This video is the best that I have seen on the market. It is very focused, covers all perspectives, and paints not only a financial but human face to the mortgage market. The explanation of the subprime market, its emergence, its evolution, and its expectations are clear and precise. Further, the global impact is simply explained and understood.

It was interesting to see Rubini and Schiller on the video. U.S. T.V. has not been so analytical so far, instead "balancing" the story with someone from the Realtors or the administration soft-pedaling the issue.

I have always heard historical housing appreciation pegged at 3,5,and 6%. This was the first time I heard someone say it was 1 %. Then again, we're not going to hold for 300 years, so the next 5 to 20 are what is important.

This really calls into question the "conservative" buy-and-hold approach. One difference is that in Holland, they live in the same houses for hundreds of years. Here, we have disposable houses, and they are affected by the costs of raw materials. Are building materials likely to cost less in 20 years? Highly unlikely, so I would still say appreciation is likely in the land of ticky-tack.

Good points.

Replacement cost is only one valuation yardstick for houses, though.

Real estate values can fall below replacement cost and stay that way for years or decades.

There is also a difference between "real" which is inflation adjusted prices, and nominal, which are current US dollar prices.

I expect US real estate to start back up in nominal terms in a few years perhaps. But in inflation-adjusted terms I don't expect things to come back perhaps for a decade or more.

Schiller's study of Holland is interesting as it applies to the US…he shows prices peaked in 1917 or so and that they only started going up in real terms around 2001 or so.

People think that they have made all this money on a "buy and hold" property but in reality, they may have just kept up with inflation (or lost ground actually).

BTW, Australia is in the midst of a worse bubble, arguably than we are in the US and it has yet to burst.

And furthermore…

I thought it a bit strange of the riverside Realtor to characterize buying for appreciation as the lazy man's way to riches. Historically, it is the way most riches have been made. More so than ever, this society does not reward hard work, it rewards correctly invested capital. Look at the tax code.
The hard work in investing is knowing when and how to buy and sell, and how to figure out who is telling you the truth.

Chuck, the system is set up to reward financial speculation and not hard work or real productivity.

When Greenspan lowered short term rates to 1% and encouraged irresponsible lending, property prices rose and encouraged more people to get into more debt.

The government created the real estate bubble.

And now we'll be dealing with falling property values for years as a result of this bubble.