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The Housing Time Bomb  

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  • QE Will Blow More Bubbles - In Commodities, Bonds and Stocks [View article]
    Gold up $22 already this morning.

    Keep pushing it Mr Bernanke. The US dollar is rapidly turning into nothing more than a piece of toilet paper.
    Oct 13, 2010. 10:32 AM | 6 Likes Like |Link to Comment
  • European Debt Worries Resurface [View article]

    I am hoping a restructuring can be done but you could very well be right.

    One default and the rest of the PIIGS all start to fall like dominos. Who knows, perhaps it takes the rest of us down with them.

    Scary thought
    Sep 24, 2010. 01:48 PM | 2 Likes Like |Link to Comment
  • Time to Take a Timeout From the Capital Markets? [View article]

    WIthout the government's balance sheet replacing the consumer the market would have been a mess in 2009.

    The market did not represent the state of the economy.

    All we did in 2009 was kick the can down the road. There will be no more stimulus moving forward because we are pretty much broke at this point. There are no jobs to drive demand. Look at jobless claims.

    The only thing left to figure out now is how we decide to get out of this. Do we slash spending and go into a depression via austerity or do we devalue the currency and go through some type of inflationary event?
    Aug 19, 2010. 12:39 PM | 3 Likes Like |Link to Comment
  • Market Dislocations Hit All-Time Highs [View article]

    I wish I could answer that for you. Only you can make that decision because its based on many things.

    Fiscally it makes little sense to buy at an inflated price. The most important part of investing is when you buy versus when you sell.

    If you have a young family and a stable job(if there is such a thing) and you need a house then you gotta do what you gotta do.

    Just realize you will likely have to take a hit when you sell.

    If your job isn't stable or you work in a job where you need to move in order to get promoted etc then I would stick on the sidelines.

    I think if you can afford to wait a couple years then you should because I think you will find much lower prices then.

    Housing cycles are very long and when they finally bottom prices do not move higher for several years. It will be even worse after this bubble because the lending got more stupid than it ever got before.

    For example in the last housing slump in the early '90's prices were flat for years until the tech boom hit.

    I would be in no rush unless your circumstances dictate otherwise.

    Best of luck.
    Aug 5, 2010. 10:02 PM | 1 Like Like |Link to Comment
  • Market Dislocations Hit All-Time Highs [View article]

    If you plan to own for 20 years then its not a bad idea to buy in a normal market.

    The problem is ponzi style lending has created artificially high prices in the bubble markets. Even with the current price corrections most areas are still too expensive other than a few areas in say like Florida or Las Vegas.

    If you buy in one of the markets that hasn't capitulated yet you will face two headwinds:

    1. Prices dropping as they revert to the mean pre-bubble.
    2. Higher intereset rates.

    Personally, renting makes much more sense to me because you pay no property taxes and you don't have to spend money on it for upkeep.

    Also keep in mind you can rent a nice house these days because there are so many empty ones as a result of massive inventories of people who can't afford to sell and have moved away for work etc.

    Rents in many markets are also falling as a result.

    The bottom line is this is a peronal decision. If you have FU money then buy a house. It's nice to own one if you can affford it.

    However, if you do decide to buy, you must accept the fact that it's not an investment and it will likely not appreciate in value. There is a much greater risk of it losing value versus rising in value.

    Keep in mind though that it will be smarter to wait in most areas because prices are still dropping and high unemployment will only accerlerate the price drops as deflation sets in.

    This will create much nicer bargains down the road.

    Best of luck!
    Aug 5, 2010. 02:12 PM | 4 Likes Like |Link to Comment
  • Has Deflation Arrived? [View article]
    Great thoughts all.


    Great point. Greenspan fought this in 2001 via cheap money and then handed over the reigns to Helicopter Ben.

    Bernanke knows were screwed. He just can't say it. I am a hell of a lot less worried about inflation in the short term after hearing him yesterday.

    I don't think the guy will print. Then again, I thought we would never attempt a QE so who in the heck knows.
    Jul 23, 2010. 12:08 AM | 1 Like Like |Link to Comment
  • Consumer Spending Contracts as the Great Recession Rolls On [View article]

    Keep in mind many sellers can't afford to drop the price because they are underwater on their mortgage so they can't afford to sell.

    This is keeping real estate propped up more than anything else. Sellers are stuck with no options because

    A) They overpaid for the house at the peak.


    B) they pissed away all of their equity away via the housing ATM using HELOC's.

    So we end up with a standoff as a result where nobody wins and no real price discovery. This won't last of course because the buyer can't afford the house. He will eventually walk away and take the credit hit. The banks then get slaughtered with losses.

    The Realtors of course try to avoid this dirty little topic by discussing appreciation and other horse****.

    What a sham the whole industry has turned into.
    Jul 9, 2010. 02:53 PM | 2 Likes Like |Link to Comment
  • Consumer Spending Contracts as the Great Recession Rolls On [View article]
    Great thoughts folks!

    I wanted to add a few thoughts about this dropping interest rate environment. This is terrible for the housing market.

    Rates are basically getting to levels where they can't go much lower given our deficits.

    This is a huge negative for any asset(including houses) that you borrow to pay for becuase interest rates have only one way to go which is up.

    Therefore you are guaranteeing yourself a loss down the road if you buy a house with rates this low because there will be no way for the house to appreciate in value. The higher rates go the less your house will be worth.

    Once the sheeple understand this I predict demand is going to collapse. We are already seeing this with the recent terrible housing numbers.

    Everyone is going to eventually realize that buying a house is a horrible investment with rates this low.

    It will have the opposite effect of what the government is trying to do which is increase demand via low borrowing costs.

    The smart money will understand this and will sit on the sidelines as housing values continue to drop due to lack of demand.
    Jul 9, 2010. 10:35 AM | 6 Likes Like |Link to Comment
  • Paul Krugman vs. Niall Ferguson: You Decide [View article]

    There will be no prosperity with austerity but thats how it works.

    PAIN is inevitable when it comes to fixing this nightmare. There is no other option.

    Austerity is not a solution to avoid pain. It sucks but we have no other alternative.


    Are you smoking crack?

    The bond market ALWAYS sets rates.

    Bill Clinton's spending program in the early '90's was totally dismantled by the bond market.

    The Fed does not control rates. It's all about the bond market.
    Jul 7, 2010. 01:57 AM | 2 Likes Like |Link to Comment
  • Financial, Tax Reform Paralyze Wall Street [View article]

    Agree with your play but you better get out after the bounce. If we see a 3-5 day rally that gets us to 1150 or so I will short the piss out of this market.

    Earnings will never be this good again for corporate America for years and years. The economic data is a mess and the market will reflect it.

    Many are already saying that it already does reflect it but IMO they are clueless. We have hit the debt wall and there is no escape.

    We are way oversold here though.
    Jul 3, 2010. 02:07 AM | 1 Like Like |Link to Comment
  • Looking Over the Edge of the Cliff: Can the Bulls Hold S&P 1040? [View article]
    A shout out to the hall monitors for the spelling mistakes:)

    This is a one man show and I proof read but my time is limited. Please excuse my mistakes and dc yes you are right on both acounts.
    Jun 30, 2010. 02:59 PM | 2 Likes Like |Link to Comment
  • Monday Treasury Craze: Why Investors Are Spooked [View article]

    No...Cash and gold. Mainly cash.

    Gold is an important hold though to protect yourself from currency troubles. Stay the heck away from equities.


    YEah in Japan thats what happened. I think Japenese mortgage rates are at 1.6% right now.

    Don't agree on a treasury bull market this go around though. If the credit markets even sniff insolveny within the US rates are going to soar here just like they did in Greece.

    This one is a very tough call. We could go the Japan route but I worry about the debtloads that this country has taken on. By 2013 it could be 30-50% of our GDP. I can't see rates staying low under this environment.

    The bond market sets rates and I think after this big move down rates are going to soar if we don't see huge cuts in spending to reign in our deficit.
    Jun 29, 2010. 04:59 PM | Likes Like |Link to Comment
  • Day Trading Bubble Redux? [View article]

    I named this place in 2008 when I first got started when I saw the housing bubble.

    I am a bear because of the economy. I would love to be a bull but the fundamentals just aren't there.

    I am very objective with my analysis. I read many of the bullish sites but frankly they make no sense to me.

    Anyone long this market sounds like a bunch of snake oil salesman. I just don't think we are in a recovery.

    Best of luck with your investing.
    Jun 22, 2010. 01:22 AM | 1 Like Like |Link to Comment
  • Day Trading Bubble Redux? [View article]

    I agree.

    Not going to risk the long side after the run we had when one economic time bomb could capitulate the market.

    The risk/reward smply isn't there for me at these levels. I will stay mostly on the sidelines.
    Jun 17, 2010. 10:28 PM | Likes Like |Link to Comment
  • Day Trading Bubble Redux? [View article]

    Because I can't find any stocks that are undervalued. Who wants good prints if they are not reflecting real values?

    Speculating always ends in tears whether its housing, tulips, or tech stocks.

    The day traders are buying stocks based on speculation and daily technicals(which are worthless) versus fundamentals. Like any other Ponzi scheme there will be a point in which the speculation ends because they run out of suckers to sell to.

    They will end up being the bagholders as the economy continues its spiral downward.
    Jun 17, 2010. 06:31 PM | Likes Like |Link to Comment