We always hurt the ones we love best... in this case the beautiful and fun places that are within a few hours flying time from their first homes and jobs.
i built a second home, and it's only 45 minutes from my home. it's three stories and each story looks out at the ocean. we hardly ever use it, but my wife and daughters love the idea of having it. i just put a contract on a third home. this one is canal front, to launch the boat i'll never have. it's a totally emotional decision. i'm presently talking myself out of closing on it.
i know a lot of people who got second home loans, but they are flippers. those, who didn't flip, are renting them for serious negatives. i'm one of the few who actually keeps the home vacant. i paid cash, but the taxes, insurance and utilities still put a dent in my wallet. any way you cut it, a second home is a liability. my wife said that if i ever try to sell it, she won't sign the contract or closing papers. as i stated before, she doesn't use it much, but loves the idea of having it. right now, on my same second home street, every other second home is for sale. not many buyers, though.
Encouraged by large gains on their homes in the UK, Brits have gone utterly barmy in the last few years buying vacation homes in Europe. Indeed, they have been responsible for creating real estate bubbles in many places across Europe. No place is too remote, or too bizarre, so long as they get a "deal".
Not so long ago, after the last big real estate bubble had burst in the UK, buyers of houses were warned that homes were for "nesting and not investing". Within three years they'd forgotten that advice totally. Mind you, so had the economist who had dispensed the advice. He's now one of the biggest bubble boosters around.
I suspect some of that second home purchasing would be happening regardless, just by demographics.
The froth is killing conservation efforts in at least a couple places I know of. There's high demand for land adjacent to nice places, so the cost of protecting that land has skyrocketed. Outsiders are often willing and able to bid way beyond what the local economy, even the rental economy, can support. Poof. There goes paradise.
Lets not forget the implication beyond saving beautiful places that I'll never visit.
One basic assumption is that housing will never fall much because we live in it and to let it go quickly would mean the end of shelter.
Now it appears that 20% of housing can be 'lost' to its owners without affecting their shelter.
Now what we do not know, is the economic status of the owners of these 20%. How secure is their jobs(RE guys?, middle management of disappearing US companies, professionals dependent upon good income of the 'little people'). At what point of an economic recession would their income disappear or become impared. On thing is sure, the 45-60 years of age folks have high UE and high difficulty in replacing jobs. Or in the case of realist, the wife could decide it is a wonderful divorce settlement. (no speculation about realist other than probablity theory)
vader takes a chance on realist's spouse (like some here on CR's) and realist's declining marginal utility...nothing personal, but should realist be offended blame probability theory.
I understand that Prof Shiller has several homes. Do you think he is confident enough in his views to short the housing market. He has been saying these things for a long time now, and if he had acted on his thinking he would have lost a lot of money. Talk is Cheap! I enjoy reading this site, but I just don't understand why Bob would own so many homes (some in hot markets) if he really believed that the market was overvalued
As far as I know it's been reported that Schiller owns two homes. That's not unreasonnable to own one single second home when you are doing well financially, as I'm sure he's doing.
what is going to be even more interesting is the extent to which people were lying on their loan originations and putting down that they were going to occupy the home vs. investors. The data he is drawing from is most likely skewed downwards given the fact that lending standards have basically been thrown out the window. I would trust the early 90's data but i would be very suspect of the data over the last 3-4 years for investors and second home loans.
"but I just don't understand why Bob would own so many homes (some in hot markets) if he really believed that the market was overvalued"
So many?
From an interview with Shiller by Money Magazine in January 2005:
Q. So what should we do?
A. Most people want to live in their homes, so they should stay. But people can make decisions to reduce their home-price exposure. One possibility is to not be as ambitious about the size of your house. If you think that you'll move again in five years, then wait to buy your dream house.
Q. What are you doing personally?
A. I bought a summer home on an island in Long Island Sound in 2002. I worry about a bubble in vacation properties. But we wanted to live there in the summer.
Well, sigh, we normal folk with our paltry median salaries will never cut the mustard.
I suggested some time ago that MNC and TNC overseas profits sparked the housing boom, helped of course by low interest rates and tax cuts. All that money had to have somewhere to go. It certainly did not go into investment. It was simply not needed.
Wherever it went, it fueled speculative fever. Drop a couple of mansions in a nice locale and watch the property values climb. Second houses? Take a look at multiple vacation homes. There are communities tucked away in scenic Canadian mountains where many of the homes are four million or higher. These are just weekend retreats, used maybe once or twice a year.
The world is one piece of cloth. Now we watch the yield curve flatteninginverting--again, despite rising rates. There is a lot of money out there with nowhere to go. Investment is not the name of the game; raking in the profits is.
I am sure all the Delphi employees are happy to provide these goodies to the well deserving. Whats a maquiladora for if it is not a piñata for the well off?
So far more of the same: Greed, greed, greed,overconsumption, carpe diem and with gross manipulation of the tax codes to the total detriment of the economy and this country !!!
Are to be mocked and scorned whever they go...and to their faces! They never face what they do on their paths of destruction.
Boomers and their offspring so far ruining the country.
Too numerous and overpaid overbenefited govt. and education jobs are a serious part of the problem too!
Not air and papers and the genuine economy and this country can go to hell they don't care.
This aspect is not highlighted enough. There is a room of 99 random people and Bill Gates. It is not a normal distribution, people. The stats need that normal distribution to be able to carry much weight. So thankyou Stormy for the story about the $4M cottage in the Canadian wilderness. I'm sure it appears in the Wyoming and Colorado wilderness too. Is it showing up in the recent housing stats? Not really. Does it show up in the ranks of favored industries? St. Louis Fed | Page Not Found
This reputable source thinks the average hourly wage in the Brokerage business is $38/hr. [You're right it is dated but only back to 2000, not the Middle Ages like you thought.]
Second homes are often a way to test a retirement destination, selling off the first home when the time comes. Second home markets are usually the most speculative, but if you don't plan on selling, that can easily be lived with.
I'm sure the 2nd home people are a large enough segment to warrant our attention, but what of the more committed speculator/professional who has more, perhaps many more houses? A smaller number likely, but perhaps just as interesting a segment, no?
And: Those who care should expend efforts to stop any one building on the hill horizons!
Any one who has gotten away with destroying horizons already, should face modern Green Mountain type boys and girls to make their lives miserable whenever and wherever it can be done to them.
We always hurt the ones we love best... in this case the beautiful and fun places that are within a few hours flying time from their first homes and jobs.
df, From the Eagles "The last resort":
They call it Paradise I don't know why
You call some place Paradise Kiss it good-bye.
Best Wishes.
i built a second home, and it's only 45 minutes from my home. it's three stories and each story looks out at the ocean. we hardly ever use it, but my wife and daughters love the idea of having it. i just put a contract on a third home. this one is canal front, to launch the boat i'll never have. it's a totally emotional decision. i'm presently talking myself out of closing on it.
i know a lot of people who got second home loans, but they are flippers. those, who didn't flip, are renting them for serious negatives. i'm one of the few who actually keeps the home vacant. i paid cash, but the taxes, insurance and utilities still put a dent in my wallet. any way you cut it, a second home is a liability. my wife said that if i ever try to sell it, she won't sign the contract or closing papers. as i stated before, she doesn't use it much, but loves the idea of having it. right now, on my same second home street, every other second home is for sale. not many buyers, though.
Encouraged by large gains on their homes in the UK, Brits have gone utterly barmy in the last few years buying vacation homes in Europe. Indeed, they have been responsible for creating real estate bubbles in many places across Europe. No place is too remote, or too bizarre, so long as they get a "deal".
Not so long ago, after the last big real estate bubble had burst in the UK, buyers of houses were warned that homes were for "nesting and not investing". Within three years they'd forgotten that advice totally. Mind you, so had the economist who had dispensed the advice. He's now one of the biggest bubble boosters around.
I suspect some of that second home purchasing would be happening regardless, just by demographics.
The froth is killing conservation efforts in at least a couple places I know of. There's high demand for land adjacent to nice places, so the cost of protecting that land has skyrocketed. Outsiders are often willing and able to bid way beyond what the local economy, even the rental economy, can support. Poof. There goes paradise.
Lets not forget the implication beyond saving beautiful places that I'll never visit.
One basic assumption is that housing will never fall much because we live in it and to let it go quickly would mean the end of shelter.
Now it appears that 20% of housing can be 'lost' to its owners without affecting their shelter.
Now what we do not know, is the economic status of the owners of these 20%. How secure is their jobs(RE guys?, middle management of disappearing US companies, professionals dependent upon good income of the 'little people'). At what point of an economic recession would their income disappear or become impared. On thing is sure, the 45-60 years of age folks have high UE and high difficulty in replacing jobs. Or in the case of realist, the wife could decide it is a wonderful divorce settlement. (no speculation about realist other than probablity theory)
vader takes a chance on realist's spouse (like some here on CR's) and realist's declining marginal utility...nothing personal, but should realist be offended blame probability theory.
vader takes a chance on realist's spouse
No thanks, I've taken changes on 2 wives in my life time.
That is enough.
I understand that Prof Shiller has several homes. Do you think he is confident enough in his views to short the housing market. He has been saying these things for a long time now, and if he had acted on his thinking he would have lost a lot of money. Talk is Cheap! I enjoy reading this site, but I just don't understand why Bob would own so many homes (some in hot markets) if he really believed that the market was overvalued
As far as I know it's been reported that Schiller owns two homes. That's not unreasonnable to own one single second home when you are doing well financially, as I'm sure he's doing.
what is going to be even more interesting is the extent to which people were lying on their loan originations and putting down that they were going to occupy the home vs. investors. The data he is drawing from is most likely skewed downwards given the fact that lending standards have basically been thrown out the window. I would trust the early 90's data but i would be very suspect of the data over the last 3-4 years for investors and second home loans.
Some say once people move to retire, they will sell their first home to move into the second.
Could help the crash
vader, calmo:
my wife is much younger than i. as long as she keeps her good government job and keeps saying, "come on big boy," she can keep her beach house.
"but I just don't understand why Bob would own so many homes (some in hot markets) if he really believed that the market was overvalued"
So many?
From an interview with Shiller by Money Magazine in January 2005:
Q. So what should we do?
A. Most people want to live in their homes, so they should stay. But people can make decisions to reduce their home-price exposure. One possibility is to not be as ambitious about the size of your house. If you think that you'll move again in five years, then wait to buy your dream house.
Q. What are you doing personally?
A. I bought a summer home on an island in Long Island Sound in 2002. I worry about a bubble in vacation properties. But we wanted to live there in the summer.
MONEY Magazine: Interview with Robert Shiller - Jan. 25, 2005
As we say in the bible belt, realist is blessed.
Well, sigh, we normal folk with our paltry median salaries will never cut the mustard.
I suggested some time ago that MNC and TNC overseas profits sparked the housing boom, helped of course by low interest rates and tax cuts. All that money had to have somewhere to go. It certainly did not go into investment. It was simply not needed.
Wherever it went, it fueled speculative fever. Drop a couple of mansions in a nice locale and watch the property values climb. Second houses? Take a look at multiple vacation homes. There are communities tucked away in scenic Canadian mountains where many of the homes are four million or higher. These are just weekend retreats, used maybe once or twice a year.
The world is one piece of cloth. Now we watch the yield curve flatteninginverting--again, despite rising rates. There is a lot of money out there with nowhere to go. Investment is not the name of the game; raking in the profits is.
I am sure all the Delphi employees are happy to provide these goodies to the well deserving. Whats a maquiladora for if it is not a piñata for the well off?
"The world is experiencing a second-home boom."
How in do you even talk to a guy like Shiller?
The world?
Damn, things are better than I thought!
So far more of the same: Greed, greed, greed,overconsumption, carpe diem and with gross manipulation of the tax codes to the total detriment of the economy and this country !!!
Are to be mocked and scorned whever they go...and to their faces! They never face what they do on their paths of destruction.
Boomers and their offspring so far ruining the country.
Too numerous and overpaid overbenefited govt. and education jobs are a serious part of the problem too!
Not air and papers and the genuine economy and this country can go to hell they don't care.
This aspect is not highlighted enough. There is a room of 99 random people and Bill Gates. It is not a normal distribution, people. The stats need that normal distribution to be able to carry much weight. So thankyou Stormy for the story about the $4M cottage in the Canadian wilderness. I'm sure it appears in the Wyoming and Colorado wilderness too. Is it showing up in the recent housing stats? Not really. Does it show up in the ranks of favored industries?
St. Louis Fed | Page Not Found
This reputable source thinks the average hourly wage in the Brokerage business is $38/hr. [You're right it is dated but only back to 2000, not the Middle Ages like you thought.]
This source thinks that's a tad low:
PageNotFound
Second homes are often a way to test a retirement destination, selling off the first home when the time comes. Second home markets are usually the most speculative, but if you don't plan on selling, that can easily be lived with.
I'm sure the 2nd home people are a large enough segment to warrant our attention, but what of the more committed speculator/professional who has more, perhaps many more houses? A smaller number likely, but perhaps just as interesting a segment, no?
And: Those who care should expend efforts to stop any one building on the hill horizons!
Any one who has gotten away with destroying horizons already, should face modern Green Mountain type boys and girls to make their lives miserable whenever and wherever it can be done to them.