I agree with Smiling Joe - the media machine is out of control. If investors pull out of the real estate market, where are they supposed to put their money? Gee, I wonder... back in the stock market? Who really stands to gain from a major reallocation of investor's dollars? Where was the money before investors jumped into real estate? I would guess mostly in the stock market or on hold in cash funds or low-risk investments waiting for the market to recover. Remember WHY we pulled out of the stock market? Is the market honestly looking THAT much better now?
The media is doing everything they can (quite successfully) to get the word out to all (not just investors) to stir up panic. Example: local media (in KS) is now talking about the bubble effecting our area - pleeease! Property values here have steadily appreciated 4-7% a year for the last 20 years... now it's a bubble? Come on! By the time you factor in cost of living & increases in cost of building materials, labor, etc it sounds pretty sane to me. But now people everywhere, including the midwest, are afraid of buying in a bubble and losing the money they have invested in their homes.
If you've pulled out of real estate, where do you put your money now? I don't know about the rest of you, but I am not dumping my money back into the market - give me a reason to feel confident that it makes sense to do so and I might get back in, but at present, it doesn't look so rosey. Those 14 month cds at 4.25% are looking pretty good these days. Or if I bury it in my back yard, at least I won't LOSE anything.
Do you think any of this is going to change lending practices - 40 year mortgages, interest only loans, high debt to loan ratios? It's all part of a larger problem - overconsumption, overspending, overextending, overeating... The media (ie: advertisers/lobbyists/sponsors) has programed us to overdo everything without any concern for what's good for us, good for the environment or good for the long-term economy. It's all about somebody making big bucks. I'm sick of the ongoing daily onslaught of sales pitches, misinformation and outright lies. We are little puppets and the saddest part is that the majority of people out there don't even realize they're being manipulated. What to do? I'm awake - what now?