California real estate ...

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Mon Apr 5 11:24:32 PDT 1999


From rad at gte.net Mon Apr 5 11:09:15 1999

Plenty of people have lost money in California real estate

because it very much IS subject to periodic bursts of

over-valuation.

Yes, and plenty of people have lost money on AMZN, but the long-term trend, like California real estate, is up. We were talking about bubbles, not "periodic bursts of over-valuation" ...

California real estate, I maintain, is not (yet) a bubble. It continues to command a premium for no apparent logical, rational reason. A bubble, when it bursts, is when a seemingly unrelated event reveals this irrationality and crushes the market. Your example of an massive earthquake misses the point: the destruction would be *actual* -- the value of the land would be destroyed, not merely shown to be irrationally inflated. For all the troubles the LA has seen in the last decade, it's still 50% more expensive to buy a house in LA than it is in Cincinatti.

The Antelope Valley, scene of recurrent white racist violence,

is in part a product of one such burst, driven by Reagan's

military buildup during the 1980s. It left plenty of folks

high and dry with upside-down mortgages -- owing more than the

value of the home.

The plural of anectdote, my logician friends tell me, is *not* "evidence" ...

Just because you've got a long-term trend -- even a

particularly strong one -- doesn't mean you can't have

speculative bubbles as well.

I think you missed the part where we were talking about the market as a whole; the DJIA 36,000 piece, etc. Sure, little things will crop up and go away. Little bubbles everyday. But the current market,as a whole, is not a bubble.

/jordan



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