Archive for June, 2007

A great many people like it when houses go up in price. During a rally the bulls become intoxicated with greed and obsessed with owning real estate as an investment. However, once houses become an investment, the prices of houses begin to behave like an investment, and volatility is introduced into the system. You do not want houses to trade with the volatility of a commodities market. It causes more harm than good. Price volatility is a very disruptive feature in a housing market: the upswings are euphoric, and the downswings are devastating -- and there are downswings. Declining house prices are emotionally and financially draining both to individuals and to the economy as a whole. The upswings create massive…[READ MORE]

Bulls have opinions; bears have opinions. How do can you tell who's opinion is more likely to become future reality? What characteristics are exhibited by an analysis with good predictive power versus those without? How do you tell the difference between an opinion based on emotion, fantasy and wishful thinking from an opinion based on a rigorous, unbiased examination of the facts? These are the questions I wish to explore today. As part of my job, I obtain market studies to evaluate various land uses for specific pieces of property. Based on the quality of the information in these reports, I make and implement recommendations on the purchase and development of multi-million dollar properties. If my analysis is faulty, or…[READ MORE]

Why do we get so much pleasure from failed flips? I can think of no other human endeavor which has engendered so much pleasure in the misfortune of others. In my opinion, the outpouring of schadenfreude we are seeing as the housing bubble deflates is a mixture of Greek tragedy and bad karma. In short, bubble participants should have seen it coming, and they are getting what they deserve. Schadenfreude is not a spiritually uplifting response. Most religious traditions would counsel us against it. In Buddhist teaching, people are taught to cultivate feelings of compassion for the misfortune of others -- feeling empathy and sadness for the slings and arrows of outrageous fortune when they impact another. The near enemy…[READ MORE]

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