Wednesday, March 02, 2005

Latest Justification For Bubble: September 11th

If you sometimes think that reporting on real estate matters has gone bonkers, your not alone. For that reason I don't usually focus on foolish statements, even when it comes from a RE economist. But the National Association of Realtors has a guy who takes the cake when seeking to explain away the massive speculation in housing.

David Lereah, the NAR's chief economist said,"What we're seeing is that real estate is no longer just a place to live. It's a viable alternative to stocks and bonds..Sept. 11 changed real estate forever."

Not everyone is convinced. "It's at the end of a housing cycle that you start to see people investing irrationally," fellow economist David Stiff said. He was speaking of homeowners leveraging their equity to speculate. "If anything is a sign of a price bubble, that is it."

Mr. Lereah sees it differently," I think that's good...Real estate is being more liquid. You could never have done that 20 years ago. Real estate was a large, tangible, awkward asset.."


At 1:52 PM, Blogger mspenelope said...

Hi Ben,
The above link contains the whole story from which this clip came:

****Otherwise, some investment buyers could find themselves unable to get renters at all, as rental vacancy rates are near historic highs. With many buyers putting down almost no cash, they could simply let their bank foreclose and walk away.******

Do you think a lender can foreclose on an investment property and then come after
the property these investors
live in to cover any loss?

Perhaps this is why they are
being so generous?

PS Sorry if this post shows up twice...not sure if the first try doesn't seem to be showing up.

At 6:50 PM, Blogger Ben Jones said...

Thats a good question Ms. P.,
In most cases, yes, all homes are fair game. I think it would be a state by state issue. I know that Texas, for instance, used to have a constitutional right to keep their "homestead" (primary home) against all debt other than 1st liens and tax liens. That state voted away that protection in the 90s in favor or second liens, home improvement loans, etc. They may come to regret that. Another question would be multi-state bankruptcy and jurisdiction. Overall, I think all assets would be subject to the relevant type of bankruptcy the owner fell into...Ben


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