Social

Facebook. Where else you can read the intimate thoughts of people you haven't spoken to in 15 years? It's the one thing that gets me out of bed each morning.Well not true, but in the midst of Facebook friends telling me how Mondays suck, Wednesday is hump day, Thursday is Thirsty and Friday is the start of the weekend, they soon start blabbering about the calamities of their relationships or financial predicaments. When this happens, I get mildly aroused. Even more-so when they mention real estate.

See, whoever manages their rental property just tossed them the latest appraisal and they weren't happy. Mid-five figures below what they expected. While acknowledging the market was bad (a common theme) this was their property, a combination of brick, mortar and tile, that should be in no way subject to market forces.

Some were aghast - imagine houses falling in value. Others offered support - the appraisal couldn't be accurate. Some realistic - lucky you're not on the Gold Coast or that would be six figures. But who got the props? The moron - an appraisal means nothing; put an extra 50k on it and the right buyer could still come along and pay that.

"True, thanks for that. It makes me feel a lot better."

Unfortunately, the head-in-sand approach doesn't work in the midst of a catastrophic smashing of illiquid, debt ridden assets. Millions of plans are still hitched to the 'real estate always goes up' meme and those plans are well and truly still alive because that meme ain't dead yet. Those with time up their sleeve are withdrawing from the market, hoping the winter chill will rescind with the emergence of spring.

Those without time don't have any such luxury. They've clued into the severity of the rogering that awaits them - at the moment it's probably worth a Holden Commodore. Leave it till spring and it might just be something of European origin.

Imagine my faux friend from the social network if they'd bothered to investigate their own predicament. Sleeping tonight wouldn't be an option because equity is being torched by the hour.

Hobart, February 2010 and someone assumed laying down $450,000 for this 4x2 was a good idea.

December, 2010 and it's on the market at $475,000. No sale. Skip a few months ahead, several in fact, and stop at July, 2011 - the price crumbles to $395,000. Factor in closing costs and that's over $4000 a month up in smoke. Enjoy the bright flames of the equity bonfire at work - plastic money burns even prettier than paper money ever did.

When buyers lose their raging hard-on for houses, that Disneyland price in your head - forget about it. While this is all happening, it's far from over. Vendors will cling to the unrealistic and heads will remain in the sand because everyone has one of those moron Facebook friends. Happy to reassure you miracles are possible - he's not cheating on you; you look hot in that dress; your luck will turn around and you can regrow equity in a new game called Houseville.

Tidy up the joint, re-list in Spring and watch the buyers come running back... what could go wrong in the mendicant state?