Be Aware of the Times

I do think this is gonna be a doozy of a recession. Lew Rockwells site and Gary North have been a great source for serious discussion on why we are here. This article is sobering.


What if House Prices Fall by 30% Worldwide?By Gary North

In the midst of local house-buying manias, the classic mark of the end is when buyers line up to buy a house and bid against each other. This is the best way to sell a house and the worst way to buy one.

Why do buyers do this? Because they have missed out again and again by offering less than the listed price. The buyers who offered the listed price bought the house.


[I did this in February, 2005 for my home. The other family thought that $90,000 for a 4-bedroom house was too much to pay. They were wrong.]

Then the panic escalates. Those offering the listed price get left behind. They wait too long. "Too long" means more than one day after the house comes on the market. They hesitate. He who hesitates is lost in a seller's market.

[In late 2004, I found a 2-acre commercial property listed at $30,000. The normal price in the area was $90,000 an acre. I got there on the first day it was listed. There was no For Sale sign. I visited it again the next day, a Sunday afternoon. A For Sale sign had been up for one hour, I later learned. I submitted my offer – $30,000 (no haggling) – on Monday. When something is priced 83% below market, don't dilly-dally.]

Then panic appears. A group of buyers will line up in front of a property before it officially goes on sale. The list price is merely the minimum bid in what soon becomes an auction. In an auction, buyers overpay. They become frantic that they will miss out again. The presence of other bidders makes them desperate. They think: "This is the last time I will be able to buy. It's now or never." This is always wrong. They are in fact buying at the peak...
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