Customer Reviews

Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them

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1 star:		(40)

 

 

For me, this was more comic relief than any scholarly analysis. The author has a vested interest in the bubble not bursting, and he's selling his soul with this book to prove it.

He spins webs of demographics and interest rates, but he never ever addresses the core issues that determine housing values. What is lost here is that housing in itself creates no value, its value is completely predicated upon peoples ability to pay for it. Ergo, housing prices for the last 100 years have tracked income remarkably closely, that is, except for the last five years. Historically, the ratio of housing price to annual income has been 2.1, with very little variation. In many parts of the country, this ratio is now approaching 10.5! Can you say "major correction?" Further, the amount of leverage used to buy homes during this boom has been increased to absolutely unprecidented levels. Even during the last boom of the late 80s/early 90s, the standard was still 30 yr fixed and 20% down. Not anymore. Last year, less than 15% of borrowers put down 20% or more! Further, the 30 yr fixed has been replaced by the IO, or interest only loan. See now, we have the same borrower capable of bidding 30-40% more for a propery without any better credit or ability to repay. Neat trick, but sadly, Lereah at no point addresses any of these fundamentals.

Our stock/housing pattern appears remarkably similar to the one Japan had 20 years ago. First the stock market busted. Right after, the real estate market rallied, and it busted too. The current Japanese real estate market is in a 14 year slide to date, and houses are going for roughly their 1980 value.

Keep talking Dave - we'll need the comic relief soon!

Your Yugo Will Run Forever and How to Set the Land-Speed Record With It.

Go back in time to the year 2000 when the NASDAQ was trading at 5,000. Some people said it was a bubble and couldn't go on forever. Yet the temptation to go with the flow and make was seemed to be easy money was irresistible. Driven by the marketing efforts of those who make their living in the stock market, it was argued that prices would still go higher. If you bought into their line of reasoning, surely NASDAQ 10,000 was not too far away.

I was reminded of those times when I read David Lereah's book "Are You Missing the Real Estate Boom." Even after the biggest 5-year run-up in housing prices in U.S. history - where 40% of all homebuyers must now resort to interest-only adjustable rate mortgages in order to qualify for home financing - Lereah tries to convince us that the U.S. real estate market should continue to stay healthy for the next 10 years.

His arguement goes something like this: Even though housing prices are high, the combination of low interest rates, 80 million wealthy baby boomers and their offspring ("echo boomers") will continue to fuel demand. This is not objective, unbiased advice. As head cheerleader for the Realtor hallelujah choir, Lereah is using the same tactics that have been well-honed on Wall Street: "When the ducks are quackin', feed 'em."

I don't remember what Lereah was saying about U.S. housing prices in 1998 or 1999 when prices were 30% lower than they are today (and 75% lower in many of the highly populated coastal regions), but I think its safe to say he wasn't forecasting a coming real estate boom that would last for the next 15 years.

The key to making money in real estate - and keeping it - is to get aboard a rising real estate trend early, not late. While it is true that real estate is a good long-term investment, what Lereah ignores is the cycle nature of real estate. In other words, if you buy an overvalued house late in the market cycle - and you are over leveraged and illiquid like most Americans are today - you may not be around for the long-term.

Robert Campbell
Author of "Timing the Real Estate Market"

Below is the list of liars and clueless (like David Lereah) who ruined millions with erroneous, self serving, predictions saying "all is well," "go back to sleep," at the beginning of the worst depression ever. Randy


1927-1933 Pompous Prognosticators

"There may be a recession in stock prices, but not anything in the nature of a crash."
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

"Stock prices have reached what looks like a permanently high plateau.I expect to see the stock market a good deal higher within a few months."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929

"This crash is not going to have much effect on business."
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929


"Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
- R. W. McNeal, financial analyst in October 1929


"Hysteria has now disappeared from Wall Street."
- The Times of London, November 2, 1929

"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."
- Harvard Economic Society (HES), November 2, 1929


"In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

"Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

"[1930 will be] a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929

"For the immediate future, at least, the outlook (stocks) is bright."
- Irving Fisher, Ph.D. in Economics, in early 1930

"...there are indications that the severest phase of the recession is over..."
- Harvard Economic Society (HES) Jan 18, 1930

"There is nothing in the situation to be disturbed about."
- Secretary of the Treasury Andrew Mellon, Feb 1930

"... the outlook continues favorable..."
- Harvard Economic Society (HES) Mar 29, 1930

"... the outlook is favorable..."
- HES Apr 19, 1930

"While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
- Herbert Hoover, President of the United States, May 1, 1930


"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930


"... the present depression has about spent its force..."
- HES, Aug 30, 1930 (actually lasted ten years!)

The real estate market does nothing but go straight up, up, up! No price is ever too high! I've got a bridge to sell you with an adjustable negative amortization loan and rising interest rates! Ha, Ha, Ha!

There, now you've read the book. Don't you feel smarter, having saved tons of time reading this summary, rather than reading a book by this shill for the industry?

BE WARNED, click on the author's name link. He's the same BOZO who was telling people how they could get rich on tech stocks in a book published in MARCH OF 2000!!! Whatever this guy says to do, DO THE OPPOSITE and you should be fine.

LOL - this guy needs some way of making money, so he's hoping people will buy his book. I'd say his days at NAR are now numbered since he's been cheerleading the housing market for years, just recently headed up the $40M campaign to get more fools to buy a house, then stated that the market bubble has popped.

Quotes from him from mid-November:

`The biggest question I'm faced with is how far do prices have to drop and how long will it take for the correction to finally turn around in [those] markets. I don't have an answer,'

`You'd have to go back to the Great Depression to find a housing period that is this unique.'

Ouch - yeah, "now is a great time to buy or sell a house" - ROFLMAO!

As of now we are sitting on the biggest asset bubble in our history of our time -- bigger than the dot com one that crashed 5 years ago. With prices already doubling and teetering on even tripling in some of the most extreme bubble markets since that time -- like Las Vegas, Phoenix, San Diego, and Miami, affordability is at an all time low. People are resorting to exotic, risky mortgages just to afford a house. Rents are half, sometimes even lower, than the monthly mortgage payment one would expect to pay on an equally comparable home.

The evidence of a housing bubble is overwhelming. The number of real estate agents has quadrupled in the past few years. You can go into any bar in America and find a 21-year-old nobody talking about flipping homes. Strangely but not surprising, those promised condo developments in Las Vegas and Miami are being cancelled. Even on ABC's "Nightline," Yale University economics professor Robert Shiller, one of the most respected authorities on the economy, has sternly warned that real estate is in for a shock.

And yet, we have the unpronounced king of the real estate industry writing a book about how everything fine. There is no housing bubble. Oh, this is normal, he says, real estate will continue to boom forever.

Lereah is like the shovel salesman at the end of the gold rush. Introvertedly panicked that his industry is about to take a nosedive, he attempts to assure us with those great pearls of wisdom that everyday fools continue to quote:

"Real estate only goes up."
"There not making any more land."
"Baby boomers are retiring at record pace, and are in the market for condos."
"You better buy now before you're priced out forever."

Fortunately, most people aren't fools. People are waking up, and realizing real estate is not as safe as it seems. More so, people like myself are fed up and plainly refuse to buy a house at today's prices.

Don't be duped. The con artists of the National Association of Realtors want you to continue to buy houses at these record prices -- the bigger the price, the fatter their commission. If you are one of those trusting fools that believes the user car salesman when he tells you that car is not a lemon and worth every penny listed on the sticker, then Lereah's your man. Buy his book. Flip some condos. As the other reviewer put it: There's a sucker born every minute (and consequently adding this book to their shopping cart.)

On a side note, it was also quite funny to see Linda Rheinberger, president of the Las Vegas Realtors Association, submit a review on behalf of her crony. Equally funny are those other superficially positive reviews from flippers in trouble in bubble markets, hoping you'll come around to their open houses as they sweat the market which has come to a screeching halt.

HA HA HA HA HA HA HA HA HA HA
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*gasps for air*

HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
ha ha ha ha
ha ha hee hee hee
heh heh

*wipes tears from eyes*

Seriously though, does Amazon.com sell tar and feathers? I know they've got pitchforks.

It is a little worrisome to think that so many investors learned nothing form the speculative bubble that was built up in the stock markets, particularly the Nasdaq. When it comes to residential housing, this is simply Act II being engineered by Alan Greenspan, the person most responsible for Act I (the stock market speculative bubble). People fell in love with residential housing ("very safe, good") immediately after they fell out of love with stocks ("too risky, bad"). Coincidence? I think not. Books like this one serve only to fan the flames of a fire that is roaring out of control- especially along the coasts. Shame on you Mr. Blodget, er, I mean Mr. Lereah! ----Instead of this self serving new era garbage, read the recently released Irrational Exuberance, Second Edition by Robert Shiller if you want an easy to read balanced account of what is REALLY going on in residential real estate right now. It might save you thousands upon thousands of your hard-earned dollars if it cautions you against joining the home-speculating heard.