Most Helpful Customer Reviews
33 of 34 people found the following review helpful:
4.0 out of 5 stars
Compelling Analysis, Skip the Politics, April 16, 2006
This review is from: Sell Now!: The End of the Housing Bubble (Paperback)
About a year ago, I read Talbott's first book, "The Coming Crash in the Housing Market." At the time, I agreed with the premise but felt that the author had failed to marshal sufficient support for his claims.
This book is much better. Talbott starts out by quickly demolishing arguments that real estate will always increase in price. Talbott not only explains why the housing bubble is about to burst in many areas, he describes the nationwide and international ramifications of that crash. Although Talbott builds on work done by Robert Shiller (who determined that real housing prices have been increasing only since 1997), Talbott advances the research by considering the tax benefit received by homeowners as an independent asset. Once that tax benefit has been factored into the equation, Talbott finds that housing prices have risen, in real terms, since 1981, when nominal interest rates began their descent. Talbott demonstrates (persuasively, in my opinion) that a major reason for the bubble was banking practices that enable buyers to borrow more when nominal, but not real, interest rates are low. Because nominal rates are low when inflation is low, however, new buyers have a harder time "growing their way out" of a large mortgage.
This could have been a five-star book. Talbott's analysis of the real estate market is spot on. I only deducted a star because of the existence of Chapter 4, entitled "Can You Say 'Conspiracy'?". In the middle of cogently explaining the housing crisis, Talbott veered off course to write a chapter about the Federal Reserve, the FDIC and Alan Greenspan. I am not convinced that there is any "conspiracy" here, or that the one statement about ARMs made by Greenspan is evidence of malevolent intent. A fuller discussion of the Federal Reserve's actions in the early 2000s would take into account its attempt to prevent the dot.com implosion for wrecking the entire economy. Although Talbott acknowledges this fact, Talbott does not persuasively counter it. This chapter is, alas, in line with Talbott's own political orientation, as he jabs the "Bush" tax cut and those "status-seekers" who buy large houses.
Fine, if you agree with Talbott. For the rest of us, the politics are just noisy intrusions in an otherwise well-reasoned, compelling book. Highly recommended.
Help other customers find the most helpful reviews
Was this review helpful to you? Yes
No
24 of 25 people found the following review helpful:
5.0 out of 5 stars
Talbott is Brilliant, April 12, 2006
This review is from: Sell Now!: The End of the Housing Bubble (Paperback)
Talbott, like the other scholars/economists at the UCLA Anderson School of Management, has got it right! Unlike the housing cheerleaders at the NAR, Talbott gives straight talk about the origins of the housing bubble, and the 8 myths for permanently high housing prices. He explains that the real culprits of the bubble were overly aggressive banks. As of this writing, every day I read something about the FDIC trying to rein in these agressive banks, and how people are getting foreclosed on because they cannot pay their adjustable rate mortgage as the interest rate has gone up. Talbott predicted all of this.
He devotes an entire chapter to the Greenspan conspiracy. Why did our smartest and lead banker, Alan Greenspan, tell the American public in late 2004, to get adjustable rate mortgages? He knew people would have trouble paying as interest rates climbed. I knew it too, so I avoided it although I would have saved a bundle initially on the payments. Talbott explains that Greenspan was helping out the banks, and preventing a recession after the dotcom collapse, without worrying too much about the more painful consequences he was creating by later foreclosures and bank collapses from declining real estate.
He explains from an economist view why houses are overvalued in our most expensive cities in the US and the world, draws comparisons to Japan whose housing market is declining for the 18th year!, compares us selling houses to each other to a Ponzi scheme, and asks people to evaluate if they are in trouble too. He devotes some pages to the effects of a housing bubble bust on the economy, and the recession that will rise over the entire country, since the majority of new jobs have been created in real estate: lenders, realtors, construction, and retailers/remodelers/car and boat stores who profited as consumer spent their home equity.
Talbott makes some other interesting observations that I had not read anywhere else. I am rereading it the second time, and underlining as I go along. I would be delighted to meet Mr. Talbott, so I could ask him more questions about the economy, and the role of the housing bubble collapse on our economy.
Straight talk! That's what you'll get from this book. He'll go down in history as one of the only economists who foresaw the effects of the housing bubble. I recommend anyone who owns real estate or is thinking of buying, to read this first!!
Help other customers find the most helpful reviews
Was this review helpful to you? Yes
No
20 of 22 people found the following review helpful:
5.0 out of 5 stars
lies, damn lies and statistics, June 7, 2006
This review is from: Sell Now!: The End of the Housing Bubble (Paperback)
This book mainly argues that the price of real estate has become de-coupled from the "fundamentals" (rental values, income) worldwide, resulting in a bubble that will burst. It also argues that this has been caused and pushed by Alan Greenspan at the Fed. (he lowered interest rates to cause the housing sector to get pumped up, mainly to cause a "soft landing" for the economy right after the dot.com stock market bubble burst). And it argues that non-market forces, such as aggressive lending by banks and mortgage brokers, as well as status-seeking has caused the bubble. All this with a background of a federal government that is not overseeing lending and banking the way it should (as was the case in the 1980s with the savings and loans debacle, and in the 1990s with Enron). In short, Talbott accuses Bush of being "in bed" with the banking industry, and being more a propoent of the banking industry, instead of being a proponent of the average working family. His analysis is brilliant and wideranging, and he does not stop at economics, but questions the American obsession with "image over substance" (highly-leveraged people buying villas and mansions way beyond their means, financed by increasingly complex "jumbo mortgages").
The bubble is here, and when it bursts, it will take the world economy down with it. The Economist has already predicted this, and they also predicted the 2000 stock market bubble bursting. The first signs of it are now appearing in Britain, Australia, and Ireland (not to mention Japan, which has had 18 years in a row of falling real estate prices).
Help other customers find the most helpful reviews
Was this review helpful to you? Yes
No
|
|
Most Recent Customer Reviews
|
