It's not nice to say "I told you so," but I told you so.
The housing bubble is bursting with a vengeance, even in the Bay Area. Almost 50% of home sales are from forclosures, up from 10% last year.
Last month 47.6 percent of all homes that resold in the Bay Area had been foreclosed on at some point in the prior 12 months, up from 44.0 percent in October and 10.1 percent a year ago.
Here are all my old posts on the housing bubble.
I think my very first bubble post sums things up nicely:
When the end comes, it will be swift. At first, it will be a small thing. A number of buyers will be forced to sell their homes when interest rates rise and the principal repayments begin. When they go to sell, they'll find that demand is tapped out. As a result, home prices will begin to drop. As more homes come onto the market, the prices will continue to drop. As prices drop, nervous homeowners who see their equity eroding will rush for the exits, hoping to sell and lock in profits. As homes flood onto the market, prices will drop. As homeowners find themselves unable to make payments and unable to sell their homes, foreclosures will rise. Those houses will come on to the market, lowering prices further, convincing more people to sell, and so on.
And on the day when the newspapers and magazines are running articles about "The Death of Real Estate," I will buy a house.
Thursday, December 18, 2008
My friend Bill Burnham (a hedge fund manager who also spent time as an investment banker and venture capitalist) has a great analysis of Bernie Madoff's fraud on his most recent blog post. Definitely read the whole thing, but here's the single best paragraph:
What makes this fraud truly genius is that everyone on the street, including I suspect most of his investors, assumed all along that Madoff was a crook, in fact that’s why they invested with him in the first place! The rumor was always that he made his money by front running the order flow from his market making business so if things didn’t add up people must have just figured, “Well of course they don’t add up, wink wink nudge nudge, because we all know this whole split strike strategy is just a lie to cover up the fact he is screwing his order flow customers”.
As usual, the easiest way to con a mark is to convince the mark that they're in on the con.
P.S. I just Googled "the easiest way to con a mark is to convince the mark that they're in on the con" and came up with no results. Therefore, I'm claiming this as a new Chris Yeh quote!