''Housing turnover is now reaching Ponzi-like proportions.''

[DeepModem Mom]

New York Times/AP:
Real Estate Market a Gamble
By THE ASSOCIATED PRESS
Published: July 23, 2005

....In this era of skyrocketing prices and rock-bottom interest rates, many people share (Tricia Allen of Tulsa's) dream. Late-night infomercials babble about big payoffs with no money down. Slick self-help gurus host $3,000 seminars where they promise to reveal ''secrets'' that can turn anybody -- even you -- into a real estate tycoon. In especially hot markets such as Miami and San Diego, people buy and sell condos as if they were trading tchotchkes on eBay.

Any economist will tell you this is nuts.

''Housing turnover is now reaching Ponzi-like proportions,'' warns Stephen S. Roach, chief economist for Morgan Stanley.

Real estate mania is this decade's version of the irrational exuberance that pushed Internet stocks to ridiculous heights during the last decade, only to come crashing down at the beginning of this one. And just as many investors wish they'd never heard of etoys.com or XO Communications, a lot of would-be real estate tycoons may soon rue the day they started buying property....(T)ransforming a house from eyesore to dream home isn't effortless, either. With the real estate market as hot as it is, contractors take on more business than they can handle. A job that should take weeks stretches into months, delaying the rental income that keeps this enterprise afloat....


***

It would be nice if you could shell out a few thousand dollars on a weekend seminar and then make a million in real estate. Maybe in these heady times some lucky people do. But in the real world of real estate, that's not how things usually work....

http://www.nytimes.com/aponline/national/AP-Real-Life-Real-Estate.html

[barbaraann]

1. I don't think there is a consistent nationwide "bubble."

There are just too many factors involved with local home prices. In general, however, I think that we have created a national non-homeowning underclass that will just sink into desperation because of the high price of houses compared to wages.

There are parts of this country people would do almost anything to live in and parts where people would do almost anything to get out of. "The Long Emergency" has a breakdown of what Peak Oil could mean for various regions of the US and it's very different for each region.

[wli]

2. buy low, sell high

Only a fool would buy at such grossly inflated prices, which is why half of these things or more are sitting empty.