Will housing bubble implosion cause ripples into comic market?

[Psiknight]

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.

 

Well, I know (since I'm a Barks collector) that the insane prices for some Barks books are the direct result of a weak US dollar. Once the dollar gains, the Barks books will fall, I think.

[lou_fine]

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.

 

To tell you the honest truth, real estate prices have gone up so much the past few years, I actually wouldn't mind if they took a breather for a year or so. At least I wouldn't have to listen to my wife nag me every week about how I've been sitting on books with make believe prices, while the housing market has gone up by well over 20+% during each of the past few years.

 

She just finished reading another newspaper article on the weekend saying that year over year increases are already in the +25% range with still no evidence of a slowdown. Figures she would also point out to me that prices in Calgary continues to motor right along with a year over year increase of over +45%.

 

So, it's not so bad to have a bit of a slowdown in the housing market every now and then, as it makes it easier to justify your comic book purchases.

[tth2]

Figures she would also point out to me that prices in Calgary continues to motor right along with a year over year increase of over +45%.

Lou, tell your wife she can buy a place in Calgary, but then she has to live there (year round)! That should bring that particular line of discussion to a screeching halt.

[JiveTurkeyMoFo]

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.

 

My friend, I wish it were so.

 

The Wall Street Journal reported a few months ago that over $2 TRILLION dollars in US mortgages are set to adjust in 2006 and 2007. (The WSJ is a subscription site, so I can't access the article, but you can read some commentary about it here).

 

Or, you can look at it this way....nearly one out of every four US mortgage dollars are subject to rising interest rates. That's 1 out of 4 TOTAL mortgage dollars.

 

Some people will be able to re-fi. Most won't, especially in bubble areas where prices have already begun to dip and their home will no longer appraise for near what it did before. And since most of these folks are cash-poor to begin with (you generally don't sign on for a gimmicky adjustable loan if you can afford to put 20% down), I can only imagine how the hike in monthly payments will play out.

 

I know a lot of people don't agree with me here, but anecdotally, I've seen a huge growth of inventory in both the real estate and comic markets since last year. The absorption rate in both is a lot lower then it was in 2003-2004. Yes, prime books still sell for good money, just like prime properties.

 

But don't ignore the dearth of stuff thats just sitting around right now. Any precipitous drop in prices comes after the existence of an abundant supply that can't be absorbed by the market.

[JiveTurkeyMoFo]

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.

 

Well, I know (since I'm a Barks collector) that the insane prices for some Barks books are the direct result of a weak US dollar. Once the dollar gains, the Barks books will fall, I think.

 

I don't see a strong dollar policy in the works, do you?

 

The Fed made clear its intentions that it plans to do very little about inflation when they paused, even though there are clear inflationary pressures still in play. There is credence in the argument that a 6-18 month lag factor exists for the current round of rate hikes, and that we won't see their full effect until next year, but still.

 

The dollar dropped past 1.29 against the Euro again this morning. The ECB has indicated they will likely raise rates to ward off inflation.....what will the dollar be trading at when they do? Or better yet, what will the dollar be trading at when the Fed decides to cut rates again early next year? The last time I checked, our national deficit was still out of control, and the dollar is losing fans all over the world for any number of reasons.

 

And cut the Fed will. Ben Bernacke is in the unenviable position of having to either ward off inflation or suffer the consequences of a severe housing-inspired recession. Considering he is a student of the Depression, and how he believes lack of liquidity prolonged and deepened its effects, I'm pretty sure he'll try to inflate his way out of a corner.

 

My guess is this will have two effects: a weaker dollar (which helps us with our enormous national debt) and the subsequent creation of a third asset bubble, this time, probably in gold and silver. A weakening dollar (and the inflation it will signal) will send gold to the moon, in dollar terms anyway.

 

Everyone get ready for "How to become a Gold Millionaire" infomercials by 2009.

[Psiknight]

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.

 

Well, I know (since I'm a Barks collector) that the insane prices for some Barks books are the direct result of a weak US dollar. Once the dollar gains, the Barks books will fall, I think.

 

I don't see a strong dollar policy in the works, do you?

 

 

I don't either, at least not in the near future (as spelled out in your post). Which stinks for me (well and any collector of comics that have a strong overseas group of buyers).

[JiveTurkeyMoFo]

One last thing about the whole Housing Market....

 

Yesterday, along with their disappointing earnings and revenue announcement, the CEO & Chairman of luxury home builder Toll brothers made the following statement:

 

“It appears that the current housing slowdown, which we first saw in September 2005, is somewhat unique: It is the first downturn in the forty years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors. Instead, it seems to be the result of an oversupply of inventory and a decline in confidence: Speculative buyers who spurred demand in 2004 and 2005 are now sellers; builders that built speculative homes must now move their specs; and nervous buyers are canceling contracts for homes already under construction. The resulting excess supply has exacerbated the drop in consumer confidence, which first appeared last September, that was already a drag on new home sales.”

 

A declining housing market during a time of growth and prosperity? Many real estate bulls have been arguing for the last year that it can't happen, but yet, here is the CEO of a major builder saying it has.

 

I shudder to think what will happen if (and I think we will) slide into a recession next year.

[kidcolt]

I doubt it will effect collectibles.

[Mr. Zipper]

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.

 

My wife is a realtor and she tells me that this is frighteningly common. There are plenty of new builds less than a year old on the market around here. The reason: skyrocketing property and school taxes plus an ARM... they are living in a home they can no longer afford.

[comicdonna]

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.

 

My wife is a realtor and she tells me that this is frighteningly common. There are plenty of new builds less than a year old on the market around here. The reason: skyrocketing property and school taxes plus an ARM... they are living in a home they can no longer afford.

Some competition for my wife in Saratoga County.

My wife sees the same thing. Even new clients, that want to own a home badly. My wife helps them get Pre-Qualified, And deep down, she knows that they are facing problems down the road.

[DawgPhan]

When we first bought our house we had an ARM. After the first year we refi'd and got into a fixed rate mortage. The ARM was the only way that we were going to be able to afford to get a house at the time though. Since then both of us have started making more money and now with a fixed rate mortage I dont worry about the mortage...

 

I think that folks that stay in them a long time set themselves up for problems...

[the blob]

m, barks books...sell 'em once in a while, by why won't some Danish collector at least make a "best offer" on some of my old ones if there are so many Euros taking advantage of the weak dollar?

[the blob]

"The Wall Street Journal reported a few months ago that over $2 TRILLION dollars in US mortgages are set to adjust in 2006 and 2007. (The WSJ is a subscription site, so I can't access the article, but you can read some commentary about it here).

 

Or, you can look at it this way....nearly one out of every four US mortgage dollars are subject to rising interest rates. That's 1 out of 4 TOTAL mortgage dollars."

 

Yes, but some of these ARMs have been around for a while, it's not all people who bought in the last few years 9though a lot of it probably is), so is it going to be the end of the world? My folks have a 20+ year old ARM and didn't refinance because they have lousy credit and didn't see any need when they were paying like 5% for a while on their ARM. So, when rates are at 8%, they're happy they aren't at 8-9% like in the 80's. Temporary 5% rates were like a free gift.

[Psiknight]

hmm, barks books...sell 'em once in a while, by why won't some Danish collector at least make a "best offer" on some of my old ones if there are so many Euros taking advantage of the weak dollar?

 

Are they high grade? Slabbed?

 

The only Barks books that tend to sell for big bucks to overseas collectors are high grade Barks stuff.

[blazingbob]

"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"

 

KD - KD Lang?

 

Kentucky Duck?

 

Help out a low roller here

[blazingbob]

We wouldn't be starting this threads if Gene had given us the investment advice necessary to avoid speculating in real estate and comic books. We'd be smoking cigars and drinking champagne with the money we would have made buying oil and copper.

[joe_collector]

KD - KD Lang? Kentucky Duck?

 

Help out a low roller here

 

Kraft Dinner/Mac 'n Cheese

[blazingbob]

Ah, the college breakfast/lunch/dinner of champions

 

[valiantman]

Should we mention that the "housing bubble" is geographic?

http://money.cnn.com/2006/07/25/real_estate/housing_market_values/index.htm

 

Overvalued markets are common, no doubt, but the "housing bubble" isn't everywhere.

 

If there is an effect, it will likely be regional as well...

My own housing market is currently undervalued by 17%.

(Not surprising since our house (2006 construction) only cost $90/sq.ft.)

[DawgPhan]

clearly it is regional and not strange that the guy talking about the bubble is in FLA...