HEY, LET'S BUY A FUCKIN' HOUSE. WE CAN'T LOSE

Real Estate—is it a bubble waiting to burst? Marc Faber, a dam good analyst, stock picker, investment advisor, and so on, has pointed out something really interesting. Suddenly—well not so suddenly—the volume of housing turnover exceeds the number of home owner families by a whopping 8%. This cannot continue, and he has all the data and charts to back up his very good argument. I mention this as a caution. Other booms like this have been followed by near catastrophic real estate collapses.

Having said this I have written him the following observations:

OK, so the volume in home sales exceeds the number of home owning families----------IN THE U.S., and here is where there may be a serious flaw in your analysis.

I was raised in Carmel California, home of Pebble Beach and the surrounding now insanely high priced housing. I asked around about the high prices---Pebble Beach mean price $2.4 million; Carmel $1.45 million---and who the hell was buying that shit? Answer: Japanese and Europeans with a smattering of Indians. Are these people buying now to sell later at a profit? No, they are millionaires and they show up for a few months out of the year. I think if you will check further you will find that foreign buying in desirable areas is significant; Vail, Sante Fe, Sun Valley, and so on. I think this is a conditional bubble---all foreigners dump their foreign holdings when their own economies go into depression----and will only burst if foreign economies bust. What? France go broke? Let's hope so.

Now the chances of me being right and he being wrong are truly microscopic so you better all be dam careful of Real Estate now being touted by every bozo on the internet.

The bozo factor is very important. Before the crash of the late 1970s my wife and I were literally accosted at a party by two of the stupidest women one could imagine. They real estate hustled the shit out of us for ten minutes before I moved elsewhere in the room—those were my polite years, now when some hustler dares to hustle me at a party I am immediately rude, and if that doesn’t work I use bad language----anyway, when the party was over I told my then wife that the bubble was over, that if those two morons were in it the entire business was bad. Two years later the bottom dropped out.

A year or less before the stock crash of the Clinton bubble I saw our guard reading the Financial Times of London. Christ, that was a harbinger of things to come if there ever was one.

Faber’s argument must be taken into serious consideration should you choose to buy now because “it’s a good investment.” Looking at his data, which includes the highest volume since the Watergate crash, you should be worried. At least cautious.