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Ben Jones: The Housing Bubble Is Popping Right Now

Expect MUCH lower prices ahead
Monday, November 26, 2018, 8:08 PM

As we've been tracking here at PeakProsperity.com, the housing market is starting to look quite ill.

After the central bank-driven Grand Reflation following the Great Financial Crisis, home prices are now beginning to nose over from their new bubble-highs.

Has the Housing Bust 2.0 begun? If so, how bad could things get? And what steps should those looking to pick up values at much lower prices in the future be taking?

This week we talk with citizen journalist Ben Jones, property manager and publisher of TheHousingBubbleBlog -- where he tracks the latest headlines and developments in the housing market.

And given the stream of data Ben sees every day, he's extremely pessimistic on home prices in most major markets worldwide:

We're going to see a collapse. The housing bubble is in the process of popping right now. 

Everybody’s been behaving like speculators. Housing prices have been just like day trading stocks. What’s happening right now is a lot more suggestive of a bubble bursting much more than it does just a correction or a down cycle. 

I can’t think of a market in the United States I would buy in right now.

There’s plenty of people like me who have a memory of how this is going to play out (from the 2007 housing bubble burst), and they’re actually probably all lining up the same way.

If you're looking to purchase housing at better values once this current bubbe bursts, you don’t want to buy from Joe Six-Pack. You want to buy from a bank or a lender, that will frequently be Fannie May and Freddie Mac. For instance, in 2010, I helped somebody buy a house for $12,000 through an online auction. That house had been refinanced four years before for over $100,000. That same day, we could’ve bought three more for the same $10,000-$12,000 price. That’s the kind of discount you want to see and it's the lenders who are going to be the ones that give you those big discounts. Wait until the distressed sales. You don’t want to be buying retail in real estate.

Sheriff sales, trustee sales -- they have to go through this process where they offer the propoerty to anybody who can buy it, including the current owner. They’ll put a print price on it that’s usually what’s owed on the property. When you see them selling it for less than what’s owed, that’s when there’s blood on the streets. Wait until a foreclosure has been sitting on the market for about 6 months, after they've whacked it down eight or nine times. Then make a lowball offer.

You have to realize is that the guys that are selling these are hired professional. Their job is to get rid of the houses -- they’ve got so much to spend on them and so much that they're allowed to lose.

That’s where we’re headed again. I would be very patient right now about catching a falling knife in the current market. Wait for the coming distressed discounts.

Click the play button below to listen to Chris' interview with Ben Jones (43m:05s).

Transcript: 

Chris Martenson: I am your host Chris Martenson and today, we’re going to be talking about housing and the many and various housing bubbles that exist across the globe. Housing bubble you say? Yup. Remember, a bubble exists when asset prices rise beyond what incomes can sustain. That’s my definition. I think it’s a good workable one. In housing, my rules of thumb are these. A ratio of median income to median house prices is healthy when it’s in the range of two and a half to three and a half. In other words, if the median household income was $50,000 dollars, then we’d expect immediate house prices ought to be in the range of $125,000 to $175,000.

By the time that ratio stretches to around five, I consider that to be the beginnings of certified bubble territory. By the time that ratio climbs to eight or more, you have a silly bubble on your hands. One that will end in tears for a lot of people, especially those who took out home equity lines of credit or otherwise fell for the stupid banker blather about tapping your equity or taking advantage of the wealth effect. So let‘s give one example. In Toronto, Canada today, the median income for the Metro region is $78,373 dollars. So we’ll call that $78,000. That means a healthy housing market would be priced for the median house somewhere between $195,000 and $275,000 dollars. That makes sense.

Well, let’s turn now to look at the average home selling price in Toronto. What would that be? It’s $825,000, giving us ridiculous ratio of 10.6. However, if you actually wanted a detached home in Toronto, then the selling price for those vaults to $1.35 million dollars yielding a ratio of 17.3. Bubble territory? You decide. Here today to discuss all things housing bubble related is Ben Jones, proprietor of thehousingbubbleblog.com. Ben’s been tracking housing markets and bubbles for a long time in his excellent blog. Great way to track the ups and the downs of housing. Welcome to the program Ben.

Ben Jones: Thank you.

Chris Martenson: It’s good to have you. So Ben before we really dive in the housing, could you please tell people about your background and how you got interested in tracking housing bubbles?

Ben Jones: In the 1980s in Texas, I was studying real estate and we had a big real estate bubble that popped, and it was devastating. All the banks failed, the S&Ls. Then 1998 I moved to Austin, Texas and became aware of a housing bubble there. At that time, it was kind of a dot com thing related. Then that popped, and I moved to Arizona in 2003. Sedona, Arizona and I just kind of parachute in and everybody was just gaga about housing. I had a guy saddle up to me one day and to me his house was going up 10,000 dollars a month. We’re not talking about fancy houses. So became concerned. In 2004 I started of The Housing Bubble Blog and went from there. Of course, within two or three years in Sedona it was a disaster. Tell you the truth, it’s really disappointing that we’re back here in this situation that we’re in.

Chris Martenson: Well, I would certainly agree with that, because if we look at the history of bubbles whether they were tulip bulbs, swampland, railroads, it usually took a little over a generation to forget the painful lessons. I’m astonished Ben that we had an internet stock bubble in 2000, a housing bubble in 2007 and we’re here again. I think this shows that whatever people are up to today, maintaining a sense of perspective history and memory is just not part of it. I did not expect us to get back here again so soon.

Ben Jones: Well, that brings up an important point. We talked about it a few times on my blog that, I think this is the same bubble. For instance, in Texas when everything got wiped out in the 80s, the term speculative building was a dirty word for decades. For decades. The fact that we jumped right back into these TV reality shows about flipping houses and stuff like that. I think that shows that this was…that the speculative frenzy wasn’t extinguished by the collapse last decade. So I think it’s the same bubble.

Chris Martenson: Well, now I would agree with that and I think that’s really when we talk about what the central banks were up to, we could constrain it to the Federal Reserve if you want, but I prefer to look at all the world's central banks because this is a global liquidity phenomenon now. But one of the things they clearly had to do was, they had to maintain that bubble fervor. Because I actually traced this…when people say oh, there was this major housing bubble that burst. That was the pain. I said, no, no. That was a site bubble. The main bubble is this one that’s been blown since the mid-1980s and it’s centered on this ridiculous idea that you can constantly expand debts faster than incomes.

Taken nationally or globally, that would be the global amount of debt to global GDP. Nationally it would be national debt to national GDP. At the household level it's your household income to your own debt levels. Whatever it is. But as a household Ben we know that’s a dumb idea. I can’t expand my debts faster than my income forever. I have a math problem pretty soon. Somehow, we fell for the story in the central banks. The Federal Reserve is the main defender of this idea that what we need to do as a nation is continually perpetually forever have our debts grow faster than our income. Where do you fall on that particular story? I’m sure you’re tracking the central bank's shenanigans, too right?

Ben Jones: Right. I think if you chase it down to where it really started, it probably was in the 80s. For instance, from ‘86 to ’89, Fannie Mae and Freddie Mac doubled their mortgage portfolios. So that’s probably where the genesis of the whole thing is and this whole idea that houses or…well, in other words, why housing? Well, because everybody’s got to live somewhere and it’s a way to create this idea, this wealth effect and in as many households as possible. Yeah, now you’ve got houses that were bought for 25…or built rather, for 25, $40,000 dollars now trading for a million or a million whatever. Sure, people feel really wealthy and the dollar has kind of become meaningless and like you said debt becomes meaningless.

When you are talking about incomes to housing prices, there was a report that came out I don’t know, a couple of years ago that the most expensive neighborhoods in the country actually had the lowest incomes to house prices. I think that the high…yeah. That to me was like really telling. I mean, like the one that I remember the most was Mercer Island in Washington was the highest. It has 11…the house prices were 11 to 1 to the incomes. Every single…it wasn’t Detroit. It wasn’t the slums of this area or Ohio. It was the most expensive neighborhoods had the lowest incomes to housing ratios. The report was without any irony. Wow. These people are really wealthy. It’s like, no they’re not. Their houses are just way higher than their incomes.

Chris Martenson: You know Ben, a really important point that I don’t know why it had to be drilled into me this way. Because if you just live out here in the world of receiving your news from the newspapers, you will that message which is, oh, look these people are wealthier because their houses are going up in price. So that whole thing is just marketed constantly. It says your house is an asset. Your house is an asset.

Well, I’ve been hanging out with Robert Kiyosaki and I think it was probably the third time I heard him say the same story, but he drilled into me finally that your house is not an asset. An asset puts cash in your pocket. If you really examine what a house is, it’s a major cost center for everybody if you’re living it. You’ve got taxes, which are going through the roof in a lot of locations. You’ve got of course, all the maintenance. You’ve got insurance. You’ve got whatever interest payments you’ve got going on. This thing is a major cash sucking machine. A money pit. Therefore, it’s not an asset and somehow that all got reversed into this idea that your house is an asset. But I think we can expose this.

Let’s imagine some on Mercer Island. They decide to sell their house. So now they’re rich. But what would they do with that? Well, now they have to…the only way you can tap that equity is to move to a place with lower cost housing and buy another money pit and hopefully capture some gains difference. But otherwise, it’s not possible, by definition for everybody to get wealthy because their houses go up in price because everybody's got to live somewhere. The whole thing just falls apart as soon as you look at it even slightly rigorously, I think

Ben Jones: Well, right and all you have to do is listen. I don’t know about your radio, but when I listen to the radio all I hear is cash out refinance commercials, Rocket Mortgage. That’s how it works is the musical chairs. That’s why you read so often about people in California. Well, we’re moving to Arizona, or we’re moving to Nevada, or we’re moving to Oregon. Yeah, that works for a while, but it’s not sustainable.

Chris Martenson: Right. Well, absolutely not. So let’s talk about these bubbles then. So as far as I’m concerned, a bubble always needs two things. You need the story. There’s some story. It’s eyeballs. Elon Musk is going not create electric cars for everybody in the world. There’s a story and its usually got a good nugget of truth buried in it somewhere and you need credit. This is the thing. Like the tulip bulb crisis mania back in the 1600s in Holland. That couldn’t have happened without letters of credit being issued. So you need credit, because again, back to the definition of bubble. Occurs when asset prices rise beyond what incomes can sustain.

So we can all chortle and laugh about tulip bulbs, because obviously there was no income or cash flow associated with those things. But the same thing is true today in housing and just slightly more complicated. So you need the story, you need the credit. What kind of stories need to be told in order for…let’s pick on an area. I don’ know, let’s pick San Francisco Bay Area where I understand a local governance board has decided to…if I have the numbers right in my head. This is off top my head. But they’ve said well, to be qualified as a poor family now, to qualify for housing assistance, a family if they have an income up to 108,000, they’re poor.

So here we have an example of a place where it’s literally impossible for an average family to own an average house. Yep, there’s a story that has to go along with that which says, well, this is reasonable. Rational. It’s not that the house prices are wrong, there must be something else wrong with the story so that you have local governance saying, you know what we’re going to do? We’re going to help people afford the houses. Because there’s nothing wrong with house prices. We we’ll help them get into affordable housing with air quotes around that word affordable. Talk to us about this idea of what the story needs to be and the role of credit in creating these things.

Ben Jones: Well, the story is in the Bay Area well, we’ve got all these tech jobs. Which in my opinion the tech jobs are part of the bubble as well. You got all of these companies out there that don’t make money. But somehow are worth billions of dollars. Basically, like bed-and-breakfast, air B&B kind of things. But yeah, I mean if you look at the credit, the first thing that happened when the housing bubbled popped was Fannie Mae and Freddie Mac increased the loan caps for California. Now that happens whenever the jumbo loans went way.

So why did the federal government feel a need to increase loan caps for California at a time when prices were collapsing. That made no sense at all. Now we find that the federal government is basically guaranteeing not…close to 90 percent of the home loans in the United States. Before the housing bubbled popped, I think it was in the 70s, 70 percent. So that’s the credit. The credit is endless. It’s an endless well that’s coming from just the government. The federal government.

Chris Martenson: Yeah. Well, the headwaters of that particular river the central banks, but you’re right. Having Fannie Mae, Freddie Mac, and also I believe FHA loans; I was surprised how quickly they walk those all the way back to needing a three percent down payment. Which is just an insanely low thing. Of course, house prices…if people don’t…people don’t’ buy the house anymore. They buy the monthly payment. So as long as interest rates were falling and they were extremely low. Generationally low.

My first mortgage was at 12 and a half percent in 1988. So as long as mortgage rates were down there in the three and a half, four percent range, you could afford a lot more house in terms of price. Now that interest rates are rising, we’re obviously seeing some stress and strain. So let’s talk about that now Ben. In your view A, where do you see bubbles? What you would call housing bubbles. B, would you agree that many of those are arguably quantitatively passed peak and starting to fall?

Ben Jones: It’s hard to say. It’s a much short list to say where’s not bubbles.

Chris Martenson: Well, pick some of the worst ones.

Ben Jones: The worst in the world or in the United States?

Chris Martenson: Let’s take a world tour and then we’ll come to the US.

Ben Jones: Well, Hong Kong, China, Sydney, Australia, Auckland, New Zealand, Dubai, London, France. The United States I would say Seattle, the Bay Area, almost all of Florida, New York, Massachusetts. I’m here in Texas right now and it used to be the…these houses were 30, 40,000 dollar and now they’re 250, 350,000 dollars. In Dallas, which is falling right now, people don’t really blink buying a 250,000 dollar house; spending 10,000 dollars on it and then putting it back on the market for 350. I got to tell you, the people in Dallas don’t make enough money to afford that. It just got out of control. For whatever reason, these central bankers and the governments did this. I cannot speak for them. I don’t know what their motivation…well, I have my suspicions. But they just let it get out of control and it’s really unfortunate, but there is going be a price to pay I can tell you that.

Chris Martenson: Well, let’s talk about a place where I think that price is starting to be paid. You have a recent article about Australia and people starting to panic under the financial strain. As much as I understand, I live in Massachusetts that we’ve got a housing bubble here. As bad as it looks here, when I look at what happened in Melbourne and Sydney and places like that my jaw drops. It absolutely was crazy and not speaking of the motivations. Listen, the bankers love to get people on the hook for lots loans. We get that. Of course, they all make crazy money on the way up and then when things burst, everybody needs…who’s going to get the bailout. But the people get swept up in the story Ben. Take us through that story of what’s going on in Australia right now. What kind of panic are people experiencing?

Ben Jones: It’s really bad. I’ve seen in Bloomberg reporter in The Financial Times have already called it a…has said the word global housing bubble. I think Sydney's income to house prices they tipped over 10 percent and that brings up another thing, which is this whole foreign investor deal. They were building entire towers in like Brisbane and Melbourne that were just to be sold to Chinese investors. Financing never…off the plan we would call preconstruction condos and they would sell them out in two days. So now they’re being finished and it’s collapsing. They’ve got something like a 25 percent default rate combined with a 20 percent decline in prices.

Well, I tell you what, in a year or two it's going to be a 50 percent decline in prices. Similar to what we saw in Florida with the preconstruction condos back in 2006 and ‘07. So it’s a complete…as far as an economy it’s a disaster in Australia and they already know it. There is hardly a day that it does not just fill their headlines. That kind of gets to the strange concept about what I’ve said about the housing bubble was, the most important things happened after 2007 and ‘08 which was quantitative easing what the central banks did. Because that sat off a commodity boom centered around China.

I don’t know if you remember, they said that China in 2009, ‘10 poured as much concrete in three years as the United States did in a hundred. Well, that sat off this huge commodity boom which then fed this commodity explosion in Australia and in Canada. So then you had these mining areas in Australian and oil boom…oil shale things in Canada. These little towns and cities in Australian for instance, their median house prices went to 900,000 dollars and now they’re down as much as 80 percent. So that was really…what happened with the commodities actually created kind of like this…it's hard to even explain.

But what happened after 2008 was more important than what happened with the subprime, et cetera, before because it exacerbated this housing bubbling and spread it into Nigeria for instance with all the oil. Now you’ve got massive declines all over the world, because they were built…that was another story. It was this oh, well commodities. Well, commodities are what hammer…commodity bubbles is what hammered Texas in the 80s. Nevertheless, everything kind of comes down to what people can afford and boom or not well, booms turn to bust. That’s the way it goes.

Chris Martenson: Well, I totally agree. And of course, we said the bubble needs two things. You need that story, you need that credit. In Australia, I talked to a lot of people from Australia over the years and they said…many of them sort of knew what they were in, but sort of shrugged and said well, as long as everything is…all the house prices are going up and it is crazy here, and you don’t understand and there’s just no inventory and all at stuff. You still need that credit. When you issue credit, what you’re doing is you’re pulling forward consumption to today from the future. So eventually, that credit has to get paid back and that means that whether you were consuming commodities today, they don’t get consumed in the future because you’re paying that back.

However you look at that, there is less demand in the future and if enough credit gets wiped out, of course, you have deep, deep problems. You get systemic banking issues, all that stuff. So I’m looking at Australia now where we’re seeing that median house prices have dropped from 1.2 million down to a million in a year. That is a 200,000 dollar drop. Foreclosures are up by 600 percent in some regions. So we’re clearly seeing that their past peak and my advice and I’d see if you would share this. My advice to anybody who’s got real estate Australia who wants to move it is, don’t be shy. Drop the price until it sells and get the heck out of the way. That would be my advice here. What would yours be?

Ben Jones: Well, from a pedestrian standpoint, yeah, run for the hills. But the way I look at it is more like well, who are you going to sell it to? Well, some sucker and that’s fine. But the way I look at this whole thing is like the…is not from like individual standpoint. It’s like well, what does the housing bubble mean to the economy? So you got…yeah, you got winners and losers and that’s fine. Be one or don’t be one. But the problem is that we’re in the situation from the get go. Yeah, I mean, I guess you could say yeah, let’s bailout and let some other guy be a bag holder. But what I would prefer to focus on is, how can we not get in this situation again. What needs to be changed?

I think that the problem…the root problem is that for whatever reason, we’ve gotten into this situation where houses are supposed be some kind of creation of will, when as you said, they’re not. A house is an expense. I’m a property manager and I can tell you every day is an expense. Housing, it needs to go back to what it used to be, which is this something that we consume that requires investment, maintenance. It shouldn’t be this big bonanza. There shouldn’t be…for instance. I was astounded to find out that the housing TV reality shows are a multibillion-dollar industry worldwide, especially in like Australia and New Zealand. I mean, they used to basically worship housing and its role was just astounding. That just shouldn’t be. There shouldn’t be TV reality shows about housing. It wasn’t that way, 20, 30 years ago.

Chris Martenson: Well, this is…if we back up a bit and you asked important question which is look, how do we avoid this in the future? Believe me, I put a lot of blame at the feet of the bankers, but also the homeowners really who are participating in this have to bear some of the responsibility. But that’s kind of hard to say, like if you live in Seattle and you’ve got a job and you really want to own a home. What do you do? You either participate or you don’t and you either pay the prices that exist there or you don’t. In some ways I think A, for the home…here’s where homeowners bear responsibility in this. When they really, really stretch, when they think they’re going to flip the home for more, when they have their eye on the capital gains that they’re going to make off of this when they extract equity from their house because they’re worth so much more.

Those are things that really ought not to be done on average, especially during a bubble. So if we back up and asked that important question, how do we avoid this again? Look, we have an everything bubble in the world. As burned as people are going to get on real estate, what until you see what happens to the junk-bond and the leverage loan markets. Oh, my god. Just trillions of losses coming. In the equity markets, this is the everything bubble. Every major financial asset class, real estate, stocks, bonds got driven through the roof because the central bank said hey, we think we can…we blew up a credit…a cycle in 2000. Really unfortunate, but we learned our lesson. We just had to double down. Bernanke gave us a next layer of that. We had more participation by the world central banks. China got on board with that.

Unbelievable how much money was printed through all that and now we’re in our third credit cycle. This one blows up, Ben all I can tell you is that, if we’re smart and this is painful enough, what we do is we decide that we can’t let central bankers drive credit cycles as the policy instrument is damaging. It’s stupid and it always ends in tears. I think this time it ends in much more tears than 2008 just because like I said, there’s really nowhere to hide. Even at the height of 2007, I was writing about the bubble in housing and certain equities as well. There were still places to hide. There is nowhere to hide. Everything got overpriced except for certain commodities in this cycle. So beyond that, I just think my advice to people is know where you are in the bubble, stay oriented and for goodness sakes, get out of the way of it if you can. I don’t know what else to tell you at this point.

Ben Jones: Well, also whenever people are…whenever you hear crazy talk, just recognize it for what it is. For instance, it wasn’t that…it was 2016, people were telling us that negative interest rates were the future. This is the way it’s going to be. Oh, you’re going to pay me to borrow money? It was ludicrous on the face of it, and yet it was accepted by how many media organizations and talking heads? Look where it’s went. You talk about trillions. There’s already been trillions of dollars lost on sovereign debt that was issued at negative interest rate. The media won’t tell you that. But it’s already gone. Trillions of dollars have been lost on negative interest-rate bonds.

Chris Martenson: Yep. Yep. Who knew? Who knew that paying Portugal to lend it money was a bad idea? Who could’ve figured that out?

Ben Jones: Right. One thing you touched upon I want to mention is that, the house buyers themselves…one of the most important things I ever came across was Peter Schiff mentioned that people respect how many different ways that people speculate on housing when they don’t really know that they’re speculating. A perfect example is, if you refinance your house and you don’t really need to, you basically sold it to the bank. So you got to pay that back. So why would you do that? In most cases, these people don’t expect to have to pay it back.

I was in the foreclosure business for eight years and I did a lot of research on the houses as they came across my desk. A lot of times, these people were refinancing two, three, four times. This was in Flagstaff, Arizona. So they were refinancing every year. A lot of time pulling out 80, a hundred thousand dollars at a whack. Why would you do that when you know you have to pay it back? Well, they were expecting that they were never going to pay it back. So they were speculating. This is same with a lot of people like on Mercer Island in Washington. Why would you pay 10 times your income for a house? Well, because you expect it to go up? Another example is the way that in Santa Clara and Palo Alto where I’ve post stories in Palo Alto that now they’re whacking a million dollars off the price and it won’t get an offer.

Whereas before, they were getting multiple offers, et cetera. You don’t really need a five-million-dollar house. Why would you buy a five-million-dollar house? Because you expect to sell it for seven. So there is a lot of speculation that’s kind of going under the radar that well, housing is a good investment and it’s like, it’s not a good investment. We can debate that, but the fact is that nobody really needs a five million-dollar Santa Clara house, which is really kind of an ordinary house. They could live in a million-dollar house even if you believe that the housing was worth five million dollars, they actually expect it to be this big bonanza. Well, I guess the take away is that, there’ s a lot more speculation going on in the market than most people acknowledge.

Chris Martenson: Well, sure and when that speculation comes to an end there’s a usual pattern of things. So what are you looking for if you had advice for somebody who’s thinking is now the right time to buy? A lot of people of course are in that decision set right now, because people move. But what would you be looking at in terms of inventory or months on the market or how the prices in various subcomponents are moving? What would you look at to say, I should probably wait a little longer in this market? What would those indicators be?

Ben Jones: Well, that brings up something that I kind of think is funny is this months on the market thing. I posted an article yesterday about the months on the market going from 10 days to 15 days and now is a buyers’ market. Obviously, the months on the market thing is meaningless. I call it the real estate industrial complex. These guys…I don’t want to say what I think them frankly. But the months on the market doesn’t mean anything. The inventory…well, I would say right now the bubble is popping in the United States and until interest rates settle out and these processes settle down…I mean, I’m an investor. I’m a state investor and I’m getting ready to sit on the fence like a vulture, because that’s what’s going to happen here.

I mean, it’s really unfortunate, but we are going to see a collapse. We are seeing a collapse. The real estate market, the bubble has popped right now. You can mostly because…let’s take the Bay Area in California. Prices are falling and yet everybody is rushing to sell, and purchases are dropping like a rock. It’s the exact opposite when prices go down, people should buy more but they’re not. Everybody’s behaving like speculators. It’s just like day trading stocks or something. So what’s happening in the market right now is a lot more…has a lot more in common with…or suggest a bubble much more than it does just a correction or a cycle. I don’t know. I mean, I can’t think of a market in the United States I would buy in right now.

Chris Martenson: Alright, so as you sit like a vulture though, you might have to be patient. Bubbles take time. I know they tend to fall a little quicker than they go up. But still, housings a little slower than stocks and bonds…well, a lot slower than stocks bonds, most because you’ve got real people and the sale is cycle is slow. I just remember even in 2008 people just hanging on and grudgingly lowering their price by 5,000-dollar increments when a 50,000-dollar whack was what was needed. So there’s a little bit of a slower trajectory on that. Would you agree with that and two, is it possible though that because people have that recent memory of a decade ago that they might be a little quicker this time?

Ben Jones: Well, yeah, there’s plenty of people how have a memory of how this is going to play out and they’re actually probably all lining up the same way. But what you want to do…you don’t want to buy from Joe six-pack. What you want to buy is from a bank or a lender and that’s going to be Fannie May and Freddie Mac. For instance, in 2010, I helped somebody buy a house for 12,000 dollars. It was an online auction. That house was refinanced four years before for over 100,000 dollars. That same day, we could’ve bought three more for the same for like 10,000, 12,000 dollars. So that’s what you want. The lenders are going to be the ones that give you the big discounts. Wait until the distressed sales. You don’t want to be buying retail in real estate.

Chris Martenson: So I’ve never done that process Ben, so take me through that. How would I…how’s that work? Do you develop a relationship with a bank or is there just a machine and there’s a way that they do it and you have to figure out how that machine works and you show up with all the other people who understand how that machine works? Or do you follow individual foreclosures in a key market area and then make calls? How does that work?

Ben Jones: Well, it’s actually a ton of different ways it works. Sheriff sales, trustee sales. That’s the first level. In say Texas and Arizona, that’s the actual foreclosure. So they have to go through this process where they say well, its anybody can buy it including the current owner. They’ll put a print price on it that’s usually what’s owed. Whenever you see them selling it for less than what’s owed, that’s when there’s some blood on the street. So then, a lot of times in a falling market, it won’t sell at that price. So then there’s…there’s a post foreclosure and that’s when the rubber hits the road. So they’re going to put it on…it’s on the…they obviously want to market it to the largest number of people you and that’s when…you remember back in the day when there was a ton of foreclosures on the market right.

So that set post foreclosure marketing. So I used to go to a lot of sheriff sales and trustee sales and it’s a waste of time. Wait until that foreclosure has been sitting on the market for about six months and they’d whack it down eight or nine times. Then you go in and make a lowball offer. It’s not…another thing to realize is that, these guys that are selling these, they’re not…it’s not Fannie Mae and Freddie Mac. They hire asset managers and these guys, they’re professionally. They’re getting rid of the houses and they’ve got so much to spend on them and so much to get…so much that they can lose basically. Well, that’s where we’re headed again. I would be very patient right now about catching a falling off.

Chris Martenson: If I was interested Ben in figuring out that whole process, what’s a good way to go about learning about all that?

Ben Jones: Well, you could follow my blog. But I would just dive into it. I mean, there’s HUD with the system. HUD is going to have a lot of foreclosures. They always do? Because that’s what they are. They’re basically kind of a subprime outfit. You can just follow along the HUD foreclosures and just watch how it goes. Fannie Mae, Freddie Mac, they had the same thing. But they’re less transparent. What I would suggest you kind of watch out for is the auction.com outfits.

I can just say in my opinion from having watched them is that, they do bids on behalf of the lenders. So for instance, once we won a bid where we were the lead bid and within like two minutes of the closing, a bid came in 10,000 dollars higher. We were like, who would do that? Who would bid 10,000 dollars higher at the last second? Digging into it, later on we found out that the website had reserved the right to make bids on behalf of the seller. So bidding online is difficult. Well, I guess it’s like anything. It kind of becomes a doggy dog thing.

Chris Martenson: Yeah, it sounds like eBay with an undisclosed reserve minimum.

Ben Jones: Yeah, it’s really unfortunate. I mean, it’s definitely buyer beware.

Chris Martenson: Yeah. Well, I’ve been advising my listeners for a long time that there are better prices in the future and that everybody should…if you want to get involved in real estate or you want to buy different stocks or bonds, whatever you want. Get your buy list. Do your homework. Begin that process of due diligence. Understand what you would want under what circumstances and then be patient. So this is an area that I would really like to…personally I’m going to be following and I’d like to be alerting my listeners to as well which is this idea that, if you want to be in real estate, there’s a lot of legwork. A lot of homework. You got to do your due diligence. Just this past fall, I looked at 70 separate properties here in western Massachusetts. Couldn’t find any of them that looked even remotely compelling.

The prices were ridiculous. But I learned a lot about what was out there and what the market was and we got different key markets with five universities. So there’s a story about professors and students and then we’ve got a different story around the surrounding towns. So just working that all through is really important. But I think I’ve got a pretty good sense of the market now and I’ll keep building that sense as I go forward. I would not personally be participating in this market right now here, but I know under what circumstances I would. So I like that idea and will be following that and as well your blog. So Ben, we’re out of time for today. But first, thank you for your time. Please remind people where they can find your work and continue tracking the bubble.

Ben Jones: It’s housingbubble.blog.

Chris Martenson: Housebubble.blog. Yeah, great articles there. You can track everything that’s going on around that and it’s just fantastic. So hey, good luck being a vulture on the fence. I’ll be right there with you. I know some people listening will as well and we’ll be continuing to track this. So Ben, thank you so much for your time today.

Ben Jones: Thank you for having me.

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18 Comments

beejay's picture
beejay
Status: Member (Offline)
Joined: Apr 5 2014
Posts: 1
Buying Foreclosed houses

Hello Chris,

 

It would be great if someone could do a report on how to buy foreclosed stock from lenders like Ben Jones is describing in this podcast. His blog doesn't seem conducive to finding specific information like that....

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1712
The bubbles seem to be popping from the top down

I know we always say around here that economic weakness and collapse starts on the outside (the most fragile or overextended places) first, and works its way to the center (the strongest places economically). So Greece, Turkey, and Argentina first, then moving toward the US, western Europe and China.  But I'm seeing that the housing bubbles worldwide are now starting to pop in the most ridiculously overpriced places first (NYC luxury markets, Seattle and San Francisco, Hong Kong and London, Australia), and these are universally viewed as economically strong. From what I can see, the prices in places where the "Average Person" lives in an "Average Economy" are not exhibiting declines like these most overpriced markets are (yet). In fact some are currently stable or still rising (more on that below). I explain that to myself by concluding that the most ridiculously overpriced markets are therefore the most fragile and vulnerable, and respond first to the slightest perturbations of their economies and housing markets. The "Average Markets" are not as overextended and therefore not as instantly sensitive to the slightest problems.  Additionally, it seems that these most ridiculously overpriced markets are where buyers with the privileged first access to money printed-out-of-thin-air buy (either because they live there or because they invest there). And since the world's central banks are beginning to reverse their money printing operations and soak up some of the oceans of liquidity, then that dynamic is bound to effect first those who have been receiving it and profiting from it all along (and therefore the real estate markets they've been playing in are affected).

This whole housing market bubble has my complete attention as we are currently building a home to retire to in New Hampshire while we finish out the last 6 months of our (traditional) careers here in Philadelphia.  Part of our strategy has been to retire from a city with a high cost of living to a town far away with a lower cost of living, and that looks like it's going to work well (as long as local housing prices hold up for another 6 weeks!!). However, this whole popping housing bubble getting started has caused us to move up the date we list our house for sale from March 2019 to the beginning of January 2019.

We bought our house here in 1988 when the local economy sucked and we were located on the literal line dividing a low income, high crime "ghetto" area from a middle and upper-middle class area.  (If you haven't lived in a major US city you would probably be shocked how fast neighborhoods can change from ghetto to middle class to prosperous.  Two to three hundred FEET can make a world of difference in such high density places.)  Anyway, we were pioneers and risk takers at a time when no one could predict which way our neighborhood would go: up or down.  Fortunately for us, our neighborhood became more prosperous as other risk takers came along and reinforced our position.  The beginnings of the ghetto have now moved 1/4 mile north of us and the "gentrification" is continuing in that direction as houses are being renovated at a rapid clip, or torn down and new homes constructed.  We are now comfortably inside the upper-middle class neighborhood.

Our neighborhood did not see as much price appreciation as the rest of the country in the 2004-07 housing bubble, and when when the bubble burst it didn't see as much decline either.  This time, however, our prices have gotten crazy high and are still climbing.  If everyone would just be quiet about the ridiculous prices and the inevitable collapse, we'd be happy because we just want to get ours and slip away before the ship goes down!!  Our neighborhood is one of the two hottest in the city and prices are holding steady and climbing a little in spite of the rest of the world or ultimate reality. And our neighborhood does have a lot to recommend it if you are required to live in the city or have chosen to do so.  Public transit is good (though one of the most expensive in the country).  People can also walk or bike to most cultural attractions and to most jobs in the center of the city and its adjacent neighborhoods.

To give you an idea what's happening here, consider this.  In 1988 we paid $64,500 for our 1,100 square foot, two story, brick rowhouse (built in 1881). It needed A LOT of work, and we did most of that ourselves while raising a 7 year old and and a 3 year old.  Since '88 we've probably spent $150,000 on renovation and maintenance.  Back in June, two of our neighbors with houses 95% identical to ours and less than 200 feet away sold their houses in 11 days for $420,000 and $409,000.  Prices have been slightly rising until this month.  Three houses in our neighborhood 95% the same as ours are currently listed for $459,000 to $479,000.  I find that astounding, and I'm pretty sure it's not just because I'm old and don't know what things cost "these days."  Selling in January isn't as big a problem in Philly as it is in many other places that are more seasonal, so we expect to list our house for at least $449,000 even if prices contract every week between now and then.  Of course we'll have to pay the 6% sales commission and the 2% city real estate transaction tax (the buyer has to pay 2% too -- the joys of city life!). We've been going to the "open houses" for these properties competitive with ours and we're finding that most of the prospective buyers are DINKs (double income, no kids).  That's not surprising.  Who else could afford to buy here? 

Our new home in Concord, NH is 1,480 sq. ft and sits on 0.63 acre and we're into it for about $330,000.  So it looks like we're going to be able to pay off our construction loan and other expenses with the proceeds of our Philly house sale, and still have some change left over!  Making sure we can at least cover our expenses for building was our primary goal.  We've been debt free since 2007 and that's the way we want it to stay.  It would be a disaster for us if we still owed money for the house in Concord after we received the proceeds from the Philly house.  I'm starting to relax about that now since only a sudden cataclism like WWIII could cause the price of our house to drop from $460,000 today to $360,000 (our break even sales price) in the next 5-6 weeks.  Even in the bursting of the last housing bubble, prices didn't come down that much that fast (at least not here).

Of course, to pull this all off we've had to endure everything urban living in Philadelphia could throw at us for 30 years. That has been exhausting and we're looking forward to some peace and quiet.

"Welcome to the Hunger Games.  And may the odds be ever in your favor."

 

Snydeman's picture
Snydeman
Status: Platinum Member (Offline)
Joined: Feb 6 2013
Posts: 593
You nailed it
thc0655 wrote:

I know we always say around here that economic weakness and collapse starts on the outside (the most fragile or overextended places) first, and works its way to the center (the strongest places economically). So Greece, Turkey, and Argentina first, then moving toward the US, western Europe and China.  But I'm seeing that the housing bubbles worldwide are now starting to pop in the most ridiculously overpriced places first (NYC luxury markets, Seattle and San Francisco, Hong Kong and London, Australia), and these are universally viewed as economically strong. From what I can see, the prices in places where the "Average Person" lives in an "Average Economy" are not exhibiting declines like these most overpriced markets are (yet). In fact some are currently stable or still rising (more on that below). I explain that to myself by concluding that the most ridiculously overpriced markets are therefore the most fragile and vulnerable, and respond first to the slightest perturbations of their economies and housing markets. The "Average Markets" are not as overextended and therefore not as instantly sensitive to the slightest problems.  Additionally, it seems that these most ridiculously overpriced markets are where buyers with the privileged first access to money printed-out-of-thin-air buy (either because they live there or because they invest there). And since the world's central banks are beginning to reverse their money printing operations and soak up some of the oceans of liquidity, then that dynamic is bound to effect first those who have been receiving it and profiting from it all along (and therefore the real estate markets they've been playing in are affected).

 

I think you've hit on the key idea here; in housing, the "outside" would be the most over-valued and least traded (in terms of volume of sales), and hence the most sensitive to price changes. The "core" would be average people like us, living in the markets that average people buy in. As I recall from the last bubble, the worst perturbations were in the $1million+ market, and things started there first. When it started to hit everyday markets in "middle-class America," shit started getting real. Well, until TARP and all that nonsense.

 

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 2033
Impact of Mortgage Interest Rates on Home Price

The problem:  A young couple wishes to buy a home.  They figure they can afford monthly payments of $1,500.

How big of a loan can they afford?  (Assume 30 year, fixed, conforming loan)

As the mortgage interest rate rises from 3% to 6% the couple finds it can afford $100,000 less house.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 878
Sell it yourself
thc0655 wrote:

To give you an idea what's happening here, consider this.  In 1988 we paid $64,500 for our 1,100 square foot, two story, brick rowhouse (built in 1881). It needed A LOT of work, and we did most of that ourselves while raising a 7 year old and and a 3 year old.  Since '88 we've probably spent $150,000 on renovation and maintenance.  Back in June, two of our neighbors with houses 95% identical to ours and less than 200 feet away sold their houses in 11 days for $420,000 and $409,000.  Prices have been slightly rising until this month.  Three houses in our neighborhood 95% the same as ours are currently listed for $459,000 to $479,000.  I find that astounding, and I'm pretty sure it's not just because I'm old and don't know what things cost "these days."  Selling in January isn't as big a problem in Philly as it is in many other places that are more seasonal, so we expect to list our house for at least $449,000 even if prices contract every week between now and then.  Of course we'll have to pay the 6% sales commission and the 2% city real estate transaction tax (the buyer has to pay 2% too -- the joys of city life!). We've been going to the "open houses" for these properties competitive with ours and we're finding that most of the prospective buyers are DINKs (double income, no kids).  That's not surprising.  Who else could afford to buy here?

THC,

Have you considered selling it yourself? There are lots of resources on the internet to guide you. That 6% sales commission comes out of your pocket. Instead of giving it to realtors, give a 6% discount to the buyer. Your bottom line would be the same, and would give you an edge in a declining market environment.

The last time I sold, I used a realtor who told us our house was more valuable than I thought it was. After a couple of months with no serious buyer interest, the realtor told us we may have been too aggressive in our pricing and suggested dropping the price about 3.5%. Almost 2 more months past before we got an offer that was almost 3% below our lowered price. That offer came with some contingencies (kitchen upgrades) that would have cost another 2%+. We agreed to the lowered price, but without any strings. They eventually agreed to our conditions and the sale was finalized.

The house sold for about what I thought it was worth. I still had to pay the realtors' commissions. I also had 5 additional months of double house payments. Needless to say, it has left a bad taste in my mouth.

If/when I decide to sell, I'll drop in my bank and ask for a list of house appraisers they consider competent. (They may just tell me that anyone with XXX certification would be considered competent.) Then, I'd go shopping for an appraisal that meets bank standards. Then, I'd advertise my house on craigslist (lots of nice pictures and a good story) showing the appraised price along with the 6% discounted price (sold 'as is'.) If the house doesn't sell this way in a month or two, I'd reconsider my approach and go the traditional realtor route.

That's what I'd do. Of course, you have to decide what is right for you since you know your situation better than I do, and this "advice" is nothing more than a friendly suggestion to consider.

Grover

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3210
Giving Away Homes For Free In Japan

This is what happens when a stagnant economy collides with aging demographics:

Want a free country house in Japan? They’re giving them away (CNBC)

Japan has an increasing number of vacant homes — a problem that’s set to persist because of an aging and shrinking population that has left many towns and villages empty.

“Japan faces significant economic and social impact effects from demographic (aging) over the next three decades,” Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, wrote in an October note.

Abandoned properties in the world’s third-largest economy are among the least-discussed side effects of the country’s demographic changes. But it’s getting more attention given the increasing number of affordable — and sometimes free — houses put up for sale online on websites called “akiya banks.”

On one website, several homes are free, with the buyer having to pay only taxes and fees such as agent commissions.

Across Japan, the number of vacant homes stood at 8.196 million in 2013, representing around 13.52 percent of the country’s total housing stock, according to latest data by the Ministry of Internal Affairs and Communications.

The 2013 figures were higher than 2008′s 7.568 million empty houses, which accounted for about 13.14 percent of Japan’s total homes that year, according to the data. By 2033, the proportion of vacant homes in Japan is expected to grow to surpass 20 percent, according to Fujitsu Research Institute.

 

Dlumb77's picture
Dlumb77
Status: Bronze Member (Offline)
Joined: May 25 2014
Posts: 44
Is the 2.5 - 3.5 House Price to Income Ratio still valid?

Is the 2.5 - 3.5 House Price to Income Ratio still valid?

2 Observations:

  • Increasing population. Unchanged Land availability. Competition through supply/demand dynamics will surely drive up prices in places that populations is increasing.
  • Low Interest rates. We're at the end of a 35 year decline in interest rates. With today's low interest rates (in comparsion to the historical average), you can buy a higher-priced house for the same 30 years worth of mortage repayments (becasue less is being spent on interest).

BTW, I'm in Australia. 2 major differences to real estate bubbles in the US:

  • Non-Recourse loans. My understanding is that the house is commonly the only security for the loan in the US. As such, you can just "give your keys back to the bank" and walk away from the loan. In Australia you can't do that. The borrower is responsible for the loan regardless of what happens to the house. In previous downturns, rather than a dramatic drops in price, we saw that people simply stop selling and attempt to ride-out the losses. Prices see a slight drop and then years of stagnation.
  • Net migration. Cities like Melbourne and Sydney have added 25%(!) to their populations in the last 10 years, mostly through overseas migration. Forecast migration numbers are unchanged for future years. Any wonder why the competition for houses is so strong?

Final comment: "You have to live somewhere". When the whole country is in a bubble you have no choice but to participate as either an owner or a renter. People are renting out tents on AirBnB in their back yards for $90/night in Melbourne! There is literally nowhere "else" to go and sit out the bubble.

Happy bubble watching.

sebastian's picture
sebastian
Status: Member (Offline)
Joined: Feb 9 2010
Posts: 12
Get out while you can

I’m guessing within the next 10+ years  that large metropolitan areas will become  very hard to live in. We will be making one of our trips into the “big city” of Vancouver shortly. Every time we go there I’m reaffirmed in our decision to become ruralites. You can’t buy a house for less than 800,000$! How anyone accepts that is baffling, I would rather be struggling to make it in a rural setting than getting by in that crazy place and Vancouver is one the nicer cities I’ve been to. By and large the happiest people I’ve encountered while travelling have been humble country folk. The population density is just too much, when things get desperate cities are alway full of people you haven’t built relationships with. Within the last 6 months of being in a small town I’ve developed closer ties with my neighbours than I did living 12 years on the same street in an urban setting. There is something about being in a sparsely populated area that makes people lean on each other, it much healthier. 

Seb.

Mots's picture
Mots
Status: Silver Member (Online)
Joined: Jun 18 2012
Posts: 198
Giving away more than homes

Re: Giving Away Homes For Free In Japan

It gets even better. We have tons of working, beautiful, farms with deep topsoil, many with houses attached, that are free for long term (10 years or longer ie. indefinite) zero cost lease in the countryside.  All that is needed is a plan for farming the land.

Many wonderful opportunities for young people and others who want to start a life here in Japan. 

And, like most things in life, the best opportunities are found outside the government controlled/organized system.  That is, it is best to interact directly with private individuals without bothering with real estate companies and government agencies.  CNBC doesnt know the half of it...........

Mots

Matt Holbert's picture
Matt Holbert
Status: Silver Member (Offline)
Joined: Oct 3 2008
Posts: 145
Echoing Grover

I would consider bypassing the realtor and "listing" the home on Zillow. Someone just down the street did this and sold their house in 3 weeks or so. See here. A sign was never put up. We got a realtor involved when we sold a home in 2006. Like Grover's case, the Realtor set the price too high. Knowing that there was a bubble, I -- against the advice from the realtor -- quickly started lowering the price. I just told the realtor to lower the asking price by 10k per week. It eventually sold for 55k below the initial asking price. This was still 110% more than what we paid for the home 8 years prior. I personally showed the home to the eventual buyers two times. The realtor didn't even have to show up. All the realtor had to do was put the home on MLS. Not necessary with a service like Zillow.

Please note that the neighbor mentioned above may have had to pay a commission -- likely 3% -- if the buyer was working with a realtor. When we bought in 2016 we did not use a realtor. Our offer was accepted over higher offers because the selling agent got the full commission and just happened to be the son of the seller. : )

Uncletommy's picture
Uncletommy
Status: Platinum Member (Offline)
Joined: May 3 2014
Posts: 633
How long can you tread water?

Depending on your ethnic and age demographic, one thing many of us older white, NA, privileged types need to realize is that our European heritage exclusiveness is rapidly being supplanted by an ethnically diverse world population. As well, commerce and urbanization will be the mainstay of future population growth. The sad truth is, for many of us "ruralites", looking to maintain a connection to a traditionally "earthy" value system and independant way of life, those days are slipping away. Having lived in the country (which is now only 20 minutes from the nearest Lowes), I am confident that very few new potential buyers of real estate are willing to part with $500,000+ just to live like a peasant and enjoy the smells of an organic existence. The specialist has replaced the generalist when it comes to a techno-lavished world and interconnectedness the norm. With more and more farm land being buried by asphalt and natural landscapes giving way to Solar farms, our human footprint may be the only thing left by the time the world population peaks.

Living together in new communities for a measly "starting at $289,000" and enjoying curried rice,dim sum with falaphel and watching "Bollywood" movies may be the new reality. Move over traditionists; change is on its way!

Image result for landmark townhomes for sale edmonton

pgp's picture
pgp
Status: Silver Member (Offline)
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Posts: 219
The Science of Profit Capture

Over the past 70 years technology has advanced.  All sciences have developed and innovation has led the way but what people don't necessarily realize is that there have been significant advancements in behavioral studies, neurology and psychology.

The corporate parasites have of course profited from that science as well.  It drives modern advertising, market manipulation, the election process and is responsible for humanitarian movements, gender freedom and arguments over the justness of time honored traditions.

That trend in behavioral science when applied to controlling the population is why we have speculative housing bubbles, doubt over global warming and environmental collapse that our governments do nothing about. 

What better way to get people buying houses than to broadcast a reality TV program showing them how easy it is to make a hundred grand.  Don't just advertise the next great bargain, demonstrate it on the tube.  Microsoft, Apple, Audi and BMW already use big Hollywood movies to sell their wares.  And of course the best medium of all upon which to sell the masquerade is social media.  Elections will now be won or lost on how well that medium is managed, but equally a big corporation will do exceptionally well if they can convince people that their products are trending, at least until a negative sentiment develops, as with the I-Phone.  All it takes is money, in the amounts only elite institutions and credit fueled corporations can wield.

So yes the bubbles have been there for decades, because the usurer's hard-sell has become exceptionally good at convincing everyone that the benefits of being all-in outweigh any possible short term negatives.

 

The root causes of societal failure come from incompetent or corrupt leadership and a lack of control. Where once governments evolved to protect the people and police exploitation today they simply protect the money-makers while suppressing and even fleecing the middle class.

People jump up and down, protesting symptoms while being utterly blind to the real triggers.  As with all "revolutions" those with real vision need to be empowered so they can step forward and focus the rising community anger where change is desperately overdue.  Seriously empowered because "politics" has become very effective at deflecting attention towards manufactured issues like terrorism, Russian hacking, China, South Korea and every pointless skirmish in  between.

Mark_BC's picture
Mark_BC
Status: Platinum Member (Offline)
Joined: Apr 30 2010
Posts: 522
I have a situation that I am

I have a situation that I am struggling with right now. I didn't think it worthy of starting my own topic but it pertains to timing of the crash so I'll post it here. I can't really talk to most people about it the way you all understand the situation going forward, which is why I'm posting this here. Not looking for answers, just putting it out there.

I recently saw a post for my dream job and applied. I got a first interview last week and I will know by next week if I got through that to the second round. It is for coral restoration work around the Caribbean and branching out into the Pacific.

The catch is it's based out of Miami. I think it's safe to say that when the big crash hits, southern Florida will be one of the worse places to be stuck in, in the US. Plus it is for a non-profit organisation which would probably get hit hard financially by the crash.

Right now, I have reliable and good work in a gold mine in Canada. It is interesting and I love gold for the reasons we all know about, but ultimately it's just a mine and beyond the monetary aspects of gold I don't have any lifelong need to spend my career in gold mining. But coral reef restoration... that is something I could truly sink my soul into.

But I am "safe" up here in Canada and would weather the crash better than most, possibly "prospering" in relative terms.

If I thought we had another 5 years before the crash I'd for sure take the job. But what if we only have 2 months? 8 years ago I was thinking the crash was right around the corner but it didn't happen. What if we are all wrong again this time?

Of course if I don't get offered the job then the decision will have been made for me which will make it a lot easier but just trying to prepare myself for if the decision does come...

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 878
Dreams or Security

Mark,

This is the best advice I heard for a hard choice I had in front of me:

When you are on your death bed looking back at your life, what choice are you going to wish you had made?

I would add that it would be smart to hedge as much as you can. I had a dream and followed it for over 7 years. Financially, I failed miserably at it; however, not attempting it would have been much worse for me. To misuse Robie's metaphor somewhat, it settled my mare.

I wish you the best,

Grover

Mark_BC's picture
Mark_BC
Status: Platinum Member (Offline)
Joined: Apr 30 2010
Posts: 522
Grover wrote: When you are
Grover wrote:

When you are on your death bed looking back at your life, what choice are you going to wish you had made?

Thanks, yes this is always something in the back of my mind. My concern is if a much-feared-and-anticipated-by-preppers Mad Max scenario arises after the crash during hyperinflation, then my death bed may be in Miami in 3 months!

Yoxa's picture
Yoxa
Status: Gold Member (Offline)
Joined: Dec 21 2011
Posts: 306
Trust that feeling
Quote:

 that is something I could truly sink my soul into

Trust that feeling. It matters, a lot.

Florida might pose big challenges if things collapse, but no place will be completely safe. You can do things to improve your "crash-proof-ness" no matter where you are so don't let collapse worries outweigh the other factors in your decision making. It's definitely something to keep in mind, but think of it as one factor among many to consider, probably not the make-or-break issue.


Quote:

 death bed may be in Miami in 3 months

Or you might get hit by a truck next Tuesday.

Few of us know when we'll die. So let your end take care of itself and try to make the choices that will be meaningful for your life.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 878
There's NO Free Lunch

I agree with Yoxa!

Ladies and Gentlemen,

Take my advice.

Pull down your pants

and slide on the ice.

QQQBall's picture
QQQBall
Status: Member (Offline)
Joined: Mar 3 2011
Posts: 11
The problem isnt that only a

The problem isnt that only a new couple buying a home can affors $100k less; the real problem is that their dopplegangers already bought the home aand are $100,000+ underwater and due to the rising rates, one of the couple lost their job.

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