Chris Martenson: I am your host Chris Martenson and today, we’re going to be talking about housing and the many and various housing bubbles that exist across the globe. Housing bubble you say? Yup. Remember, a bubble exists when asset prices rise beyond what incomes can sustain. That’s my definition. I think it’s a good workable one. In housing, my rules of thumb are these. A ratio of median income to median house prices is healthy when it’s in the range of two and a half to three and a half. In other words, if the median household income was $50,000 dollars, then we’d expect immediate house prices ought to be in the range of $125,000 to $175,000.
By the time that ratio stretches to around five, I consider that to be the beginnings of certified bubble territory. By the time that ratio climbs to eight or more, you have a silly bubble on your hands. One that will end in tears for a lot of people, especially those who took out home equity lines of credit or otherwise fell for the stupid banker blather about tapping your equity or taking advantage of the wealth effect. So let‘s give one example. In Toronto, Canada today, the median income for the Metro region is $78,373 dollars. So we’ll call that $78,000. That means a healthy housing market would be priced for the median house somewhere between $195,000 and $275,000 dollars. That makes sense.
Well, let’s turn now to look at the average home selling price in Toronto. What would that be? It’s $825,000, giving us ridiculous ratio of 10.6. However, if you actually wanted a detached home in Toronto, then the selling price for those vaults to $1.35 million dollars yielding a ratio of 17.3. Bubble territory? You decide. Here today to discuss all things housing bubble related is Ben Jones, proprietor of thehousingbubbleblog.com. Ben’s been tracking housing markets and bubbles for a long time in his excellent blog. Great way to track the ups and the downs of housing. Welcome to the program Ben.
Ben Jones: Thank you.
Chris Martenson: It’s good to have you. So Ben before we really dive in the housing, could you please tell people about your background and how you got interested in tracking housing bubbles?
Ben Jones: In the 1980s in Texas, I was studying real estate and we had a big real estate bubble that popped, and it was devastating. All the banks failed, the S&Ls. Then 1998 I moved to Austin, Texas and became aware of a housing bubble there. At that time, it was kind of a dot com thing related. Then that popped, and I moved to Arizona in 2003. Sedona, Arizona and I just kind of parachute in and everybody was just gaga about housing. I had a guy saddle up to me one day and to me his house was going up 10,000 dollars a month. We’re not talking about fancy houses. So became concerned. In 2004 I started of The Housing Bubble Blog and went from there. Of course, within two or three years in Sedona it was a disaster. Tell you the truth, it’s really disappointing that we’re back here in this situation that we’re in.
Chris Martenson: Well, I would certainly agree with that, because if we look at the history of bubbles whether they were tulip bulbs, swampland, railroads, it usually took a little over a generation to forget the painful lessons. I’m astonished Ben that we had an internet stock bubble in 2000, a housing bubble in 2007 and we’re here again. I think this shows that whatever people are up to today, maintaining a sense of perspective history and memory is just not part of it. I did not expect us to get back here again so soon.
Ben Jones: Well, that brings up an important point. We talked about it a few times on my blog that, I think this is the same bubble. For instance, in Texas when everything got wiped out in the 80s, the term speculative building was a dirty word for decades. For decades. The fact that we jumped right back into these TV reality shows about flipping houses and stuff like that. I think that shows that this was…that the speculative frenzy wasn’t extinguished by the collapse last decade. So I think it’s the same bubble.
Chris Martenson: Well, now I would agree with that and I think that’s really when we talk about what the central banks were up to, we could constrain it to the Federal Reserve if you want, but I prefer to look at all the world's central banks because this is a global liquidity phenomenon now. But one of the things they clearly had to do was, they had to maintain that bubble fervor. Because I actually traced this…when people say oh, there was this major housing bubble that burst. That was the pain. I said, no, no. That was a site bubble. The main bubble is this one that’s been blown since the mid-1980s and it’s centered on this ridiculous idea that you can constantly expand debts faster than incomes.
Taken nationally or globally, that would be the global amount of debt to global GDP. Nationally it would be national debt to national GDP. At the household level it's your household income to your own debt levels. Whatever it is. But as a household Ben we know that’s a dumb idea. I can’t expand my debts faster than my income forever. I have a math problem pretty soon. Somehow, we fell for the story in the central banks. The Federal Reserve is the main defender of this idea that what we need to do as a nation is continually perpetually forever have our debts grow faster than our income. Where do you fall on that particular story? I’m sure you’re tracking the central bank's shenanigans, too right?
Ben Jones: Right. I think if you chase it down to where it really started, it probably was in the 80s. For instance, from ‘86 to ’89, Fannie Mae and Freddie Mac doubled their mortgage portfolios. So that’s probably where the genesis of the whole thing is and this whole idea that houses or…well, in other words, why housing? Well, because everybody’s got to live somewhere and it’s a way to create this idea, this wealth effect and in as many households as possible. Yeah, now you’ve got houses that were bought for 25…or built rather, for 25, $40,000 dollars now trading for a million or a million whatever. Sure, people feel really wealthy and the dollar has kind of become meaningless and like you said debt becomes meaningless.
When you are talking about incomes to housing prices, there was a report that came out I don’t know, a couple of years ago that the most expensive neighborhoods in the country actually had the lowest incomes to house prices. I think that the high…yeah. That to me was like really telling. I mean, like the one that I remember the most was Mercer Island in Washington was the highest. It has 11…the house prices were 11 to 1 to the incomes. Every single…it wasn’t Detroit. It wasn’t the slums of this area or Ohio. It was the most expensive neighborhoods had the lowest incomes to housing ratios. The report was without any irony. Wow. These people are really wealthy. It’s like, no they’re not. Their houses are just way higher than their incomes.
Chris Martenson: You know Ben, a really important point that I don’t know why it had to be drilled into me this way. Because if you just live out here in the world of receiving your news from the newspapers, you will that message which is, oh, look these people are wealthier because their houses are going up in price. So that whole thing is just marketed constantly. It says your house is an asset. Your house is an asset.
Well, I’ve been hanging out with Robert Kiyosaki and I think it was probably the third time I heard him say the same story, but he drilled into me finally that your house is not an asset. An asset puts cash in your pocket. If you really examine what a house is, it’s a major cost center for everybody if you’re living it. You’ve got taxes, which are going through the roof in a lot of locations. You’ve got of course, all the maintenance. You’ve got insurance. You’ve got whatever interest payments you’ve got going on. This thing is a major cash sucking machine. A money pit. Therefore, it’s not an asset and somehow that all got reversed into this idea that your house is an asset. But I think we can expose this.
Let’s imagine some on Mercer Island. They decide to sell their house. So now they’re rich. But what would they do with that? Well, now they have to…the only way you can tap that equity is to move to a place with lower cost housing and buy another money pit and hopefully capture some gains difference. But otherwise, it’s not possible, by definition for everybody to get wealthy because their houses go up in price because everybody's got to live somewhere. The whole thing just falls apart as soon as you look at it even slightly rigorously, I think
Ben Jones: Well, right and all you have to do is listen. I don’t know about your radio, but when I listen to the radio all I hear is cash out refinance commercials, Rocket Mortgage. That’s how it works is the musical chairs. That’s why you read so often about people in California. Well, we’re moving to Arizona, or we’re moving to Nevada, or we’re moving to Oregon. Yeah, that works for a while, but it’s not sustainable.
Chris Martenson: Right. Well, absolutely not. So let’s talk about these bubbles then. So as far as I’m concerned, a bubble always needs two things. You need the story. There’s some story. It’s eyeballs. Elon Musk is going not create electric cars for everybody in the world. There’s a story and its usually got a good nugget of truth buried in it somewhere and you need credit. This is the thing. Like the tulip bulb crisis mania back in the 1600s in Holland. That couldn’t have happened without letters of credit being issued. So you need credit, because again, back to the definition of bubble. Occurs when asset prices rise beyond what incomes can sustain.
So we can all chortle and laugh about tulip bulbs, because obviously there was no income or cash flow associated with those things. But the same thing is true today in housing and just slightly more complicated. So you need the story, you need the credit. What kind of stories need to be told in order for…let’s pick on an area. I don’ know, let’s pick San Francisco Bay Area where I understand a local governance board has decided to…if I have the numbers right in my head. This is off top my head. But they’ve said well, to be qualified as a poor family now, to qualify for housing assistance, a family if they have an income up to 108,000, they’re poor.
So here we have an example of a place where it’s literally impossible for an average family to own an average house. Yep, there’s a story that has to go along with that which says, well, this is reasonable. Rational. It’s not that the house prices are wrong, there must be something else wrong with the story so that you have local governance saying, you know what we’re going to do? We’re going to help people afford the houses. Because there’s nothing wrong with house prices. We we’ll help them get into affordable housing with air quotes around that word affordable. Talk to us about this idea of what the story needs to be and the role of credit in creating these things.
Ben Jones: Well, the story is in the Bay Area well, we’ve got all these tech jobs. Which in my opinion the tech jobs are part of the bubble as well. You got all of these companies out there that don’t make money. But somehow are worth billions of dollars. Basically, like bed-and-breakfast, air B&B kind of things. But yeah, I mean if you look at the credit, the first thing that happened when the housing bubbled popped was Fannie Mae and Freddie Mac increased the loan caps for California. Now that happens whenever the jumbo loans went way.
So why did the federal government feel a need to increase loan caps for California at a time when prices were collapsing. That made no sense at all. Now we find that the federal government is basically guaranteeing not…close to 90 percent of the home loans in the United States. Before the housing bubbled popped, I think it was in the 70s, 70 percent. So that’s the credit. The credit is endless. It’s an endless well that’s coming from just the government. The federal government.
Chris Martenson: Yeah. Well, the headwaters of that particular river the central banks, but you’re right. Having Fannie Mae, Freddie Mac, and also I believe FHA loans; I was surprised how quickly they walk those all the way back to needing a three percent down payment. Which is just an insanely low thing. Of course, house prices…if people don’t…people don’t’ buy the house anymore. They buy the monthly payment. So as long as interest rates were falling and they were extremely low. Generationally low.
My first mortgage was at 12 and a half percent in 1988. So as long as mortgage rates were down there in the three and a half, four percent range, you could afford a lot more house in terms of price. Now that interest rates are rising, we’re obviously seeing some stress and strain. So let’s talk about that now Ben. In your view A, where do you see bubbles? What you would call housing bubbles. B, would you agree that many of those are arguably quantitatively passed peak and starting to fall?
Ben Jones: It’s hard to say. It’s a much short list to say where’s not bubbles.
Chris Martenson: Well, pick some of the worst ones.
Ben Jones: The worst in the world or in the United States?
Chris Martenson: Let’s take a world tour and then we’ll come to the US.
Ben Jones: Well, Hong Kong, China, Sydney, Australia, Auckland, New Zealand, Dubai, London, France. The United States I would say Seattle, the Bay Area, almost all of Florida, New York, Massachusetts. I’m here in Texas right now and it used to be the…these houses were 30, 40,000 dollar and now they’re 250, 350,000 dollars. In Dallas, which is falling right now, people don’t really blink buying a 250,000 dollar house; spending 10,000 dollars on it and then putting it back on the market for 350. I got to tell you, the people in Dallas don’t make enough money to afford that. It just got out of control. For whatever reason, these central bankers and the governments did this. I cannot speak for them. I don’t know what their motivation…well, I have my suspicions. But they just let it get out of control and it’s really unfortunate, but there is going be a price to pay I can tell you that.
Chris Martenson: Well, let’s talk about a place where I think that price is starting to be paid. You have a recent article about Australia and people starting to panic under the financial strain. As much as I understand, I live in Massachusetts that we’ve got a housing bubble here. As bad as it looks here, when I look at what happened in Melbourne and Sydney and places like that my jaw drops. It absolutely was crazy and not speaking of the motivations. Listen, the bankers love to get people on the hook for lots loans. We get that. Of course, they all make crazy money on the way up and then when things burst, everybody needs…who’s going to get the bailout. But the people get swept up in the story Ben. Take us through that story of what’s going on in Australia right now. What kind of panic are people experiencing?
Ben Jones: It’s really bad. I’ve seen in Bloomberg reporter in The Financial Times have already called it a…has said the word global housing bubble. I think Sydney's income to house prices they tipped over 10 percent and that brings up another thing, which is this whole foreign investor deal. They were building entire towers in like Brisbane and Melbourne that were just to be sold to Chinese investors. Financing never…off the plan we would call preconstruction condos and they would sell them out in two days. So now they’re being finished and it’s collapsing. They’ve got something like a 25 percent default rate combined with a 20 percent decline in prices.
Well, I tell you what, in a year or two it's going to be a 50 percent decline in prices. Similar to what we saw in Florida with the preconstruction condos back in 2006 and ‘07. So it’s a complete…as far as an economy it’s a disaster in Australia and they already know it. There is hardly a day that it does not just fill their headlines. That kind of gets to the strange concept about what I’ve said about the housing bubble was, the most important things happened after 2007 and ‘08 which was quantitative easing what the central banks did. Because that sat off a commodity boom centered around China.
I don’t know if you remember, they said that China in 2009, ‘10 poured as much concrete in three years as the United States did in a hundred. Well, that sat off this huge commodity boom which then fed this commodity explosion in Australia and in Canada. So then you had these mining areas in Australian and oil boom…oil shale things in Canada. These little towns and cities in Australian for instance, their median house prices went to 900,000 dollars and now they’re down as much as 80 percent. So that was really…what happened with the commodities actually created kind of like this…it's hard to even explain.
But what happened after 2008 was more important than what happened with the subprime, et cetera, before because it exacerbated this housing bubbling and spread it into Nigeria for instance with all the oil. Now you’ve got massive declines all over the world, because they were built…that was another story. It was this oh, well commodities. Well, commodities are what hammer…commodity bubbles is what hammered Texas in the 80s. Nevertheless, everything kind of comes down to what people can afford and boom or not well, booms turn to bust. That’s the way it goes.
Chris Martenson: Well, I totally agree. And of course, we said the bubble needs two things. You need that story, you need that credit. In Australia, I talked to a lot of people from Australia over the years and they said…many of them sort of knew what they were in, but sort of shrugged and said well, as long as everything is…all the house prices are going up and it is crazy here, and you don’t understand and there’s just no inventory and all at stuff. You still need that credit. When you issue credit, what you’re doing is you’re pulling forward consumption to today from the future. So eventually, that credit has to get paid back and that means that whether you were consuming commodities today, they don’t get consumed in the future because you’re paying that back.
However you look at that, there is less demand in the future and if enough credit gets wiped out, of course, you have deep, deep problems. You get systemic banking issues, all that stuff. So I’m looking at Australia now where we’re seeing that median house prices have dropped from 1.2 million down to a million in a year. That is a 200,000 dollar drop. Foreclosures are up by 600 percent in some regions. So we’re clearly seeing that their past peak and my advice and I’d see if you would share this. My advice to anybody who’s got real estate Australia who wants to move it is, don’t be shy. Drop the price until it sells and get the heck out of the way. That would be my advice here. What would yours be?
Ben Jones: Well, from a pedestrian standpoint, yeah, run for the hills. But the way I look at it is more like well, who are you going to sell it to? Well, some sucker and that’s fine. But the way I look at this whole thing is like the…is not from like individual standpoint. It’s like well, what does the housing bubble mean to the economy? So you got…yeah, you got winners and losers and that’s fine. Be one or don’t be one. But the problem is that we’re in the situation from the get go. Yeah, I mean, I guess you could say yeah, let’s bailout and let some other guy be a bag holder. But what I would prefer to focus on is, how can we not get in this situation again. What needs to be changed?
I think that the problem…the root problem is that for whatever reason, we’ve gotten into this situation where houses are supposed be some kind of creation of will, when as you said, they’re not. A house is an expense. I’m a property manager and I can tell you every day is an expense. Housing, it needs to go back to what it used to be, which is this something that we consume that requires investment, maintenance. It shouldn’t be this big bonanza. There shouldn’t be…for instance. I was astounded to find out that the housing TV reality shows are a multibillion-dollar industry worldwide, especially in like Australia and New Zealand. I mean, they used to basically worship housing and its role was just astounding. That just shouldn’t be. There shouldn’t be TV reality shows about housing. It wasn’t that way, 20, 30 years ago.
Chris Martenson: Well, this is…if we back up a bit and you asked important question which is look, how do we avoid this in the future? Believe me, I put a lot of blame at the feet of the bankers, but also the homeowners really who are participating in this have to bear some of the responsibility. But that’s kind of hard to say, like if you live in Seattle and you’ve got a job and you really want to own a home. What do you do? You either participate or you don’t and you either pay the prices that exist there or you don’t. In some ways I think A, for the home…here’s where homeowners bear responsibility in this. When they really, really stretch, when they think they’re going to flip the home for more, when they have their eye on the capital gains that they’re going to make off of this when they extract equity from their house because they’re worth so much more.
Those are things that really ought not to be done on average, especially during a bubble. So if we back up and asked that important question, how do we avoid this again? Look, we have an everything bubble in the world. As burned as people are going to get on real estate, what until you see what happens to the junk-bond and the leverage loan markets. Oh, my god. Just trillions of losses coming. In the equity markets, this is the everything bubble. Every major financial asset class, real estate, stocks, bonds got driven through the roof because the central bank said hey, we think we can…we blew up a credit…a cycle in 2000. Really unfortunate, but we learned our lesson. We just had to double down. Bernanke gave us a next layer of that. We had more participation by the world central banks. China got on board with that.
Unbelievable how much money was printed through all that and now we’re in our third credit cycle. This one blows up, Ben all I can tell you is that, if we’re smart and this is painful enough, what we do is we decide that we can’t let central bankers drive credit cycles as the policy instrument is damaging. It’s stupid and it always ends in tears. I think this time it ends in much more tears than 2008 just because like I said, there’s really nowhere to hide. Even at the height of 2007, I was writing about the bubble in housing and certain equities as well. There were still places to hide. There is nowhere to hide. Everything got overpriced except for certain commodities in this cycle. So beyond that, I just think my advice to people is know where you are in the bubble, stay oriented and for goodness sakes, get out of the way of it if you can. I don’t know what else to tell you at this point.
Ben Jones: Well, also whenever people are…whenever you hear crazy talk, just recognize it for what it is. For instance, it wasn’t that…it was 2016, people were telling us that negative interest rates were the future. This is the way it’s going to be. Oh, you’re going to pay me to borrow money? It was ludicrous on the face of it, and yet it was accepted by how many media organizations and talking heads? Look where it’s went. You talk about trillions. There’s already been trillions of dollars lost on sovereign debt that was issued at negative interest rate. The media won’t tell you that. But it’s already gone. Trillions of dollars have been lost on negative interest-rate bonds.
Chris Martenson: Yep. Yep. Who knew? Who knew that paying Portugal to lend it money was a bad idea? Who could’ve figured that out?
Ben Jones: Right. One thing you touched upon I want to mention is that, the house buyers themselves…one of the most important things I ever came across was Peter Schiff mentioned that people respect how many different ways that people speculate on housing when they don’t really know that they’re speculating. A perfect example is, if you refinance your house and you don’t really need to, you basically sold it to the bank. So you got to pay that back. So why would you do that? In most cases, these people don’t expect to have to pay it back.
I was in the foreclosure business for eight years and I did a lot of research on the houses as they came across my desk. A lot of times, these people were refinancing two, three, four times. This was in Flagstaff, Arizona. So they were refinancing every year. A lot of time pulling out 80, a hundred thousand dollars at a whack. Why would you do that when you know you have to pay it back? Well, they were expecting that they were never going to pay it back. So they were speculating. This is same with a lot of people like on Mercer Island in Washington. Why would you pay 10 times your income for a house? Well, because you expect it to go up? Another example is the way that in Santa Clara and Palo Alto where I’ve post stories in Palo Alto that now they’re whacking a million dollars off the price and it won’t get an offer.
Whereas before, they were getting multiple offers, et cetera. You don’t really need a five-million-dollar house. Why would you buy a five-million-dollar house? Because you expect to sell it for seven. So there is a lot of speculation that’s kind of going under the radar that well, housing is a good investment and it’s like, it’s not a good investment. We can debate that, but the fact is that nobody really needs a five million-dollar Santa Clara house, which is really kind of an ordinary house. They could live in a million-dollar house even if you believe that the housing was worth five million dollars, they actually expect it to be this big bonanza. Well, I guess the take away is that, there’ s a lot more speculation going on in the market than most people acknowledge.
Chris Martenson: Well, sure and when that speculation comes to an end there’s a usual pattern of things. So what are you looking for if you had advice for somebody who’s thinking is now the right time to buy? A lot of people of course are in that decision set right now, because people move. But what would you be looking at in terms of inventory or months on the market or how the prices in various subcomponents are moving? What would you look at to say, I should probably wait a little longer in this market? What would those indicators be?
Ben Jones: Well, that brings up something that I kind of think is funny is this months on the market thing. I posted an article yesterday about the months on the market going from 10 days to 15 days and now is a buyers’ market. Obviously, the months on the market thing is meaningless. I call it the real estate industrial complex. These guys…I don’t want to say what I think them frankly. But the months on the market doesn’t mean anything. The inventory…well, I would say right now the bubble is popping in the United States and until interest rates settle out and these processes settle down…I mean, I’m an investor. I’m a state investor and I’m getting ready to sit on the fence like a vulture, because that’s what’s going to happen here.
I mean, it’s really unfortunate, but we are going to see a collapse. We are seeing a collapse. The real estate market, the bubble has popped right now. You can mostly because…let’s take the Bay Area in California. Prices are falling and yet everybody is rushing to sell, and purchases are dropping like a rock. It’s the exact opposite when prices go down, people should buy more but they’re not. Everybody’s behaving like speculators. It’s just like day trading stocks or something. So what’s happening in the market right now is a lot more…has a lot more in common with…or suggest a bubble much more than it does just a correction or a cycle. I don’t know. I mean, I can’t think of a market in the United States I would buy in right now.
Chris Martenson: Alright, so as you sit like a vulture though, you might have to be patient. Bubbles take time. I know they tend to fall a little quicker than they go up. But still, housings a little slower than stocks and bonds…well, a lot slower than stocks bonds, most because you’ve got real people and the sale is cycle is slow. I just remember even in 2008 people just hanging on and grudgingly lowering their price by 5,000-dollar increments when a 50,000-dollar whack was what was needed. So there’s a little bit of a slower trajectory on that. Would you agree with that and two, is it possible though that because people have that recent memory of a decade ago that they might be a little quicker this time?
Ben Jones: Well, yeah, there’s plenty of people how have a memory of how this is going to play out and they’re actually probably all lining up the same way. But what you want to do…you don’t want to buy from Joe six-pack. What you want to buy is from a bank or a lender and that’s going to be Fannie May and Freddie Mac. For instance, in 2010, I helped somebody buy a house for 12,000 dollars. It was an online auction. That house was refinanced four years before for over 100,000 dollars. That same day, we could’ve bought three more for the same for like 10,000, 12,000 dollars. So that’s what you want. The lenders are going to be the ones that give you the big discounts. Wait until the distressed sales. You don’t want to be buying retail in real estate.
Chris Martenson: So I’ve never done that process Ben, so take me through that. How would I…how’s that work? Do you develop a relationship with a bank or is there just a machine and there’s a way that they do it and you have to figure out how that machine works and you show up with all the other people who understand how that machine works? Or do you follow individual foreclosures in a key market area and then make calls? How does that work?
Ben Jones: Well, it’s actually a ton of different ways it works. Sheriff sales, trustee sales. That’s the first level. In say Texas and Arizona, that’s the actual foreclosure. So they have to go through this process where they say well, its anybody can buy it including the current owner. They’ll put a print price on it that’s usually what’s owed. Whenever you see them selling it for less than what’s owed, that’s when there’s some blood on the street. So then, a lot of times in a falling market, it won’t sell at that price. So then there’s…there’s a post foreclosure and that’s when the rubber hits the road. So they’re going to put it on…it’s on the…they obviously want to market it to the largest number of people you and that’s when…you remember back in the day when there was a ton of foreclosures on the market right.
So that set post foreclosure marketing. So I used to go to a lot of sheriff sales and trustee sales and it’s a waste of time. Wait until that foreclosure has been sitting on the market for about six months and they’d whack it down eight or nine times. Then you go in and make a lowball offer. It’s not…another thing to realize is that, these guys that are selling these, they’re not…it’s not Fannie Mae and Freddie Mac. They hire asset managers and these guys, they’re professionally. They’re getting rid of the houses and they’ve got so much to spend on them and so much to get…so much that they can lose basically. Well, that’s where we’re headed again. I would be very patient right now about catching a falling off.
Chris Martenson: If I was interested Ben in figuring out that whole process, what’s a good way to go about learning about all that?
Ben Jones: Well, you could follow my blog. But I would just dive into it. I mean, there’s HUD with the system. HUD is going to have a lot of foreclosures. They always do? Because that’s what they are. They’re basically kind of a subprime outfit. You can just follow along the HUD foreclosures and just watch how it goes. Fannie Mae, Freddie Mac, they had the same thing. But they’re less transparent. What I would suggest you kind of watch out for is the auction.com outfits.
I can just say in my opinion from having watched them is that, they do bids on behalf of the lenders. So for instance, once we won a bid where we were the lead bid and within like two minutes of the closing, a bid came in 10,000 dollars higher. We were like, who would do that? Who would bid 10,000 dollars higher at the last second? Digging into it, later on we found out that the website had reserved the right to make bids on behalf of the seller. So bidding online is difficult. Well, I guess it’s like anything. It kind of becomes a doggy dog thing.
Chris Martenson: Yeah, it sounds like eBay with an undisclosed reserve minimum.
Ben Jones: Yeah, it’s really unfortunate. I mean, it’s definitely buyer beware.
Chris Martenson: Yeah. Well, I’ve been advising my listeners for a long time that there are better prices in the future and that everybody should…if you want to get involved in real estate or you want to buy different stocks or bonds, whatever you want. Get your buy list. Do your homework. Begin that process of due diligence. Understand what you would want under what circumstances and then be patient. So this is an area that I would really like to…personally I’m going to be following and I’d like to be alerting my listeners to as well which is this idea that, if you want to be in real estate, there’s a lot of legwork. A lot of homework. You got to do your due diligence. Just this past fall, I looked at 70 separate properties here in western Massachusetts. Couldn’t find any of them that looked even remotely compelling.
The prices were ridiculous. But I learned a lot about what was out there and what the market was and we got different key markets with five universities. So there’s a story about professors and students and then we’ve got a different story around the surrounding towns. So just working that all through is really important. But I think I’ve got a pretty good sense of the market now and I’ll keep building that sense as I go forward. I would not personally be participating in this market right now here, but I know under what circumstances I would. So I like that idea and will be following that and as well your blog. So Ben, we’re out of time for today. But first, thank you for your time. Please remind people where they can find your work and continue tracking the bubble.
Ben Jones: It’s housingbubble.blog.
Chris Martenson: Housebubble.blog. Yeah, great articles there. You can track everything that’s going on around that and it’s just fantastic. So hey, good luck being a vulture on the fence. I’ll be right there with you. I know some people listening will as well and we’ll be continuing to track this. So Ben, thank you so much for your time today.
Ben Jones: Thank you for having me.