Home values seen losing over $2 trillion during 2008?

December 16th, 2008

I’m sorry, generic viagra pharm home values didn’t lose $2 trillion during 2008.

Those homes were never really “worth” that extra money. That’s why it’s called a “bubble.”

Entry Filed under: Observations

4 Comments Add your own

  • 1. David Casper  |  December 16th, 2008 at 12:48 pm

    I was thinking something similar last week when I saw all these articles talking about how long it would take home values to “recover.”

    My impression has always been that the home values were falsely inflated to begin with.

    So isn’t hoping for a “recovery” sort of like waiting for an athlete that was once bulked up using steroids to regain his mass using dubious methods once again?

  • 2. John Foust  |  December 16th, 2008 at 3:06 pm

    What’s wrong with the word “lose”? When you drive a new car off the lot, it drops in resale value. Instant loss, if you intend to recoup your money.

    The key to your inner contradiction is “were”. Houses “were” worth that much because that’s what they were bought and sold for. It didn’t matter if you thought the market was going to tank. That’s what they sold for. Price is set between buyer and seller at a particular moment in time. If you’re smarter than that, how come you ain’t rich?

    If it costs $300K to build a home but it won’t sell for $250K on the market, what would you call that?

    Same for anyone with an upside-down mortgage. They were betting that their house would retain its value in the form of the street price.

  • 3. elliot  |  December 16th, 2008 at 4:52 pm

    In most circumstances, you’d be 100% right. But my point was that people KNEW there was a housing bubble years ago.

    Business Dictionary defines a “bubble” as a:

    Temporary condition caused by unjustified speculation in the price of a stock or commodity to a level that bears no relation to its real worth or potential. Bubbles inevitably fail (burst), wiping out the savings of unsophisticated or unsuspecting investors.

    Just because you can get someone to pay an inflated price doesn’t mean that there is an actual fundamental value underpinning that price.

    Did people lose money?

    Indisputably.

    Did the housing lose value?

    Nope. The prices are just adjusting to what their real (none speculated) value is and was.

  • 4. Fuzz Martin  |  December 16th, 2008 at 8:24 pm

    So, perhaps the market IS recovering (from it’s extremely high values).

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Being in a wheelchair gives you a unique perspective on the world. This blog features many of my views on politics, art, science, and entertainment. My name is Elliot Stearns. More...

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