A surge in the number of people buying houses as a speculative investment is the contemporary equivalent of the story about Joseph P. Kennedy, father of the late president. According to the tale, he sold his stocks a week before the 1929 crash because he heard a shoeshine boy named Billy touting U.S. Steel and RCA. When the shoeshine boy starts giving you tips, he is supposed to have said, it's time to get out of the market.
If you are to get out of the market, when the shoeshine boy starts giving you stock tips, then what are we to do when the shoeshine boy trades in his polish and becomes a stock broker? As you can see from the chart below, that is exactly what has occurred. Thousands of shoeshines boys hoodwinked by dreams of quick prosperity are turning into Realtors. These figures from the California DRE reveal that number of new real estate agent licensees in California has surged from 1,300 a month in 1997 to nearly 5,000 a month in April 2005. Of course, that is pittance compared to the surge in people taking the test, which has increased from 2,500 per month in 1997 to nearly 16,000 per month in 2005. The pink line is test takers and the blue line is new licensees.
Posted by Hello
No wonder it is getting so expensive to have my shoes shined.
1 comment:
Read Tim Duy's interpretation of Greenspan's speech about the housing "non-bubble." There is a link to it on the Calculated Risk blog.
Duy sees the Fed's stance as pure CYA...
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