Tuesday, July 27, 2004

The Party is Over!

Housing boom party's over, author says John Talbott, author of The Coming Crash of the Housing Market, wrote in the Financial Times this week that "a mass exodus from overpriced housing" is already underway in the priciest areas of New York, where many people "are selling their multi-million dollar condominiums (two small bedrooms, no view, small closets and bad water pressure), moving into rental apartments and taking the proceeds from the sale and putting it in the bank."

Talbott argues "the entire housing market is corrupted. Buyers are indifferent about how high a price they pay as it is not their money. The banks are not price sensitive nor credit conscious because they sell most of the mortgage upstream to Fannie Mae and Freddie Mac."

He calls the current housing market a Ponzi scheme รข€” "assets being passed faster and faster from person to person at ever increasing 'values' in a furious game in which the only person who loses is the last one out." Click the link above for the full article.

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