Will housing bubble implosion cause ripples into comic market?

[SurfingAlien]

Now that the housing bubble is imploding and the mainstream media is beginning to acknowledge that home buyers have disappeared and home prices are retreating, will there be a ripple into collectibles? So many people have used home equity for purchases of so many things, and it now it looks like the equity ATM is closing. With all that loss of false disposable income, will it affect high priced discretionary items like high grade comics?

[valiantman]

 

So, you believe that people will be less likely to take a home equity loan

for disposable income when the housing market declines?

 

Since these specific people aren't vacating/selling their property,

why would a drop in prices affect the number of home equity loans?

(Or, who would be looking to get a home equity loan to spend on collectibles,

who hasn't done so before now?)

 

I'm not saying I disagree... I'm just confused about the connection.

[JiveTurkeyMoFo]

Now that the housing bubble is imploding and the mainstream media is beginning to acknowledge that home buyers have disappeared and home prices are retreating, will there be a ripple into collectibles? So many people have used home equity for purchases of so many things, and it now it looks like the equity ATM is closing. With all that loss of false disposable income, will it affect high priced discretionary items like high grade comics?

 

I brought up this very topic late last year. I think the general response was "go screw yourself Jive". Very few people were willing to acknowledge any correlation.

 

But back then, few people were even willing to admit that a housing bubble existed or that *gasp* home values can, and do, go down.

[Wally's Comics]

 

So, you believe that people will be less likely to take a home equity loan

for disposable income when the housing market declines?

 

Since these specific people aren't vacating/selling their property,

why would a drop in prices affect the number of home equity loans?

(Or, who would be looking to get a home equity loan to spend on collectibles,

who hasn't done so before now?)

 

I'm not saying I disagree... I'm just confused about the connection.

 

yeah, those connections are as far off as I can imagine...

 

now if inflation quadrupled and jobs were as scarce as a NM Action # 1

then yes I would say that comics prices would be effected in this connection.

 

 

[Psiknight]

Now that the housing bubble is imploding and the mainstream media is beginning to acknowledge that home buyers have disappeared and home prices are retreating, will there be a ripple into collectibles? So many people have used home equity for purchases of so many things, and it now it looks like the equity ATM is closing. With all that loss of false disposable income, will it affect high priced discretionary items like high grade comics?

 

I don't see any connection here. Where is the loss of disposable income? I really, really, really doubt people were using home equity loans to procure comic books. Even it that were the case, the housing bubble "popping" doesn't stop people from taking out home equity loans to buy books. The amount of equity in their home will remain roughly the same as it did before. It's not as if their home value is going to drop by some huge amount, causing their net equity to tumble.

 

Hmm, I don't see it.

[the blob]

1) Comics did very well the last RE crash in the late 80s/early 90s. Granted, I think that also had to do with the stock market tanking, so when people lose their real investing options, they might play with comic books

 

2) Sure, homeowners may lose equity and the ability to cash out on equity, but HOMEBUYERS may see their monthly payments go down (assuming interest rates don't go way up), leaving more loot for comics! To be honest, I have to wonder if the typical comic collector is more likely to be sitting on oodles of home equity or more likely to be a renter waiting for prices to go down.

[JiveTurkeyMoFo]

Now that the housing bubble is imploding and the mainstream media is beginning to acknowledge that home buyers have disappeared and home prices are retreating, will there be a ripple into collectibles? So many people have used home equity for purchases of so many things, and it now it looks like the equity ATM is closing. With all that loss of false disposable income, will it affect high priced discretionary items like high grade comics?

 

I don't see any connection here. Where is the loss of disposable income? I really, really, really doubt people were using home equity loans to procure comic books. Even it that were the case, the housing bubble "popping" doesn't stop people from taking out home equity loans to buy books. The amount of equity in their home will remain roughly the same as it did before. It's not as if their home value is going to drop by some huge amount, causing their net equity to tumble.

 

Hmm, I don't see it.

 

Wow, a little misinformation can be a dangerous thing.

 

As for the "equity in their home remaining roughly the same". We have investor clients who bought last year that are already 20% underwater (as in, they bought for $240,000, but they can realistically only expect $190,000 out of the home right now). They were expecting to be at $260k-$280k by now, in fact, they were counting on that "guaranteed" appreciation.

 

Most people who bought last year were counting on an endless stream of home appreciation to justify their purchase....that ship has now long sailed and home values, particularly in the bubble areas, are in decline.

 

You can't take out a equity loan when you have negative equity. Heck, you won't even qualify for a re-fi.

 

As for how these two things correlate, here's how:

 

Loose Credit Environment = Asset Appreciation.

Tight Credit Environment = Asset Deflation.

 

Did people really use the equity in their homes to fund high dollar comic purchases? I don't know. I doubt you would find anyone who would admit to it either way. But there is no doubt in my mind that the easy credit environment of the last few years not only spawned the massive housing bubble we have today, but also allowed people to justify big ticket purchases (whether they be comic books, plasma tvs, new cars) via the wealth effect of appreciating home values.

[the blob]

but the flip side is that incredibly expensive real estate has left a lot of people with very little disposable income because of their mortgage payments

 

I honestly don't think too many of your Florida RE speculators were investing in comics on the side

 

And when those properties get dumped or go into foreclosure or rented cheap, who says some comic collector/investor isn't going to benefit?

 

Anyway, comic investors are way too clever to fall for something like "guaranteed" returns on real estate investing!?! (Does anyone need a case of Spawn 1s?)

 

I'm at a crossroads now as well. Whether to trade up or not? And where to trade to? I honestly think my Manhattan apartment will hold up a little better than the burbs, but I'm also seriously considering some "up and coming" areas in NYC where the "deals" are rapidly diminishing. In this particular area people are buying to live, not to invest, and the old timers paid nothing for their homes, so I have my doubts there will be a flood of houses on the market if there is a crash. Already, there are only 2 on the market in my price range (under a million) whereas last summer there were 10 available on any given weeked. I just don't see these $900K homes going for $600K any time soon.

[JiveTurkeyMoFo]

And when those properties get dumped or go into foreclosure or rented cheap, who says some comic collector/investor isn't going to benefit?

 

Rest assured, I plan to.

[the blob]

I would too, if I ever have any spare cash. Of course, the world of foreclosures is so crooked around here it's hard for a "regular guy" to get in. It's like some frigging secret society.

 

The next massive hurricane will probably create some more "bargains" for you if you're anywhere near the coast. Plus, I'm sure (not) GB II will fix global warming before his term is up.

[Psiknight]

 

Wow, a little misinformation can be a dangerous thing.

 

As for the "equity in their home remaining roughly the same". We have investor clients who bought last year that are already 20% underwater (as in, they bought for $240,000, but they can realistically only expect $190,000 out of the home right now). They were expecting to be at $260k-$280k by now, in fact, they were counting on that "guaranteed" appreciation.

 

Most people who bought last year were counting on an endless stream of home appreciation to justify their purchase....that ship has now long sailed and home values, particularly in the bubble areas, are in decline.

 

You can't take out a equity loan when you have negative equity. Heck, you won't even qualify for a re-fi.

 

As for how these two things correlate, here's how:

 

Loose Credit Environment = Asset Appreciation.

Tight Credit Environment = Asset Deflation.

 

Did people really use the equity in their homes to fund high dollar comic purchases? I don't know. I doubt you would find anyone who would admit to it either way. But there is no doubt in my mind that the easy credit environment of the last few years not only spawned the massive housing bubble we have today, but also allowed people to justify big ticket purchases (whether they be comic books, plasma tvs, new cars) via the wealth effect of appreciating home values.

 

The only way they correlate is if the person used home equity to purchase comic books.

 

Yeah, it's possible that the sudden spike in house value caused some people to take liens against their equity to purchase items. My comment of "roughly the same" was probably a bit too loose, but it doesn't change the fact that the only way they correlate is if people used their equity to purchase comic books, a frankly absurd notion.

 

Also, your "explanation" only applies to people that purchased a home with a mortgage, had their house appreciate, then took out a lien against that "inflated" equity, and are now seeing that bad move come back to bite them. I dare you to try and convince anyone that these people are 1) a majority and 2) a large of a majority that they will impact the collecting industry.

 

edit: Just to clear this up, I dont' disagree that there is a housing bubble or that the bubble helped create a loose credit environment. I just think it's silly to think that it will affect the comic collecting industry in any meaningful way (outside of very few collectors that actually used home equity to fund comic purchases).

 

[comicdonna]

The decline of real estate sales is definately going to affect my comic book purchases. Not for the reasons mentioned in other posts. My wife is a realtor, and a seller of modular homes. With any luck, my business will do better.

[MikeS]

Now that the housing bubble is imploding and the mainstream media is beginning to acknowledge that home buyers have disappeared and home prices are retreating, will there be a ripple into collectibles? So many people have used home equity for purchases of so many things, and it now it looks like the equity ATM is closing. With all that loss of false disposable income, will it affect high priced discretionary items like high grade comics?

 

I'm not ready to call it an implosion yet - wish it were, because I'm looking to buy. Market does seem a little softer, but I'm waiting for a little more pain and suffering.....

 

I'm sure the percentage of people buying collectibles with their "false disposable income" is pretty small.

[JiveTurkeyMoFo]

Also, your "explanation" only applies to people that purchased a home with a mortgage, had their house appreciate, then took out a lien against that "inflated" equity, and are now seeing that bad move come back to bite them. I dare you to try and convince anyone that these people are 1) a majority and 2) a large of a majority that they will impact the collecting industry.

 

Actually, this isn't the only instance.

 

The problem is the "wealth effect" of appreciating house values is all but impossible to quanitfy.

 

How many homeowner comic collectors out there justified a $1,000+ comic purchase to themselves during the last few years because "the house just appreciated $80k last year, so why the heck not?"

 

I don't know. Neither do you. And I doubt very few of those collectors would be willing to admit to it anyway.

 

But I'm 100% sure it happened.

[towards2112]

Those that did justify their purchases based on their mortgage/value

ratio probably won't have either their home, nor the valuable comic book

for very long. Flipped the old house two years ago, and while working

with a rep from one of the top three mortgage companies he commented

that " with your resources you can afford whatever you want", as if my

income, equity, and savings, would qualify me for a grand mansion on

a hill. Only a fool tries to live in surroundings and purchase material items

that are beyond his means. If real estate agents and mortgage lenders

were actually responsible, and could have their feet held to the fire over

buyers that defaulted on a loan because of bad advice, things would

probably be a tad more stable in the real estate market long term.

As long as a commision is paid on contracts, then unethical writers

will always be around, and people that can't really afford a $300k house

on a $85k annual income will still buy them... same with comic books.

I might be able to get some loan officer to float a note so that I could

get Ken D's Batman # 1, but my wife would laugh me right into divorce

court for that silly little idea.

[batman_fan]

There is also a reduction in disposable income from the people that did the ARM mortages. At the end of the day, it has to have some degree of impact just like the higher fuel cost does. Anything that reduces disposable income will have an effect on comic prices. How much? who knows. If prices dip, usually there is an initial surge in buying given the perceived "bargin". Only thing I know is the amount and quality of material coming to market right now is a little overwelming. I know I am in no position to buy nearly as much as I would like to and sells have definitely slowed some but prices remain high when it moves.

[FlyingDonut]

Those that did justify their purchases based on their mortgage/value

ratio probably won't have either their home, nor the valuable comic book

for very long. Flipped the old house two years ago, and while working

with a rep from one of the top three mortgage companies he commented

that " with your resources you can afford whatever you want", as if my

income, equity, and savings, would qualify me for a grand mansion on

a hill. Only a fool tries to live in surroundings and purchase material items

that are beyond his means. If real estate agents and mortgage lenders

were actually responsible, and could have their feet held to the fire over

buyers that defaulted on a loan because of bad advice, things would

probably be a tad more stable in the real estate market long term.

As long as a commision is paid on contracts, then unethical writers

will always be around, and people that can't really afford a $300k house

on a $85k annual income will still buy them... same with comic books.

I might be able to get some loan officer to float a note so that I could

get Ken D's Batman # 1, but my wife would laugh me right into divorce

court for that silly little idea.

 

I'm not sure how I feel about your avatar. Oh, never mind.

[joe_collector]

I just think it's silly to think that it will affect the comic collecting industry in any meaningful way (outside of very few collectors that actually used home equity to fund comic purchases).

 

What about all the over-extended people poised to lose their houses once values plummet and mortgage rates spike? Or what about all those with rental properties that will soon become impossible to operate under the new economic structure? Or the many who have taken a "line of credit" against their house, which is due to be devalued to a point where the owners owe more than it's worth.

 

I don't think those guys will be shopping for CGC comics anytime soon.

 

I was in Toronto when this happened in the 1980's, and it hit everything extremely hard - like a ripple effect through virtually all businesses. There are people that were high-rollers buying paintings, coins, etc.- who are eating KD every night just to pay off a $3 million condo that is now worth $500K.

 

In fact, I used to live next door to some in Forrest Hill. Sad stuff.

[Psiknight]

I just think it's silly to think that it will affect the comic collecting industry in any meaningful way (outside of very few collectors that actually used home equity to fund comic purchases).

 

What about all the over-extended people poised to lose their houses once values plummet and mortgage rates spike? Or what about all those with rental properties that will soon become impossible to operate under the new economic structure? Or the many who have taken a "line of credit" against their house, which is due to be devalued to a point where the owners owe more than it's worth.

 

I don't think those guys will be shopping for CGC comics anytime soon.

 

I was in Toronto when this happened in the 1980's, and it hit everything extremely hard - like a ripple effect through virtually all businesses. There are people that were high-rollers buying paintings, coins, etc.- who are eating KD every night just to pay off a $3 million condo that is now worth $500K.

 

In fact, I used to live next door to some in Forrest Hill. Sad stuff.

 

Right, but the point is how many of those people actually collect comics? Sure, some people did stupid things with LOCs and ARMs. It's not as if every person in the US did this, right? You figure a small percentage of home owners took out LOCs (or ARMs) on their properties after buying the home and watching the value rise. These people will now suffer since their home value is coming down, reducing the overall equity in their home. Now, some tiny percentage of those people are comic collectors. An even smaller percentage of those collectors are big time buyers.

 

We're talking a small % of a % of a %. I just don't see the correlation...

[joe_collector]

Everything has an effect, and sometimes uncertainty in one area can breed fear right across the board.

 

Personally speaking, I'd be much more concerned with the expected resurgence of the US dollar, and the inability for all those crazy foreigners to get stupid values on US-bought collectibles.

 

Once that gravy train ends, prices will drop, guaranteed.