to have any buyers. My read: the one that sold went to someone with the bubble mentality (I was told it was a 'trust fund kid', she doesn't seem to go to work, drives a Hummer).

The other is languishing because there are fewer and fewer of those people.

edvard2 says

This is ever so apparent around here in the Bay Area. There are many people- even some on this site it appears- that think that 500k+ for a starter home sound swell.

Your totally right on the mark... and the so called $500K starter homes are rather pathic. Bubble heads have ignore local housing in historical context. Typical house used to be around 200K, factor in increase in inflation/incomes should be around $300K.

Well,if the people don't change then they have to live with it - Spend most of your $ on MIT and cut down on most other stuff you can spend on,so if the prices are going to be in the bubble territory then if you have bought in recent years you are pretty much broke at the end of that doom period. Math is pretty straight forward.

edvard2 says

This is ever so apparent around here in the Bay Area. There are many people- even some on this site it appears- that think that 500k+ for a starter home sound swell.

Forget $500K, I'm shocked by the unimpressive places available here for $800K (or more!). Burbed certainly has no shortage of posts potentially in the pipeline.

I do believe that some bubble mentality remains but generally it strictly depends on location.

I just relocated to SF and was surprised to find in the more popular neighborhoods, prices are still just barely off of the highs, and arguably, still going higher. Basically, I chalk it up to supply and demand and location, location, location.

So I tossed in the towel for SF inner city and stretched my search to the burbs. What I found was that while prices are still 'high' they are about 25-35% off their highs and are sitting at about 2003 price points. Actually, I have done some comparisons of price points of now/then/as to the inflation rate and basically the bubble has been chopped and mostly you will find prices at what we would of had without the bubble and just normal inflation.

While it may seem outrageous to most to pay 500K to 1M for a home, places like SF and NYC were ALWAYS way more expensive. Even when we find the bottom of the market, we will most likely discover that these places bottom far above other markets.

On a slightly related note to prices;

Not sure if you guys have ever read any of Richard Florida's work but basically a huge premium is paid to live in a star city, or rather where as he puts it "the creative class" wish to live. http://www.creativeclass.com/richard_florida/ Actually, I think his theories are spot on and worth a read for all those scratching your head as to why some cities and neighborhoods continue to do well, and even bubble over, while other cities and neighborhoods you can't even give away homes.

Who in the heck is spending $3,000 a month on rent? I seriously don't know anyone of all my friends that are paying that much. We're spending a little more than half that amount on a 4 BR house now, which is still significantly cheaper than buying the equivalent house. As a disclosure we have no kids and could care less about schools- even though the ones near us are rated well.

So is this a matter of people insisting on a higher level of quality? If that's the case then sure- I could see things being that expensive in all things- like rent and house prices.

edvard2 says

Who in the heck is spending $3,000 a month on rent? I seriously don't know anyone of all my friends that are paying that much.

I agree. May be a 6+ person family?

Who in the heck is spending $3,000 a month on rent? I seriously don't know anyone of all my friends that are paying that much.

$3,000+ rent for 4 bedroom house in foster city, sf, santa monica, brentwood, hillbourough, burlingame, belvedere, marin, los gatos, saratoga, malibu, pacific palisades, cupertino, honolulu, irvine, encinitas, santa barbara, sunnyvale, by stanford u, la jolla, del mar, carmel, la jolla, coronado, for that matter look at rents in Davis,ca compared to 10 minutes away huge discrepency. Real estate prices and rents are all about location. And the locations include parks, ocean, schools etc

Some of these people would form a line down the street to rent a good 4 bedroom for $3000

bigbubblemama says

Who in the heck is spending $3,000 a month on rent? I seriously don't know anyone of all my friends that are paying that much.

Shared housing.. split 3-4 ways.. young professionals..

edvard2 says

Why does rationality seem to fly out the window when it comes to houses?

That amount of "MAINTENANCE FREE INCOME" blinded our intellect and created conscious excitement and feelings of security for two and a half decades. 25% per year appreciation, What a RUSH ! That same amount of loss is causing an increase in suicide rates. Nobody wants to see a train wreck but we can't turn away. This is much bigger than any Earthquake, It has financially affected virtually EVERYONE ! including our children.
I see four types of bubble mentalities, #1. Home Owners who resist believing their pride & Joy will lose any more equity. #2. Prospective Buyers who anticipate a rapid return to that rate of appreciation. #3. The displaced who were worth half a million last year. #4. And those who read Patrick.net.

thomas.wong1986 says

ypical house used to be around 200K, factor in increase in inflation/incomes should be around $300K.

Based on your graph, that'd been about the time when capitalism began to be unleashed onto half the world. Took awhile, now they covet to establish expatriate communities in Fortress communities along the West Coast from Vancouver to Southern Cal.

That is why it is different this time, and why it is different here.

edvard2 says

Some people might think 500k for a house is ok. To me that price will never be ok unless I suddenly get a 50% wage increase and I'm already making 6 figures.

So, you would only overpay if you felt you were able to...I'm sorry, but to me, this mentality is at least part of the problem.

My .2: a disproportionate number of consumers base how much they are willing to pay for a residence upon how much debt they are told they qualify for and (fart sound) the fundamentals. I guess some consumers simply have a higher or lower threshold than others for leverage and gamble accordingly. If 40 year mortgages were available for 1 million dollar 'starter homes' I am sure people would bite.

I also think the perception of 'normal' was pushed so far out from '03 to '07 that it had a long-lasting impact on the collective psyche of sellers and buyers alike. Having prices correct even halfway from insanity seems close enough to sanity for many. Memory is short and habits die hard, to worry a cliche'.

The couples I know that purchased in the last three years either tortured the numbers to make it appear to make sense or simply proceeded with one of the largest purchases of their lives with what struck me as an uncanny sense of insouciance; but then, your typical consumer probably spends more time researching guitar plectrums and pencil erasers than they do when purchasing real estate.

I think this mentality will finally die and dig it's own grave once the real crash comes and the stock market plummets into nothing like it's going too.

Once the sheeple start drinking their own urine and feces - by then the bubble in real estate will be fully deflated.

Just make sure you aren't in a metropolitan area especially manhattan. Riots, protests, looting and societal chaos will be common place - the most worst in urban areas, cities and metropolitan areas.

Again, it's "location", but what about location? The value of a place lies in whether or not it allows people where they are useful to their own future. They pay according to their perception of that future, and their perception of what is "useful" to them, not what is useful to the real future and resources which will be needed later.
Expand this to the human race, and you have to ask the Big Picture question: "What are people FOR?"
If there is no answer, then predictions are moot. If there is an answer, you can bet your leopard shorts that it involves not killing all of the leopards just so that you can pretend not to be an animal.
The "bubble" is a perception of inflating money to hide that the money isn't actually worth anything. Buying houses with that kind of money means that anything goes, and goes away.
If it turns out that the energy to support the infrastructure of our consumer culture just isn't cheap enough, then it all goes away, either fast or slow.
Being outside of cities won't help much, as there is the same delusion, only with more guns and home-brewed alcohol, as well as an inflated idea of morality and property.
The price is not related to value in a fiat money economy, so historical records only work within a contiguous perception of a system that works. When the system breaks down (a deluded public is NOT a democracy), the value of a place becomes the price of a bullet or a picked lock.
Scary doomer? Not even close. New paradigms are coming on line, and the capitalists want us all to think we are competing for access to the ladder of opportunity instead of falling to the bottom. What really scares the crap out of them is when enough realize that the bottom ain't so bad if you get rid of the fools climbing to the top.

Gee people hoarding paper in safes. WHOAH. Papers not worth a shit one more time. You can't drive it. You can smoke it of course and it will melt away in the rain if you try to build a house out of it. Won't fit together well also.

One more time everything you own is not worth anything. No one really wants it. Except the occasional car thief or burgalar. So for trade your really worth nothing. They don't want the house you live in your car or anything else you have in your house so its useless as trade.

Now Wal-mart has stuff that is something. Does that make sense to you that you look at what they have as something and really don't consider your things as having any. After all the bible says consider your things as nothing. All loss. Everything you have is rust. Well shit aren't you stupid. Don't build a bigger bin hey, we will do it. Their very lives will be required tonight YEA RIGHT. So all the reapers and builders are going to hades and well shit you get screwed on the earth.

The good part is however you get to go to Wonderland where you get to wonder forever.

Look. You people are fascinated by manufacturing. It's what some of this adds up to. You just don't have ability. You really can't do anything but get credit. For something someone else has the ability to make. You don't want to sit down and figure out how to build a house. To much trouble. You want to slobber over the television and the internet with all its wonderful offerings.

Its way to convienent to have master do your thinking for you. Yes he will give you the credit that keeps you serving him. Then you are told what is good to get. The things your family and childern what they like and get and do. They will do it to because they serve master to because you do. Kind of shameful of course. Its the shame that your afraid to wake up to. After all Master certainly has a lot of people in the same kind of shame.

You could be distributing your masters goods. Working in a dpt store telling about your masters goods. Driving masters goods across the country. Working in accounting counting what master has. Working in their food stores. Working in your masters entertainment industry. Carrying out your masters bidding in dealing with other people. Customer service for your masters goods.

All because you love his credit or their credit. You get to work in his domain and you just love it. The real truth of it all is you don't know what to do without being told. Thats why you are totally inept at doing anything else.

Try to do anything else and your frozen in fear. Thats master over you. You may never get out of that. Sad but its the truth.

It is interesting that you bring this up now P. I was just looking at the new format of this site and wondering what happened to the "basics"? Do the basics become old-hat after a while? Everyone becomes so developed in their knowledge of this crazy subject of BuBBle, that to argue basics kind-of makes for a winded, exasperating, conversation I suppose.

I have to wonder if the people who have $500,000 to put towards a house either have old money, flipped money, or no debt at all? Or if they really make enough, based on the fundamental basics of owning a home to support that kind of house payment on their income? And if they do, how can they afford to post here all day?

And, I have a feeling that a lot of people here in CA are just grinding their teeth that they've got to come to terms with lowering prices. Everyone and their mamma, even the state government, is going to do what they can to say that 800k to a million is somehow reasonable for a house. USED to be in my day, the only million dollar houses were in Beverly Hills...

So yeah, I think the BuBBle mentality is still alive and kicking, its wrapped up in fraudulent practices, denial, and wishful thinking now...

Sad to watch people talking writting about and discussing their masters business all day long. Your so concerned about it.

People who participate in bubbles seem to have three main characteristics:

1. They are very greedy. I believe some greed is human nature, but for many in this generation getting something for nothing and living off other peoples work is their highest aspiration, their ultimate thrill. (this may now be a part of popular culture)

2. They don't have much common sense. They cannot judge for themselves when something has become overvalued. They continue buying into the pyramid hype.

3. They may be insecure. They think that if they can buy a house, turn a quick 100 grand for doing nothing, and stick a young family with the bill, this makes them somebody... a big shot.

Zakrajshek says

People who participate in bubbles seem to have three main characteristics:

1. They are very greedy. I believe some greed is human nature, but for many in this generation getting something for nothing and living off other peoples work is their highest aspiration, their ultimate thrill. (this may now be a part of popular culture)

2. They don't have much common sense. They cannot judge for themselves when something has become overvalued. They continue buying into the pyramid hype.

3. They may be insecure. They think that if they can buy a house, turn a quick 100 grand for doing nothing, and stick a young family with the bill, this makes them somebody... a big shot.

Couldn't have said it better myself.

There is a difference between price and value. The price of something is the number of dollars that you pay. The number of dollars you pay increases with inflation because the purchasing power of your dollars decreases. You need more dollars to pay for the same item whether it is a house or a tube of toothpaste. Value is those things mentioned above. Schools, location, freedom to paint the walls when you want. The value of a property to me is different from the value of a property to you and always will be. When many people want to live in a nice climate, in a nice state like California the value of that property increases to more people and the price people are prepared to pay for that value goes up. If you want to live in Michigan in the cold then not so many people want to live there and the value is less and the price reflects the lower value.
Who knows what a fair price is? It depends on the number of people who are prepared to pay it. That is how the free market economy works.
As there is more demand for rental property and it becomes in short supply (as it will) the price of rental properties will increase.

It is often forgotten that the creation of family units did not stop with the recession. While the housing market is in the doldrums now, time will always correct that. Supply currently outstrips demand in housing. As less houses are built and more family units are created that will end. Perhaps not soon - but it will end.

It is just a matter of time that is all.

Malcolm

Canada Eh says

There is a difference between price and value. The price of something is the number of dollars that you pay.

For those of you who don't understand why anyone would pay between $2500 - $3000 (or more) for a rental I can answer very simply. That is what it costs to live here. (In my case a mid tier neighborhood in OC)

The difference between the OK neighborhoods and the nice ones is just a few hundred bucks. I can cram my family into a 2 bedroom condo/townhouse for maybe $1900-2100 but it would be cramped and they probably won't lease one to someone with 3 kids. Or I could move into Riverside county and commute more than 1 1/2 hours to work each way and save some real money but lose all quality of life. Maybe I should rent in a neighborhood in Santa Ana and send my kids to some of the worst schools in the country to save a few bucks? Or perhaps I should move out of state and leave all of our friends and family to save even more money? So how much should we be willing to give up?

You can scream from the rooftops that houses should cost 300K or whatever but the fact is they don't. I am not an idiot who thinks house values are going to go up - I am not greedy and I don't think that a 500K loan for a house is my ticket to the good life.

I am a realist and I am saying that the economy is not going to collapse, we're still going to have to pay to live somewhere no matter if you rent or buy. Period. The people who benefit from keeping housing prices up have the means to drag this out for far longer than my kids will be living at home no matter what housing costs should be.

mommy1 says

I have to wonder if the people who have $500,000 to put towards a house either have old money, flipped money, or no debt at all? Or if they really make enough, based on the fundamental basics of owning a home to support that kind of house payment on their income? And if they do, how can they afford to post here all day?

The middle class is being squeezed out of existence and its taking an upper middle class income to afford a middle of the road standard of living. People who can afford 500K houses and don't want to go into debt over their heads are competing for houses in neighborhoods that should be just regular middle class neighborhoods. My point is that we are all doing the best we can and squabbling about who is an is not right for wanting to buy a home to live in is unproductive. Is there greed out there? Sure. People living beyond their means? Yup. But most people are just doing the best they can trying to get by the best they can. The real problem is that all the wealth has been sucked out of the hands of 99.9% of the people in this country and the rest of us are left fighting over the scraps. They are not the people who can afford a 500K house (which in another era would have been quite a nice house) or even an 800K house. The people who have the all money and are benefiting the most are invisible to us. They are not our neighbors. Until we change how wealth is distributed in these United States nothing is ever going to change.

I paid $875k for a 3/2 house in SF back in 2007. Yes it's lost some value, but I've paid half it off and my mortgage was recently refinanced to $2,050 a month ... that's way lower than the equivalent rent or even some rents for 1 or 2 bed apts in SF. Even when we purchased, the mortgage balance was only 2.5 times our salary.

Who knows whether the economy will collapse, but right now it's cheaper for me to own than rent in SF and I guess that's why I'm participating in the "bubble mentality".

I would not argue that things are going to collapse but the stock market and housing market certainly have put off retirements for many.

I wish I could remember the article that stated this but it was that after the dot com bubble many simply wanted something "solid" to invest money into. Post 9/11 with dirt low rates (at the time) and the whole "cocooning" thing they plowed it into homes.

Speculation leads to saturation which leads to loss and then heading somewhere else.

We will continue to have bubbles as markets expand and people look for a cheap and easy "thing" to put their money into.

mdovell says

Post 9/11 with dirt low rates (at the time) and the whole "cocooning" thing they plowed it into homes.

It also helped that it was a rising market. . .

10% pa returns, 2002-2005.

http://research.stlouisfed.org/fred2/graph/?g=2wf

Pretty much a ponzi at the end, thanks to the "affordability" products which were really just suicide loans since they only made homes temporarily affordable (until they recast at 120% LTV or the teaser rate reset).

edvard2 says

bubble mentality is still very much alive and kickin'. This is ever so apparent around here in the Bay Area. There are many people- even some on this site it appears- that think that 500k+ for a starter home sound swell

edvard,

why don't you leave bay area and here is 5 places good for you:

http://realestate.yahoo.com/promo/5-cheapest-places-to-live-in-america.html

HAHA

Seems like you want bay area prices to match these 5 cities...

Well, we pay $3,060 in rent for a 4 BR, 2400 square foot house in the Santa Cruz Mountains on 2 1/2 acres. We have an in-ground pool along with nice, mature landscaping. We are a six person family with four youngish children and one reason we moved here was for the excellent school system. The commute time is not bad, around 35 minutes to get to the San Jose airport which is near my place of work.

That said, we'd like to buy a place but most of the houses we've visited have been priced between $350 and $400 per square foot -- ridiculous. We moved here from Florida where we paid $75 per square foot to build a house in 2007.

Auntiegrav says

They pay according to their perception of that future, and their perception of what is "useful" to them, not what is useful to the real future and resources which will be needed later.

"They" isnt the buyer but their employer. Its the employer who provides $$$ greenback... And if the employer has other options of hiring elsewhere where housing is cheaper and so are salaries they will and already have.

Wow, a lot of judgement here. I agree with Canada Eh and Teri. As Americans always seem to know the price of everything but the value of nothing your points hit the bull's eye.

I just relocated to SF from Vancouver. One of the most expensive places in the known universe to one of the most expensive places to live in America. So from this perspective, SF, while outrageous in price, is still a relative bargain compared to Vancouver.

Our situation now is that we pay 3,200/month for a 1/1 downtown. Great view and location but the apartment itself is mediocre. Guess what, rent is going up to 5K at the new year. So buying a 1M place with 20% down we would still make the home a cheaper outlay. Will we do it and make the plunge? Testing the waters and may do so if we can't find a decent rental.

But more to the original point. Me and my spouse LOVE our homes and I get more joy out of our homes than from most other things. Love the yard and playing in it, nurturing it, watching it grow and change. Love decorating, yea, even maintaining, etc. I guess living in a 'home' would even be considered a hobby of ours. I also love good architecture. From modern to old. This also makes us very picky and I do consider 80% of the housing out there as either pure junk or severely lacking in a soul, quality, design, etc. We also love our neighborhoods and sense of community that we get when we purchase a home. Sure you can get many of these things from rentals but I have rented and owned about 50/50 and I can say from my experience that owning has always brought me much more fulfillment, joy and VALUE than renting has.

So will I buy again? You bet. If the right place comes along. I always pre judge car and home purchases (clothing and other large ticket items too in a lesser way) before I buy by a single rule of thumb; will I gladly pay the monthly payment or not mind the lower bank balance, or will I hate the experience that causes pain, regret or resentment on the first of the month? If I say yes to the latter than I simply don't buy.

In the end though, money, stocks, bonds, etc. are just imaginary symbols that really hold no value. Things like homes that cradle us and love us, to me anyway, do hold value. So the experience of owning a home to me has real value. My checking account balance doesn't.

Yes, many will judge me for being foolhardy. With a warped sense of what is valuable because my idea of value goes against the norm.

However, I have learned a few things in life along the way. One of the things I learned is that my value system is the right thing for me, even if not a popular one. I used to work as a critical care RN. I held the hands of many patients as they transitioned from this life into the unknown. You know what? Not a single one of them ever shared with me the idea that they wish that they would have saved more money, had more stocks and bonds, been richer, etc. You know what most of them shared with me? That they regretted not living or traveling to where they wanted to and spending more time with themselves, friends and families in environments that they loved. You don't have to take my word for it. But I will ask you this. Pretend that you will die an hour after reading this. What advice would you give to your children, friends and family or your RN on what to value and what brought you the most happiness. Perhaps for some of you it may include renting that 1/1 with a crummy landlord. Somehow I doubt it.

Remember folks, it is only YOU who can be the true judge of value for yourself. Screw what everyone else thinks. Go after what makes you happy , content, joyful or your family and friends too. For some that may be a big checking account. No judgement. If that is what you value, go for it. My hunch though is that if you really honestly dissect your feelings, in such an example, is that you may not really value the large checking account but rather it may just be a futile attempt at controlling the unknown and a way to alleviate your ever present fears of lack of.

In sum, you all deserve better. You all deserve the best! You get to decide what that may be. Start giving it to yourself today. And hey, it may not even cost you anything at all.....

I researched building permits in Bay Area yesterday. Cost of building a brand new house is around $100-110/sf. Yep, some builders still makes over $100,000 in pure profit.

shrekgrinch says

Denial...especially 'selective denial' is alive and well with people in general. That's all.

I agree. Denial will never be gone. But I do believe will they will give up the fight once people start starving to death on the street - The same thing happened in the great depression.

The true crash hasn't come yet. Same thing happened with what led to the great depression. You first had a semi-crash in 1929 but then the full-blown real crash came in 1933.

The same thing is happening right now and the sheeple can't fucking see it. 2008 was the semi-crash - the real crash will likely come in 2012. I have known this for the past 12 months. First people will become more optimistic that things are improving but then a collapse will come and they won't know what hit them. - I speculated this 12 months back and it's what's beginning to slowly happen. False optimism turning into pessimism. But right now people I wouldn't say are pessimistic but rather more indecisive and helpless at determining which way to go. They will mostly be pessimist after the crash hits.

Once the sheeple are pessimist, that's the time to be optimist because you will buying stocks, real estate and commodities at their lowest rates generally.

The same thing happened during the periods of the great depression

There is an opportunity to profit from economic crashes; I know I sound like a scumbag banker but the truth is if you prepare and know what's coming; you can profit if you have a plan and know what invest in and which business is going to thrive in the crash.

The housing market will fully collapse once the real crash hits the economic system. Housing can't crash because the denial will not fade away until the bogus foundation that this economic system was built upon falls apart.

Once the system collapses - the sheeple will be preoccupied with more basic things like growing food, cleaning themselves, getting clean water to drink and protecting themselves against looters.

At that point, none of the sheeple will give a hoot about living the "american dream" but rather actually LIVING...

I also want to add that paper currency does have a risk of becoming useless.

Even though I had a lot of heated debates with me supporting deflation. I believe it's generally foolish to hold on to paper currency with all you assets tied to it regardless.

It's okay to hold some.

thomas.wong1986 says

Auntiegrav says

They pay according to their perception of that future, and their perception of what is "useful" to them, not what is useful to the real future and resources which will be needed later.

"They" isnt the buyer but their employer. Its the employer who provides $$$ greenback... And if the employer has other options of hiring elsewhere where housing is cheaper and so are salaries they will and already have.

Agreed. The choice to work for a particular employer and then live someplace that is not accessible to that employer, requiring more and more expensive gasoline to get to work, is not all that intentional, either. Most people take what they can get and buy what they can buy just to be 'normal'. It's too bad that 'normal' seems to involve living as part of a machine instead of as a human being moving and taking actions with a variety of sensory inputs and desires. Instead, all choices are monetary, all decisions about where to live or what to do are made by a computer when it puts the statistics on a spreadsheet. Yet, we are surprised when the bubbles pop.
Amazing, isn't it? Employers don't just go where something is cheaper; they go where the labor is cheapest. Important distinction when we are told how they are "concerned for the environment" or how our government "respects human rights".