Rating: 
Summary: Relationship between rental market and real estate ...
Review: This is a follow up on my previous review:Very quickly, I would like to point out an important formulae one can use to evaluate whether the current real estate market is out of line in relation to the current rental market: 1). estimate how much annual rental revenue you can collect if you were to rental out your castle. Then subtract the property tax, and some maintenance expense from your gross revenue to come up with the net rental income. 2). divide this net rental income by the asking price of your castle to come up with a yield. In today's market, you will be lucky if you get a yield of more than 4%. More likely you will get a yield for about 3%. That is, the asking price is way too high. On the other hand, the current 10 year mortgage rate (the benchmark measurement) is over 5% for most countries. Now you don't have to be a genious to figure out that if you had to borrow money at over 5% (fixed) and invest in a business that generate less than 4% (not fixed), pretty soon, you can lose your shirt!
Rating: 
Summary: Doom & Gloom book
Review: This is just another doom and gloom book. Since it's publication in July, 2003 property values in San Diego have risen another 20% and continue to rise. The author doesn't discuss the principle of supply and demand and why prices are rising - Lack of supply of land and enormous demand for housing. And the author doesn't touch on the many people who move to the high demand areas of California like San Francisco and San Diego - They come here with money and don't have to necessary rely on a mortgage. Will values decline? Probably. How much? Somewhat. When? No one knows; certainly more than two years from now. In the meantime those who have waited to buy are now facing an average median price of San Diego housing of $444,000; $575,000 to get a decent home. I am glad I read someone else's copy of this book instead of wasting my money.
Rating: 
Summary: Prudent advice
Review: This timely book makes several excellent arguments for the existence of a housing bubble, its causes, and possible remedies. It should be included in the reading list for anyone considering purchasing or refinancing a home. One noteworthy omission of the book is a deeper analysis of the connection between the conventional wisdom of buying all that you can afford, and the inflation rate. Unlike previous runups in home valuations, that occurred during high rates of inflation and salary increases, the price of a house purchased today may be expensive for the entire term of the mortgage. Therefore, this book does not make its case as strongly as it might. One wonders what, if any, effect this will have on prices when homebuyers factor low inflation into their decisions, instead of simply focusing on the other side of the coin, low interest rates. A recent series of articles in The Economist Magazine discusses these issues in detail: House of cards, May 29th 2003, The Economist print edition,
"In many countries the stockmarket bubble has been replaced by a property-price bubble. Sooner or later it will burst, says Pam Woodall, our economics editor."
Rating:
Summary: Great idea with no solid theory
Review: This title had a great catching phrase. But once I read the book I came to a conclusion that the author had no solid understanding of the present market. He came up with a great idea but spent all his energy getting his book out to publisher without the proper theories. Also he claims to take the responsibility to start the wave of the modern day real estate crash. In his book he refers to some stock exchange crashes and compares them with real estate. What is he thinking?
Rating:
Summary: Good book. Scary premise.
Review: This week, the magazine "The Economist" presented 2 articles describing bubble-like conditions in the residential housing market. People are starting to realize that excess liquidity, overspeculation, and irrational behavior are creating a potential economic disaster. Talbott has throughly researched this subject, and it is nice to hear from someone who is not affiliated with the real estate market comment on the state of housing in America. He points out that a number of factors could cause not only a correction, but an outright crash:
1. Overleverage (especially in the case of ARMs)
2. Interest rate increases
3. Potential deflation
4. The precarious state of Fannie Mae and Freddie Mac, companies that are basically unregulated and leveraged to the hilt. It is my own belief that a 2% increase in interest rates from 6% to 8% will start in motion one of the worst economic fiascos this country has ever witnessed. Housing has typically been a hedge against inflation. This time it will be inflation that kills the housing market. President Bush recently spent 800 Billion in 2 days. Federal spending is up over 30%. The Medicare bill will cost the US between 2 and 3 TRILLION dollars in the next 20 years. Only through devaluing the dollar (which has already begun) and massive tax increases, can the government hope to pay its bills. This means inflation, and lots of it. The people that are investing in real estate have a chronic myopia when it comes to economic history.
Rating:
Summary: Good book. Scary premise.
Review: This week, the magazine "The Economist" presented 2 articles describing bubble-like conditions in the residential housing market. People are starting to realize that excess liquidity, overspeculation, and irrational behavior are creating a potential economic disaster. Talbott has throughly researched this subject, and it is nice to hear from someone who is not affiliated with the real estate market comment on the state of housing in America. He points out that a number of factors could cause not only a correction, but an outright crash:
1. Overleverage (especially in the case of ARMs)
2. Interest rate increases
3. Potential deflation
4. The precarious state of Fannie Mae and Freddie Mac, companies that are basically unregulated and leveraged to the hilt. It is my own belief that a 2% increase in interest rates from 6% to 8% will start in motion one of the worst economic fiascos this country has ever witnessed. Housing has typically been a hedge against inflation. This time it will be inflation that kills the housing market. President Bush recently spent 800 Billion in 2 days. Federal spending is up over 30%. The Medicare bill will cost the US between 2 and 3 TRILLION dollars in the next 20 years. Only through devaluing the dollar (which has already begun) and massive tax increases, can the government hope to pay its bills. This means inflation, and lots of it. The people that are investing in real estate have a chronic myopia when it comes to economic history.
Rating:
Summary: Gutsy Call That Intelligent People Should Understand
Review: Truly a book that takes guts to print at this point in our economic cycle. Talbot reminded me about many of the Econ lessons from those bearded college professors at CSUN and USC. Whenever money is too available and easy to get, look out! Banks are giving money away to even high risk folks who have sucked all their home equity out and now have max mortgages when unemployment is on the rise. If interest rates climb as we all know they will, at some point, cash will once again be king for those not over their heads in debt. Unfortunately it may be Euro cash not U.S. cash that has more value. My fellow Americans, we need to wake up and reduce peronal debt or someone else may be enjoying your toys you have but owned by the banks. The author backs up what he says with valid facts. He has me seriously considering selling my investment property in Redondo Beach, CA. A great read for anyone thinking about entering real estate or considering a change in real estate. The real estate bubble is like many other recent bubbles. I've learned that a smart man learns from his own mistakes but a wise man learns from others mistakes. The author really has me a thinking. Recommend reading it and adding it to your knowledge base before making any big real estate decisions.
Rating:
Summary: Hard to argue with.
Review: Who of us knows what the future is going to bring? I don't- nor does the author of this well written book- John Talbott. We've all seen it before, haven't we? From my experiences as a Fiancial Advisor during the bubble years of the late 90s I can tell you that the risk of decline on housing prices is very real. Bubbles always go on for much longer than we expect them to- that is what creates the bubble- lots of time for just about every investor to begin to look at things the same way. Not to mention Greenspan and his crew. I thought the author did an admirable job of supporting his thesis with accurate and fresh data. You'll have to admit it is hard to argue with. I think he's right when he predicts a serious decline in housing in much of the country (or possibly all over). We'll wait and see- as for now I am a patient and happy renter. I stress PATIENT! If you are interested in the topic of housing prices (where I live EVERYONE is) you should find this book informative.
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