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No. of Recommendations: 4
Actually it is very entertaining having front row seats while history is being made. There have been some spectacular financial bubbles historically, the Tulip Bubble, the South Seas Bubble, Japanese Real Estate, the Nasdaq Bubble, but this is by far the biggest. RE investors will be able to pick up some real bargains in about 5 years or so. I track inventory on ziprealty for San Diego, Phoenix, and Las Vegas. Going up by about 100 listings/day. Sales plummeting. The RE industry is still reporting higher year over year prices, but that is because a small number of higher end houses is selling. If they were honest enough to publish month to month prices or price/sq/ft. it would show some serious declines in the bubbliest markets. Econ 101: prices have to follow inventory. Inventory explodes, prices crash. There is no other way.

Here's inventory for April:

4/3/06:
San Diego 18,252
Phoenix 40,012
Las Vegas 18,348

4/25/06:
San Diego 19,344
Phoenix 43,566
Las Vegas 19,567

Notice Phoenix area inventory about double SD and LV. All 3 areas are roughly equal population. Most of the Phoenix sellers are flippers. How long will they be able to hold out with the carrying cost adding up? They will have to drop prices and compete with each other to sell, hurting the comps. How many investors used equity in their primary residences in say California to buy multiple flips in Phoenix and are now holding the bag? The exploding inventory indicates a lot of people did. It could get very ugly.

Good luck everyone.
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