Monday, May 02, 2005

RE Science Fiction In Hollywood

What would a Monday be without hearing from "Julie in Hollywood". If you'll remember last time she went on a weekend in Palm Springs and nearly bought a house. This time she gets worried but her RE pals talk her down.

"'Time to get out,' I told my friend, the developer. 'Take the money and run. Go live on that desert island and drink drinks with pink umbrellas sticking out of them. Done.'"

"'Are you kidding?' my friend asked. 'I just bought four more properties that are old hotels that I'm going to be tearing down and turning into million-dollar townhomes. This is no time to be cashing out. You can't believe what's going on down here.'"

She calls her better-half the level headed one, but he sounds like he's seen too much Star Trek. "My husband has less emotional thoughts on the subject. 'Real estate is the perfect capital market scenario. This is the time for pioneers. To branch out into areas that are rapidly becoming re-gentrified before everyone else wakes up and drives the prices up there too. There are still a few bargains out there but they are few and far between…and your neighbors might still have bars on their windows."

9 Comments:

At 9:40 AM, Anonymous backintime said...

Sounds like a conversation from 1999.

Stockjockey: "I think I should sell some of my tech stocks, they're getting a little pricey."

Broker: "No way. The world has changed and the market is just beginning to price it in."

Stockjockey: "But some of these stocks are worth more than the entire sector they're in. Even if they capture 100% of the market, they will be worth more than the market itself."

Broker: "That's stinkin' thinkin'. The internet is just getting started. In two years, the market will be worth 100x what it is today."

Stockjockey: "But what if you're wrong?"

Broker: "There are always doomsayers out there. Don't listen to them. No one ever got rich listening to pessimists. The Internet will take over everything, from pet food to medicine to pizza delivery."

Stockjockey: "But how will people be able to get a pizza through the Internet?"

Broker: "It's gonna happen. It's all about bandwidth. This is a miracle technology."

Stockjockey: "OK. I'm sorry. I know I should just go with the flow and not listen to doom-and-gloomers. Buy 100 more shares of pets.com, 200 shares of drkoop.com and 500 shares of webvan.com at market. Thanks for helping me see the opportunity."

Broker: "No problem. You won't be sorry. This is the opportunity of a lifetime. But you can't let the grass grow under your feet. The race is to the swift."

 
At 9:42 AM, Blogger John Law said...

that developer sounds like a winner, he sounds like smart money and he should be getting out now. he's an insider, he's got to know things are crazy.

oh well, money blinds.

it's sad, all the money these people have "made" are just going right back into the RE game to be lost, and maybe leveraged loses at that.

I can't believe some people have such good gains and borrow against their homes. first lesson, don't get greedy when everyone else is!

 
At 10:14 AM, Anonymous Anonymous said...

I don't know how greenspan can sit on the sidelines and let this crap occur. This example mentions California, but this sort of thing is happening just about everywhere.

The Fed is worried about inflation, but as far as I am concerned, LEVERAGED SPECULATION is far, far worse. The Fed needs to jack up interest rates and increase qualifying requires and put this stupidity to rest before it hits the rest of the economy.

Can you imagine the hit to the economy when investors start getting defaults on all these hugely overpriced properties ?

 
At 10:16 AM, Blogger John Law said...

("No way. The world has changed and the market is just beginning to price it in.")

didn't glassman in his book, dow 36,000, say stocks were mispriced and they were basically risk-free?

 
At 10:40 AM, Blogger realist said...

i'm looking to cash out of a big land pop and want to 1031 into a solid apartment building in order to transform speculation dollars into cashflow. so i found this great college town, oxford mississippi (13,000 people and 13,000 students). forget that. the realtors told me condos are selling for $300 a sq.ft. the infection is spreading everywhere.

 
At 10:47 AM, Anonymous Anonymous said...

realist,
oxfords a nice town but mississippi has the highest defaults in the nation, around 8%.

 
At 11:01 AM, Anonymous Anonymous said...

10:14AM Anon,

Sorry... but Greenspan is going to get-away with this... he just needs to continue to raise rates by a 1/4-point at each meeting... and keep his "measured" language in each press release from the fed reserve... and then poof, he's retired...

 
At 11:26 AM, Anonymous Anonymous said...

"Sorry... but Greenspan is going to get-away with this... he just needs to continue to raise rates by a 1/4-point at each meeting... and keep his "measured" language in each press release from the fed reserve... and then poof, he's retired..."

Yeah, just like 2001 was "Bush's recession". Unfortunately that's how deeply most people think.

 
At 2:29 PM, Anonymous nutty said...

That article is insane. Particularly the quote about homes in Florida: "Houses that are 'tear downs' or in need of major TLC are now being priced with the finished profit in mind – in other words, they incorporate the ability for upside in their pricing."

If the upside to a tear-down or fixer is already incorporated into the price, what's the point of buying it?

People are nuts.

 

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