Thursday, August 07, 2008

Gramm's right, we are whiners

Phil Gramm got in trouble for calling Americans a bunch of whiners. Example A, is a WSJ story by the Personal Finance editor, talking about selling his house. He bought his Dallas home for $360k in 2004, and sold it for $429k this year. That's a 4.5% annual rate of appreciation, about the risk free rate. But of course, that's buried in the article, as he highlights that he put the house on the market for $490k, and got a first offer 6 months later for $390k. Talk about the world's smallest violin.


Anonymous said...

4.5% is the unleveraged appreciation. assuming a 20% down payment, 5% sales commission, and the $30K he mentioned for home improvements, he is whining about a 10% return on his capital invested-not too shabby in the midst of a so-called real estate depression.

Perhaps this reflects we have a lot longer to go before prices bottom.

btw, love the blog.

Anonymous said...

not so sure about shabbiness. i mean ppl got the leverage in the 60's and 70's too. he still rode the biggest credit bubble this world has ever seen so far. 2004-2007 if he put the house on sale 6 months ago. and got only 4.5% on notional. now granted TX is famous for not participating, but still makes you think where are the putative 100% gains.