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September 20, 2004

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paul

Speaking of bubbles . . . Californians have been jumping the border into my state (and currently we are welcoming them with open arms, even though it is becoming difficult to find decent pieces of raw land to develop)

- From Arizona

Kevin

Perhaps those denying the fact's are currently making their living off the real estate business? Real estate is a business like any other and the extreme reduction of interest rates in the past 10 years has resulted in millions of people becoming awash in [bank] cash and buying homes. Like any business seeing an opportunity to increase profit large numbers of people are now engaged in real estate speculation. The values of homes in certain areas of the country have doubled, triped and quadrupled in the last 5-8 years, and this huge increase in the selling price of homes is solely sustained by the ready availability of low interest rate loans to sustain the increase in selling price. Personal income has most certainly not quadrupled in this country, so how do you think people are getting the money to pay for these overpriced homes? Property values are nothing more than what people believe a property is worth. Sort of like tech stock prices in the early 90's don't you think? And we know what happened to them.

Tim O'Keefe

Kevin-

Yes I make my money to a large degree from the real estate industry. And as an advocate I do attempt to give my contituency fodder to fight off the doomsdayers.

But I do sincerely believe that the real estate market will not burst. Underline burst.

It may soften as I too cannot believe how high the highs are.

However, that does not mean I think it will burst.

I do believe that making an analogy akin to the stock market and the burst of tech in the 90's is falty.

Unlike stocks real estate prices have continued to rise over time. Why can that be? Demand. People got to live somewhere.People don't have to own stocks.

Stocks at some point level off. Google's stock as an example, is about as good as it is going to get. Sure it may go up a tad, but for someone who wants security it is not the way to go.

The only ones that will make money on Google will be the ones who day trade and make money off parsing margins as they go up or down.

There are investors in real estate who try and do the same. They will get burned at some point. But the long term holder virtually is never burned in real estate.

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Seeeo

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