Let Real Estate Prices Fall!

[* By artificially reducing mortgage rates, implementing moratoriums on foreclosures, renegotiating mortgages, inflating the dollar, giving buyer incentives from tax payer money, falsely "stimulating" the economy with tax payer money -- the list goes on and on.]

[[Please get your friends to join too!!! If this group ever takes off I will use it as a de facto petition and present it to some of my friends who were highly involved with the Obama campaign. Perhaps we can actually get something done!!!!!]]

This group contains information in three major sections.

I. Introduction (top). This section only contains some very high level polemics for the real estate argument.

II. Links (bottom). This section contains articles from various respectable newspapers and online sites. Filled with detail, these are the main point of news dissemination. If you don't have time to read the whole thing, please take a look at my capsule summaries where I generally highlight the most important point(s) from the articles.

III. Discussions (middle). I use this section to post interesting items that are not simply links. So far I have used this area to posted comments from respected economists and e-mail exchanges with real estate brokers. Please note that this section is NOT actually intended for people to discuss. It is just the best space for which a facebook group allows "free form" posts.

Real estate roughly tripled over the last decade. Anyone with any understanding of finance knows this was completely unrealistic and unsustainable. It was a result of various artificial government influences such as reprehensibly loose credit rates and banking policies (fractional reserves, etc), and tax deductions on mortgage interest under the fundamentally unsound advice that everyone should be a homeowner. Would anyone other than the US government tell you to leverage your net worth five times on any other asset class (e.g. equities)? Wake up people!!! The whole thing is a scam!

Everyone is super-bullish on Obama, but I am still cautious*. I, together with everyone I know with any grasp of economics, am still waiting for any remotely decent economic policies from his team. In particular, the administration seems dead set on re-igniting a bubble in the very asset class that has brought the world economy to its knees: real estate. Can anyone say, "huh???!!"

I won't go into the details of how economically disastrous it would be to continue along a line of trying to prop up real estate prices via artificially lowered mortgage rates, bailed out banks, forced lending, and the like. For now, just join if you are smart enough to see that housing prices need to fall to equilibrium before the economy can recover. Tax payer dollars alone cannot prop up any market in the long run, so anything else is just delaying the pain and hurting the future of the economy.

[* This was written 1/2009. At this point (3/2009) it is well understood and discussed amongst the economic intelligentsia that Obama and Geithner's policies have been atrocious for the tax payer, and anyone who remotely supports free market capitalism.]

April 3 at 12:34pm.
Merrill's Rosenberg: A New Bull Market? Are You Out Of Your Mind?
BofA Merill's chief economist says "it is a critical sign that we continue to have a total lack of equilibrium in the housing market" and expects prices to drop a MINIMUM of 36% over three years ONLY IF ALL HOMEBUILDERS STOP ALL CONSTRUCTION TODAY. in other words, with the fake government stimulus, we will be hitting 50% soon.

April 2 at 1:16pm.
NYC Real Estate Prices Could Fall 47%
Things could get ugly in a hurry. Deutsche Bank predicts another 47% decline in Manhattan real estate from CURRENT levels. lots of news today reporting 50% decline in sales, 20% decline in prices Q1 -- and even worse for same building sales. its coming unglued!

February 25 at 11:54am.
Manhattan's Luxury Real-Estate Market Is Rotting - Barrons.com
key takeaways: "Ivy Zelman, a former Credit Suisse analyst who was among the first to call a national housing bust, figures that the New York housing market is headed straight down." Price to income ratio is currently at 7.7 and needs to correct another 46% to get to the historical median of around 4.

-- the rest to be filled in later --