I’m sure most folks realize this and even Joe and Susie public are starting to realize that housing is way out of whack in relation to fundamentals. We’ve heard it all year but now we are seeing what happens when markets turn.

socalwatcher,

I’m not equating a college degree to upper-income jobs, obviously the path to success takes many shapes and forms. Like yourself, you put in many years and experience and that is the value of where you are at. In the last seven years 20 to 25 year olds were pulling in six figures because they could in the housing complex. In addition, many of these people are still developing their identity around who they are so ethically they may be more willing to fudge a few numbers. The party is ending and it is ending fast.

chris,

Baths do come with bubbles…

anon,

You actually bring up a good point. Many construction workers from our friends down south do not file income taxes however they do kick down remittances to Mexico. WSJ came out with an article highlighting the massive drop of remittances because of the slowing housing market. One of the largest contributing factors to Mexico’s success is US remittances. We won’t be the only folks affected.

anon,

You are correct, my respects to Mr. Pareto. I think the world of him and sadly not many economist can measure up to him in today’s fast paced modern era; most so called economist such as Greenspan and Lereah are nothing more than mouth pieces and figureheads for the growing elite. And when I say elite I’m talking about the seven figure club; I find it ironic that those in our country actually like to let our dollar implode while cheer leading these people while they loot the future of America. Total instant gratification.

Regarding U.S. stocks, one thing to note is that the world is awash in cash, and that U.S. large cap - market diverse (large international revenue component) stocks are one of the few remaining asset classes that still have relatively reasonable valuations.

While I do agree with you on the points of this particular article and the coming “labor pool adjustment”, the U.S. is still a “stable” environment for funds to be invested in.

Also, unlike prior downturns where real estate lending errors punished the lenders, this time it has been foisted off on Wall Street. It will be interesting to watch how they handle workouts since the scale will be so significant - maybe some of these real estate professionals can take jobs with the government when they resurrect the RTC to bail out all the pension funds that get stuck with the B&C paper that was securitized. Between the government protecting the “foreclosure victims” and the Pension Bail Outs, I think we will again see a hammer used where a screwdriver is appropriate (pun intended).

Personally, I still don’t get how residential RE is sustainable, and worse, how investment in commercial real estate makes long-term sense when cap rates are so out of whack with history. The one potential saving grace for real estate is inflation mixed with stable (read flat) rates over the next 3 years since some of the excess can be sopped up thus minimizing the impact in all but hyper-bubble markets like So Cal - possibly softening even So Cal.

I will continue to read and enjoy. For the record I am in the defense business and other than my home and one commercial building I sold last year have missed the Real Estate $$ bonanza.

A nit, why are you on a first name basis with V. Pareto?