Housing bubble? What does W.Buffet say?

[Vette73]

Buffett: Real estate slowdown ahead

What most people have been saying he just backs it up. That and his ViceChairman even hinted on another thing that will caue problems...

"There is a lot of ridiculous credit being extended in the U.S. housing sector."

 

[yobarman]

Buffet is the man and I would take anything he says seriously.

 

[Kenazo]

The housing market is retarded. $500,000 interest only mortgages for people that are making $65,000/year is something you just have to shake your head at.

 

[z0mb13]

darn I need to get a new job...

 

[yobarman]

Originally posted by: Kenazo
The housing market is retarded. $500,000 interest only mortgages for people that are making $65,000/year is something you just have to shake your head at.

haha for real, especially the 50 year mortage!

 

[Ronstang]

I can't wait. The foreclosure market is going to get even better and then it will be time to buy, buy, buy!!!

 

[Zenmervolt]

Originally posted by: Ronstang
I can't wait. The foreclosure market is going to get even better and then it will be time to buy, buy, buy!!!

Ditto that. Pretty much all my savings right now is being earmarked for when the bubble collapses. Hopefully it'll hold on for another year, then I'll be in perfect shape.

ZV

 

[iversonyin]

Real estate market is fragmented. In certain area, you'll probably see a bigger slowdown than others. (no real demand/population increase).

Buffet is usually right, but he was wrong on his dollar bet. So the man isn't god afterward.

 

[Vette73]

Originally posted by: Zenmervolt

Originally posted by: Ronstang
I can't wait. The foreclosure market is going to get even better and then it will be time to buy, buy, buy!!!

Ditto that. Pretty much all my savings right now is being earmarked for when the bubble collapses. Hopefully it'll hold on for another year, then I'll be in perfect shape.

ZV

Yep. Already cooling now. So just a little more time until % rates go up and houses start popping up for sale... FAST

 

[her209]

Yeah, but that's like me saying we'll be seeing another recession followed by a boom in the near future.

 

[da loser]

Originally posted by: her209
Yeah, but that's like me saying we'll be seeing another recession followed by a boom in the near future.

except you don't have billions of dollars

On Ethanol

Buffett: "Charlie [Munger] and I do not know enough about the business to evaluate it. It depends on government policy and a lot of other variables we're not good at predicting. It's also a very hot area for investors right now, and we don't like looking at things that are hot and easy to raise money for. Generally speaking, agricultural processing businesses have not earned high returns on tangible capital. Ethanol could prove an exception, but I'm not sure how you gain a competitive advantage with any particular ethanol plant."

 

[libs0n]

Originally posted by: iversonyin
Buffet is usually right, but he was wrong on his dollar bet. So the man isn't god afterward.

I was under the impression that the dollar has continued to decline in value. I'm not sure of the exact numbers, but I overheard lately that it has declined 50% from it's peak a few years ago against the Canadian dollar. Anyone with more accurate numbers?

edit: google news turned up a recent article that says that in this year alone, the dollar has declined by 7% against the euro. Of course, I'm not familiar with the details of Buffet's dollar play, so perhaps you are right when you say it backfired, but on the surface it seems that betting on the depreciation of the american dollar was a good bet.

 

[puffff]

broadly speaking, buffett is right. however, if you're in the real estate market yourself, you have to look at your local market. in some areas, values will continue to hold, if not grow.

 

[waggy]

Originally posted by: Kenazo
The housing market is retarded. $500,000 interest only mortgages for people that are making $65,000/year is something you just have to shake your head at.

yeah that is kinda silly.

a buddy of mine baught a $300k house on a interest only mortgage. he is always bragging about how his payment is cheaper then mine and my house cost half what his did. not to mention him and his wife make a combined income of $120k a year but they do not save much of that money.


also know someone who has a ballon (think thats what it is called where the interest changes) mortgage. It is still kinda low so they baught a house that was far more then they should have. they are living nearly paycheck to paycheck. should be be intersting to see if they can keep it.

i actually had people make fun of me when i said i have a locked amount at 6.25% when i could have gotten one lower but not locked.

 

[FelixDeCat]

For everyone who thinks they are going to make a killing on a collapsed housing bubble, please dont think youre going to flip them easily for at least four or five years, if even then. The old "catching a falling knife" phrase comes to mind here.

I remember the last inflation inspired bubble that began in the 70s and came crashing down hard in the 80s, taking the entire S&L industry with it. We bought a house in 1980 for $40,000 that by 1985 was worth $29,000 and today is worth $95,000! :shocked:

Buyer beware, seller take care, flippers go to hell. :evil:

:laugh:

 

[sandorski]

Prediction: As Baby Boomers retire, the Condo Market is where the growth will be. Single Homes will flood the Market and become a bargain. Florida, California, and other places with nicer climes is where Baby Boomers will flock in droves.

 

[Vette73]

Originally posted by: libs0n

Originally posted by: iversonyin
Buffet is usually right, but he was wrong on his dollar bet. So the man isn't god afterward.

I was under the impression that the dollar has continued to decline in value. I'm not sure of the exact numbers, but I overheard lately that it has declined 50% from it's peak a few years ago against the Canadian dollar. Anyone with more accurate numbers?

edit: google news turned up a recent article that says that in this year alone, the dollar has declined by 7% against the euro. Of course, I'm not familiar with the details of Buffet's dollar play, so perhaps you are right when you say it backfired, but on the surface it seems that betting on the depreciation of the american dollar was a good bet.

Yea did he not make a good amount of money? I thought the dollar was down from what I have seen.

 

[astrocase]

They've been talking about a bubble for years now though and with home appreciation rates at 25%+, even if it drops 50% I would have been better off buying back then. Now I just have to wait, wait, and wait to see what happens since there's no way in hell I'm dropping 3/4 of a million on a dump, which is what they're going for now.

 

[tami]

[Buffett singled out Dade and Broward counties in Florida as an area that has experienced a rise in unsold inventory and a stagnation in price.]

my mom is a real estate agent for both areas. :Q

 

[Syringer]

Buffet clearly doesn't live in SF/LA or its urban areas. You cannot generalize the entire US with any sort of statement regarding bubbles, however you can more or less limit your generalizations to specific areas. For instance the housing market in Montana and Kansas will be vastly different than that of Boston or New York..

 

[bsobel]

also know someone who has a ballon (think thats what it is called where the interest changes) mortgage.

Thats called an adjustable rate mortgage. A balloon is where the full balance of the remaining loan is due and payable after a certain amount of time (for example, I loan you 100k at 7% interest only with a 5 year balloon, you pay me interest only payments but have to repay the full 100k after 5 years). Most interest only loans don't have balloons, they convert to a more traditional amortized mortgage after so many years (often 10).

It is still kinda low so they baught a house that was far more then they should have. they are living nearly paycheck to paycheck. should be be intersting to see if they can keep it.

There is a couple trillion dollars of loans in their inital 5 year 'locked period' from when the rates where very low in 2002 that will convert to adjustable next year. Many people will see payments go up 50% or more. Should be interesting to watch.

Bill

 

[b0mbrman]

To those expecting to jump on rapidly dropped prices, good luck. Real estate booms cool, but the bottom rarely falls out from under them in the same manner as the tech sector imploded...

 

[puffff]

btw, perhaps the most intelligent thing that Buffett said in that article was his comment on Ethanol.

"...I do not know enough about the business to evaluate it."

A gem some ATOT members could really learn from.

 

[GTaudiophile]

Americans are going to lose their homes as ATM machines...then they'll quit buying...because they are already save as like -0.5% or something retarded like that.

It's gonna bust and bust bad for a lot of middle class people. How do investors like me protect myself?

I agree that boomers are going to flock to condos in low-crime cities, so the markets in many places in California will go unchanged. But take like Atlanta for instance. The white flight back to the city has already started.

 

[waggy]

Originally posted by: bsobel

also know someone who has a ballon (think thats what it is called where the interest changes) mortgage.

Thats called an adjustable rate mortgage. A balloon is where the full balance of the remaining loan is due and payable after a certain amount of time (for example, I loan you 100k at 7% interest only with a 5 year balloon, you pay me interest only payments but have to repay the full 100k after 5 years). Most interest only loans don't have balloons, they convert to a more traditional amortized mortgage after so many years (often 10).

ahh i see. i didnt get much info on those when i was loan shopping. i wanted a locked in rate with points etc. wanted my payment to be the same for the 30 years i have it.

It is still kinda low so they baught a house that was far more then they should have. they are living nearly paycheck to paycheck. should be be intersting to see if they can keep it.

There is a couple trillion dollars of loans in their inital 5 year 'locked period' from when the rates where very low in 2002 that will convert to adjustable next year. Many people will see payments go up 50% or more. Should be interesting to watch.

Bill

yeap. i see a LOT of younger homeowners selling in the few years. they buy huge 3k sq/ft homes etc and skip the smaller older "starter" homes. heck around here they aren't even makeing many homes smaller then 3k sq/ft. granted most of them are really 2k sq/ft homes that have the backyard 12ft lower then the front so they can claim the basement in the footage.

When we were looking (2 years ago) we wanted a nice small 3bedroom newer build but they were all huge and expensive. took us a while to find a nice 3 bedroom (2k sq/ft) that was under 30yrs old heh