The Coming Crash in the Housing Market : 10 Things You Can Do Now to Protect Your Most Valuable Investment

by John R. Talbott

Today's real estate market is a house of cards--learn what homeowners can do to prepare for its pending collapse Soaring home prices and 50-year low interest rates have lulled homebuyers into a false... This description may be from another edition of this product.

• Format: Paperback
• Language: English
• ISBN: 007142220X
• Release Date: April 2003
• Publisher: McGraw-Hill Education
• Length: 204 Pages
• Weight: 0.05 lbs.
• Dimensions: 8.9" x 0.6" x 6.0"

Customer Reviews

Excellent! Finally someone to answer the nagging questions.

One of the most interesting aspects of the book was that it answered many of my nagging questions that I had about home buying and mortgages. This includes issues that I see every day with my family and co-workers.I consistently wondered how a person could make $30,000 per year could qualify for a mortgage of $175,000. Many receive mortgages with little or no money down. How can they have a mortgage payment of $1200.00 per month and cope? How did a mortgage banker determine that they were credit-worthy? How could so many single people afford a home? Every single woman and man in my office (20 people or so) is currently buying his or her own home. Even married couples seen to spend an ever-increasing amount of their salaries to support a mortgage. How does anyone in this day and age determine future employment or employability? Globalization and the quest for lower labor costs have put pressure on nearly all jobs, even in the field of education, where I work. If people are spending 40- 50% of their salary on housing, how will they fund other needs, such as saving for retirement and education for their children?Both my parents and in-laws live on a fixed income with social security and small work pensions. I know that there is no way that they could afford to carry a mortgage after retirement. Property taxes, insurance and maintenance take an increasing share of their fixed income.Now, I know that they are all pretty much broke, they just don't know if yet.

Helped me quantify my gut feelings

If you are reading this review, I owe you 2 things about me in the first place. First, I live in San Francisco Bay Area (an extremely expensive housing market) and second, I have felt that the housing market is in trouble for awhile so I was pre-disposed towards the author's point of view.That being said, the author knows his subject matter. I work at an investment company that specializes in money management via quantitative modeling (in the technology group). As such, companies such as mine have an enormous influence on this market as an 'end consumer' of the individual mortgages taken out on homes. The author has done an extremely good job at simplifying the staggerly complex world of fixed income instruments to find the drivers of market forces that influence the world as the individual home owner sees it.The trend lines and their causes that the author has built explained a lot to me.Written in the end of the year, 2002, the discussion of forces on the companies participating in this vast money pool and how changes in those forces will effect the companies and therefore all of us is proving extremely accurate in 2003. Rates have dived to rare lows with unprecedented speed and now are rising with the same level of velocity - the velocity and depths of the dive driven in large part to the hedging strategies (or lack thereof) of investment companies. The heads of Fannie Mae and Fannie MAC are in trouble for fiddling with their numbers to drop earnings since that is what Wall Street is looking for (and therefore their bonuses are tied to those expectations) and other bad things have all started to rear their heads since this book was written (as the author predicted).Two final thoughts as recommendations. One, the housing market, prices etc... tend to be pretty 'sticky' - so this book should hold is value to you for several years past publication date. The other, is a concept that the author introduces and will give you an idea of where the author is coming from. If you thought houses were priced correctly (or even were expensive) in your area 5 years ago and today prices are significantly higher - - does that mean that all of a sudden everyone woke up and realized how badly they had misunderstood the market and value 5 years ago? Everything was underpriced then and it is correctly priced now, or is something fishy in Denmark instead??As an educated observer of the pros from the inside - this book is highly recommendedcheers! and good luck over the next 10 years

Re-Thinking Priorities

This book is an excellent analysis of the current housing market by an accomplished financial expert. Particularly appealing is the fact that the book is not a doom-and-gloom text, despite its title. Rather, it exposes serious flaws in the underlying market for residential real estate, and shows how those flaws cause periods of overpricing as well as underpricing. It's surprising how the mantra that "real estate always appreciates" has so successfully lodged itself into the popular mindset. To refute this, an example is useful: An acquaintance of mine bought a condo in Washington, DC circa 1980-81. The year after his purchase, the condo dropped in value about 20%. It took SEVENTEEN years for him to get back to his breakeven level! But no worries, in the two or three years since he broke even (2000-2002), the condo appreciated to over 210% of his original purchase price. He immediately sold in early 2003. The selling price was over $110K for the 450 sq.ft. studio. Was he smart to sell? Very probably!!The best part of this book was the author's recommendation that we re-asess our priorities. It seems as if the excesses of the Internet boom are not over. People are still looking for get-rich-quick schemes, only this time it's housing rather than stocks. Maybe if we re-think our priorities in life, we'll realize that success doesn't come in a day, and success rarely ever comes to those who delude themselves into thinking they can get rich quick. Most people take decades to become successful; maybe these people know something that speculators do not.

Excellent remarks on US housing market

Before purchasing this book, I read most reviews on this board, and found very polarized ratings about it. This book surely upsets millions of people, who hold strong denials that the housing market is over valued because the facts and scary scenarios presented by the author are against their wishful thinkings that real estate investments nowadays are more tangible and secure than "intangible" investments. I respect Talbott's courage to speak up!Valuations on Real Estate in general are much less developed than valuations on equity, while equity valuations are arguable science themselves. Therefore I think Talbott did a great job in presenting his arguments from as many as possible angles by using ratios and charts. It would be better if he could have used data that dated further back in history, but I doubt there are enough records in this area. Simple based on records starting from 1970's, the fact has been clear: the housing market madness in the past decades has reached an unsustainable level providing business practices of the industry, dark sites of Fannie Mae and Freddie Mac, and evidently general public's mentality on Real Estate.Housing market is extremely local, so I think the author did a decent job in printing a bigger picture since commenting on local markets and predicting timeframe is technically infeasible. It's your job to make judgment and take actions once facts are presented. The author virtually tells us:1) There are structural problems in US housing market (yes, we do!)2) Being over stretched in debt financing normally ends in crash (Isn't this true!)3) What goes up comes down (Law of nature, isn't it?)4) When everyone is eager to get into something, be watchful (Have we heard of "herd mentality"? How did it end?)It's a great book to understand some dynamics of US housing market. Highly recommended!

Excellent Book

This book did an excellent job of explaining how overinflated and fragile the current housing market is. I learned quite a bit about how the system works; particularly the sections pertaining to Fannie Mae and Freddie Mac. I think this book is a must read for anybody even remotely interested in real estate, especially first time buyers or anyone thinking of "moving up" right now.