> Except that they might just mean houses, which might be a little
> different, since investors in houses are a slightly different class
> than owners of apartment buildings.
Ok, we're way off track here. I'm NOT saying that the housing market isn't frothy; I never did, and I won't be misconstrued to be "against" it. It seems pretty clear that the "stupid money"[TM] is currently chasing real estate. The SM is always chasing the "wrong" thing no matter how you look at it: that's what makes it stupid. But again, I have no sympathy for dentists and lawyers who have hobbies that involve where to put $100k. And if all this SM was having a big impact, we'd see the percentage of housing stock that was rentals go up; in fact, we're seeing the opposite.
[ I'm "against" the idea that this is a "bubble" -- I think that word should be reserved for situations where, when it pops, it's gone ... like a bubble. Housing isn't like that, for all the reasons that I've said before (and Wojtek continues to misrepresent :-) ... but parts of the housing market have gone nuts and will correct at some point ]
Doug's original message (I can't believe I have to keep reminding everyone who is trying to "prove me wrong") was an appeal for sympathy to those who are "mad" because there couldn't possibly be any reason for those mortgages to exist except to hasten the end times. My point is simple: there are very good uses for these kinds of instruments, they are not the kiss of death to most of those who touch them and despite the frothiness there is also plenty of "real" demand in the housing market in the US: the population is still growing, largely because of immigration, and there's a continuation of the move away from the cities to the exurbs. Interestingly, I think that in California, where the numbers are higher, it's less likely that the 'bursting' will be a Big Deal -- precisely because it moreso represents real growth. It's those housing farms in Georgia where no one wants to live that are gonna tank :)
I continue to believe that, despite the correlation between the frothy market and the existence of these mortgages, home ownership is a good thing, people genuinely want it for legitimate reasons, and the emergence of objective standards for loans (like FICO scoring replacing skin-color-testing and the stratification of product instead of one-size-fits-all) means that a significant amount of the expansion of the housing market is by legitimate consumers and it's a net positive for those involved. Large numbers of people were historically excluded from homeownership and that's changing and it's good. This does represent an actual change and we should, as a society, be proud of it.
> It just seems like simply supply and demand. And if, like people who
> invest in the stock market, they sometimes need that money and have
> to get it out, well, even more so.
Again, Doug's appeal was NOT to specs: if they have to get out, they'll take their licks and more than likely a "hedger" (i.e., someone who wants to live there!) will buy it good and cheap. Score one for the little guy! The difference here is that "supply and demand" in the housing market is being played ONLY by the specs, not by those who are "natural" participants in the housing market -- those who want to trade up or move away from being a renter.
Ok, here's my second personal anecdote: I am able to afford a much better place to live today than I could 15 years ago. This is in some part because my income is higher, my spending patterns have changed, etc. But it is FAR more due to the structural changes in the mortgage market that makes financing available to me that simply didn't exist back then. And this completely overwhelms the difference in housing prices between then and now. And I don't think I'm alone in this.
I guess this thread is dead.
/jordan