My brother -- who is a real estate agent and was a high school buddy and water polo team mate of N.J. Republican senate candidate Doug Forrester -- says the most bubblicious part of the market is duplex to fourplex, which in Sacto are selling for as much as 300 times monthly net income. The benchmark is 100 times income. Jim says buying a fourplex would be like buying Enron at $90 a share. The below piece of bumf would, in my view, tend to confirm what he says. Any time Greenspan testimony "refutes, once and for all" the existence of anything, you have to be concerned.
As if refuting the bubble once and for all was not enough, the bumf goes on to "put this issue to rest", declare "no such thing" as a house price bubble and note that a pop of the bubble "simply isn't in the cards". If the mixed metaphors don't get you, the repetition repetition repetition will. In other words, as my bro says "DO NOT BUY an existing duplex, triplex or fourplex if they are selling at more than 100 times the monthly rent... Your entire investment could be wiped out." Rumor of Housing Bubble Pops WASHINGTON (July 19, 2002) Federal Reserve Board Chairman Alan Greenspan's testimony before Congress last week refutes, once and for all, the existence of an alleged housing market "bubble," said chief economists of the National Association of Realtors� and the National Association of Home Builders, two trade groups that collectively represent more than 1 million professionals from all walks of the housing industry. "The time has come to put this issue to rest," said NAHB Chief Economist David Seiders. "The nation's home builders have said it, the Realtors have said it, and now Alan Greenspan has said it once again, in no uncertain terms: there is no such thing as a current or impending house price bubble." Asked about the issue during his testimony, Greenspan said, "We've looked at the bubble question and we've concluded that it is most unlikely." He attributed recent "sizeable gains" in home prices to "the effects on demand of low mortgage rates, immigration and shortages of buildable land." Given the local nature of real estate, NAR Chief Economist David Lereah said, it's possible for prices to deflate on a local basis, but a "pop" simply isn't in the cards. He noted that, even during recessions and periods of declining home sales, the national home price has risen every year. "Over time, the typical home value appreciates at the general rate of inflation, plus one- to two-percentage points," he said. Acknowledging the "stabilizing force for the overall economy" that residential construction and related consumer outlays provided during last year's downturn, Greenspan noted in his testimony that the U.S. housing market continues to perform admirably in the evolving recovery period. Echoing the Greenspan's apparent confidence in the industry when he predicted "reasonably strong housing demand," Seiders and Lereah affirmed, "The housing market is fundamentally sound: we have a lean inventory of homes, historically low interest rates, good consumer confidence and strong demand from a growing population. The supply/demand situation means we can expect healthy price appreciation to continue." The housing groups applauded Greenspan's leadership of national monetary policy and his wisdom in lowering interest rates, which has unquestionably helped housing support the economy during the recession and the early stages of recovery. EDITOR'S NOTE: Housing is vital to local and state economies, creating jobs and generating taxes and wages that positively influence the quality of life. Find out more about this crucial component of the economy at http://www.nahb.com/news/housingjobs.htm . Also, NAHB's publication, Housing: The Key to Economic Recovery, explains just how housing has led the economy to recovery. This publication is available free of charge on NAHB's website, at http://www.NAHB.com/housing issues. The National Association of Home Builders is a Washington-based trade association representing more than 205,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the almost 1.6 million new housing units projected for 2002, making housing one of the largest and most powerful engines of economic growth in the country. The National Association of Realtors, "The Voice for Real Estate," is America's largest trade association, representing more than 800,000 members involved in all aspects of the residential and commercial real estate industries. Posted July 26, 2002 Tom Walker 604 255 4812
