Dec

11

Only a counter would notice that when people are defending the real estate market they use “median” prices and when they are bashing the markets they use “average” prices of homes sold. The difference of course is the highest outliers get heavier in the average than the median.

Which makes me wonder, is this really the demise of the “flipper”. Sure the guy that bought the beach front mansion to flip is in a world of hurt. But the guys buying the fixer-upper to flip, well they don’t need to sell the place, simply rent it.

Traditionally hasn’t this been the real estate speculators market? The place he fixes up hoping to flip to make a quick kill, but if not, to rent out. Didn’t he most likely get a sweet deal locking in interest rates? Now that the Prof. says buying is out of range for the first timers, won’t they be forced to rent and pay higher rent?

Could it be that many of the highest end markets are artificially highly priced due to regulations? Regulations that are set up to exclude those driving the demand… the immigrants. And will it mean that housing demand really goes down, or simply that it shifts?

All this makes me wonder if the bottom quartile going up? And what the top 10% in the various markets look like? Also in the doomsday articles, the focus always seems to be on the poor fool that bought too much house.

All this implies of course that if the upper half is feeling the pain, how much more pain must the poor guy that actually has to get his hand dirty to make a living feel … surely he didn’t think through every $ of that purchase as the guy smart enough to have money to spare.

May I suggest that the typical high net worth investor is giving the down-turn too much weight simply because it is happening to him and his friends rather than to the lower half buyers.

George Zachar adds:

This is a deep point at a rhetorical level, with parallels in many aspects of markets and politics. There is a stable framework of deception that persists in public arenas despite the transparency of the falsehoods.

The weekly Barrons doomster, the populist pols who un-employ the working stiff via regulation, etc. etc. are part of this. Rigid willful stubborn stupidity resists counting, and thus frustrates.


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