NOTE: this blog is no longer active as of 12/07. New one: http://blog.kirchhof.com
Quidquid latine dictum sit, altum viditur.
Thu, 16 Dec 2004
Just In Time For The Holidays
"It's a Wonderful Life." In 30 seconds. With Bunnies.
Posted at 13:17 by Randy Kirchhof [Permalink]
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Oh My Lord
Okay all you hipsters. Be the first on your block to do the latest
utterly
stupid thing to your body in the name of fashion.
Posted at 13:03 by Randy Kirchhof [Permalink]
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Wolves at the Door
Way back in May, one of the first posts that I did here was on the
about-to-explode housing
bubble. Today, The Economist weighs
in and it's not pretty. Housing prices are up in the entire
industrialized world well past what has proven to be sustainable
historically.
In some countries, notably America, France and Sweden, the property
market is still heating up. The average price of American homes jumped
by 13% in the year to the third quarter -- the fastest increase on record
in real terms. Prices rose at double-digit rates in half of all
American states; in five states, including California, and in
Washington, DC, they soared by more than 20%. French house prices have
increased by 15% over the past year, causing the Bank of France to
express concern about the risk of a speculative bubble.
Calculations by The Economist suggest that house prices have hit
record levels in relation to incomes in America, Australia, Britain,
France, Ireland, the Netherlands, New Zealand and Spain. In other
words, ratios of prices to incomes are now above levels that have
proved unsustainable in the past. Taking the average ratio of house
prices to incomes in 1975-2000 as a baseline, American house prices
are now almost 30% overvalued.
And interest rates are going up again, too.
What does this mean? If you're going to sell, sell now. If you're
going to refinance, refinance now -- the refinancing companies are on
their last legs and hungry to deal. If you own a home and are happy
with your investment, do everything that you can to make sure that you
keep it.
Whatever you do, don't switch to an Adjustable Rate Mortgage,
and don't pull every dime of equity out of your house at current
valuations. A 70% valuation of your best appraisal is
conservative, and probably as good a number as any based upon what the
economists are saying.
If you're going to buy, wait a year or two. It's going to be a
huge mess, and it will be a buyer's market in the not-so-distant
future.
The original article I cited in May is still
very much worth a read.
Posted at 09:11 by Randy Kirchhof [Permalink]
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