I live in San Diego suburbs, folks we have a shortage of housing that I have never seen before in my life. There is nothing for sale PERIOD. It's not even summer yet and there is no inventory. Prices are rising quickly with no end in sight.

I don't know exactly whats going to happen, but something is going to give. No one is selling and the only thing that could loosen things up would be a great crash in the stock market and interest rates going up 2, 3 percentage points.

This is a monster the FED has created due to Y2K. Nothing happened and now we have money in the streets.

Any comments, but my opinion hyperinflation is invitable.

-- DVC (dvc@att.net), April 21, 2000

Answers

Y2K = Housing Shortage

This is a new one. Y2K is stopping people from selling their houses. I think this feller deserves an award.

-- Savage (blah@blah.com), April 21, 2000.

Savage, you don't get it. It's the HUGE amount of money that the FED created last year in preparation for potential Y2K problems is what is causing the inflation in housing prices, not to mention the stock market bubble. And, if they try to get it back out of the economy too fast, down come the stock markets. Elementary.

-- financier (financier@finnews.con), April 21, 2000.

financier, you're wrong.

People DIDN'T take their money out of the banks last year -- so it's NOT end up out on the "streets".

Try to quit blaming everything on y2k.

-- (read @the.papers), April 21, 2000.

Please forgive me, I'm new at this. That should read,

so it's NOT out on the "streets".

-- (Read @the.papers), April 21, 2000.

I don't know exactly whats going to happen, but something is going to give. No one is selling and the only thing that could loosen things up would be a great crash in the stock market and interest rates going up 2, 3 percentage points.

what shit for brains thinking! So, you figure what's needed is economic problems so people put their houses up for sale -- think! -- then how many people would be clamoring to pay high prices and go into debt for thirty years? -- need bad times to "fix" the good times? Shit head thinking at its finest! you win the award today. No small feat on this board!

I'm a pretty smart guy -- IQ in the 99th percentile. And I do have my theories on the economy -- but I realize that in a world where a hundred nobel winning world class economist have OVER a hundred theories and opinions on what the future holds -- that it really is a waste of time to try and predict the future. Sure, somebody will be right. Problem is, their past LUCK doesn't mean their new forcast for tomorrow will pan out.

Fact is, One needs to have the intellectual insight and HUMILITY to realize none of us accurately understands economics enough to predict the future. When times are good (besides the fact they are never good for everybody) -- people think they will always be -- mirror image when times are bad -- they think the world must surely be close to ending -- that light at the end of the tunnel is a train!

I think anybody who would buy real estate in a hyped up market is STUPID. Why pay that much for a place to live? Anybody who counts on some "greater fool" to pay more than they did has more faith in their fellow man thatn I do. If you want to play the "greater fool" game, why not just do it in the dot.com casino -- use options to boot! Then, at least you don't have to pay realator commisions, property taxes and have to WAIT for the deal to close and get wrapped up -- periods of no buyers. I live in a nice but moderately priced area. Why should I move to the ritzy part of town and pay a couple of thousand more a month to live -- eat, sleep, whatever...I would be doing the same -- but at higher prices. It wouldn't mean I HAVE more money -- just that I HAD or was squandering more money. If an area ever gets too pricey, I say move away -- plenty of other places to live. If it's worth the price and you can aford it, pay it and shut up -- else say no thank you and move on. Grow up! Problem is people want stuff but bitch about paying the going rate. Supply and demand does seem to work it's amgic in the long run. Either buy it or pass on it -- but don't whine about how somebody wants too much for it or isn't selling -- other people aren't on this earth to give you good stuff for pennies just to please your whinney selfish self. Grow up and be an adult. And stop looking for "evidence" that "the end is near -- any day now" ...see! prosperity! that means times MUST really be bad! Think for a minute. How bad is bad these days? What standard of living constitutes bad today? Probably the standard of living of a king a century ago. Stop being a whiney doomer and LIVE YOUR FREAKING LIFE!!!! IF YOU DON'T HAVE A LIFE THEN GET ONE AND STOP BEING SUCH A NINNY AND FALLING FOR THE FUD MONGERS HYPE -- BEING AGULLIBLE IDIOT IS NOT WHAT YOU WANT TO WASTE YOUR LIFE BEING!

-- anon (doesntmatter@all.com), April 21, 2000.

Read,

I didn't say the people took their money out of the banks. One of the ways that the new FED money got into the economy in the form of new loans. There are undoubtedly many other ways. The point is that BILLIONS of dollars of newly created money were injected into the economy by the FED in the second half of 1999. It appears that most of this has gone into the stock markets. Then, as people felt more affluent, they continued to bid up the prices of available housing, move to more affluent areas, etc. Much of San Diego is considered affluent by the rest of the country.

-- financier (financier@finnews.con), April 21, 2000.

financier,

You'll have to excuse the retard that calls himself "savage", he is more than just a little dim. There isn't much point in trying to explain an idea to a dimwit that doesn't even have the mental capacity to understand you.

-- Hawk (flyin@high.again), April 21, 2000.

"It appears that most of this has gone into the stock markets."

Ahhh, now I see why you're thinking, what you're thinking.

That's where you're making your mistake. I have a family member who is in banking and s/he says s/he's sick every night of his/her life because his/her bank is approving loans to people who can't possibly pay them back. The bank doesn't lose either way -- if someone pays it back or not.

That money isn't going into the stock market. It's being used to make car and interest payments.

Excuse me for being short. I'm also working the gold thread.

-- (read@the.papers), April 21, 2000.

Read,

Thanks for the feedback. It's always nice to get some specifics. You are quite probably correct. My main point is that the money IS getting out into the streets and people ARE bidding up prices for desired items. One of the big ticket items is real estate, to which DVC alluded in the original post, and Savage disagreed. Asset inflation seems to be the order of the day.

-- financier (financier@finnews.con), April 21, 2000.

"Fed's Y2K liquidity measures keep markets calm" (Nov. 1999)

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001nPd

-- (just@the.facts), April 21, 2000.

Whether it's stocks bought on margin, home equity loans, or "introductory rate" credit cards, we've seen a massive increase in the past two years in the amount of leverage at work. Unfortunately, that debt has to be serviced at some point, and any sort of decline in any market (equities, housing, wherever) will be greatly magnified by the need to clear that debt.

The recent declines in the stock market apparently did not serve as enough of a warning to those who bought on margin, as it appears that there has been little reduction in margin levels. That is unfortunate; this particular course from The School of Hard Knocks is likely have a very nasty final exam.

Re housing:

Like DVC, I also live in the San Diego area. The local paper just published an article on housing prices and they ain't pretty:

Average home price in county at record high

By Frank Green (STAFF WRITER)

April 20, 2000

San Diegans' homes really are their castles. Pricewise, anyway.

Houses and condominiums in the county sold last month for a record average of $230,000, up a hefty 14.4 percent from March 1999, according to statistics released yesterday by Acxiom-Dataquick Information Systems Inc. of La Jolla.

"It's definitely a seller's market right now," said Ann Throckmorton, executive vice president at Century 21 Able, a local realty company. "Market affordability is a problem in every age group and at every price range."

New single-family homes posted the biggest price hikes during the period, soaring 18.7 percent to $330,000, while the value of resold houses climbed by 16.8 percent, to $236,000.

Even the sometimes stagnant condominium market saw renewed interest by home buyers last month, with midpriced units being sold for an average of $150,000, compared to $144,000 a year earlier.

Total home sales in the county last month jumped slightly, from 5,046 to 5,064, Acxiom-Dataquick reported.

Analysts said they expect the housing market in Southern California to continue sizzling through the traditionally busy summer home-buying season. They cited a combination of high demand, a booming local economy and a shortage of new housing for pushing prices through the roof...

Average price is now nearly a quarter-mill (*gulp*), up almost 15% from a year ago, and single family homes are up almost 19%. While this is wonderful for current home owners, it's very, very hard on first time buyers or people trying to move here. We're lucky that Prop 13 holds property taxes steady, or we'd all be seeing our tax bills taking a bigger and bigger bite.

People then dip into this increase in equity to finance other activities, including buying stocks. Now let's see: if the housing market cools off, you're underwater on that equity loan, and if the stock market declines, that money goes away and you're left with debt service and nothing else. Sounds like a plan. 8-}

-- DeeEmBee (macbeth1@pacbell.net), April 21, 2000.

The boom in real estate is being driven by market speculation. I bought a 1/10th acre lot for $21K four years ago. The lot next to it just sold for $96K. Just like the NASDAQ, it makes no sense.

When the markets eventually tank later this year, real estate will follow suit.

-- (@ .), April 21, 2000.

Here's one reason the Federal Reserve had to become so accomodating with liquidity in the fall of 1999. These are quotes from an Aug. 1999 article.

http://www.businesstoday.com/techpages/y2kworry08231999.htm

Says Geoffrey Coley, co-head of global capital markets at Salomon Smith Barney: ``Y2K has been part of the calculus in virtually every decision by corporate issuers in the last three months.''

and

Ford Motor is itself ready for Year 2000. But the company was glad to get its record-breaking $8.6 billion bond deal done last month, rather than test the market later this year or early next year, after the start of 2000.

``You never know what will happen and it's not a bad idea to put some money away as a precaution,'' says Dave Cosper, Ford's executive director of corporate finance.

In Sept., Alan Greenspan said...

http://www.bog.frb.fed.us/BoardDocs/speeches/1999/19990917.htm

While the evidence of precautionary inventory hedging to date is mixed, in the financial sphere, borrowers and lenders are clearly taking steps to build liquid assets and reduce their reliance on credit markets around the end of the year. This is reflected in a noticeable rise in deposit and commercial paper rates for funding that would be outstanding over year's end. Many corporate treasurers have moved forward their debt offerings to avoid any chance of a dearth of credit availability in the fourth quarter or difficulties funding short-term liabilities. The Century Date Change Special Liquidity Facility of the discount window that was approved by the Federal Reserve Board in July and the contingency actions of the Federal Open Market Committee announced by the Federal Reserve Bank of New York on September 8 should help to ensure an ample supply of liquidity and relieve funding pressures.

But then there were STRIPs options in October.

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001qpD

The Fed has auctioned five separate offerings of STRIPs since October 20, all of which have generated widespread interest, according to the New York Fed.

-- A look (back@t.1999), April 22, 2000.

-- (html@clean.up), April 22, 2000.

So if you own San Diego property, sell it at a big profit and move to KY where you can buy twice the house for half the money. Don't blame California real estate prices on a red herring like y2k.

-- Lars (lars@indy.net), April 22, 2000.