How to Profit from the Coming Real Estate Bust: Money-Making Strategies for the End of the Housing Bubble

Like a smooth attorney summing up his case to the jury, John Rubino gives you every reason in the world to be very careful now that real estate has superseded stocks as the investment of choice. Written in June, 2003, Rubino is early. But "early" means you won't get knocked down if you head for the door. Real estate is a much more serious bubble than stocks could ever be because not only does it involve the roof over your head, it also constitutes your biggest debt, a huge amount of employment and business activity, and enough political ramifications to cause major tremors under our political landscape in the event the author is correct. Additionally, there is no liquid market for real estate as there is for stocks. That means there is no October '87 to clean out the system in one fell swoop. Real estate busts take years to work through the system, with all the resulting hardships and recriminations that go with the bursting of a bubble. Rubino wasn't as prescient as Robert Shiller who published "Irrational Exuberance" in the same month as NASDAQ topped out above 5000, but if real estate does crack, this time nobody can say they weren't forewarned. The first half of the book is an excellent detailing of how the real estate market works, its history, and how the current bubble came to be. This is interesting reading for those who need to get current on the dangerous game we're playing. The last half of the book gets more specific, giving you a good overview of the alternatives to keeping you money in real estate, including everything from lifestyle changes to tax consequences to his main concern - safety. All in all, an excellent (and concise - 250 pages) synopsis on what more and more experts are warning is our next major crisis.

Don't know what it's like in other places, but here in New York City, all I can say is DAMN. A friend who paid $700,000 a few years back for an nice but unspectacular condo says it's now worth $1.5 million. Apartments the size of walk-in closets rent for $1,500 a month. Who knows where the money's coming from, but there's no doubt about how all this will end.   Meanwhile, the author of this book has been busy. I Googled "Rubino housing crash" and found some interviews that readers considering buying this or a similar book might find useful. There's an hour-plus webcast on Jim Puplava's Financial Sense Online, in which Rubino makes some aggressive (to put it mildly) comments about the big banks, derivatives, and gold. Also interesting is a profile/interview in something called Bacon's Rebellion, a site dedicated to Virginia politics and economics. Both, I think, make a compelling case that housing-and maybe the whole economy-is headed for trouble, and that Rubino gets it. (...)

I never thought I'd say this about a finance book, but I couldn't put this one down. It is fascinating, logical, concise, well-written, and occasionally quite funny. Despite the catchy title, it is about more than just the regional housing bubbles we are experiencing right now: it is a primer on the entire lending industry and how badly it's gotten out of hand.Just to be clear about it, this is not a "doom and gloom" or "the sky is falling"-type book. There are no histrionics to be found here, only well-researched facts and common sense presented in a very reasoned manner. Whether you own real estate or are thinking of eventually buying, and whether or not you are convinced that some housing markets are overpriced, this book will give you the background and advice you need to protect your assets and possibly even to profit enormously.I have to comment on one of the other reviews here, by "A reader from San Diego, Ca," which implies that Rubino ignores the laws of supply and demand. This is an unfair accusation because it cites bad data: as a matter of fact, San Diego's home supply has increased at exactly the same rate as its population growth. They have both increased by 7% in the past 5 years. In the same time period, San Diego home prices have increased by 110%. The person who posted that review is clearly more interested in rhetoric than in facts but I wanted to set the record straight.

Back in 1999, when investment bankers were ordering $400 bottles of wine at lunch and Dow 36,000 was a credible forecast, not a joke, John Rubino was offering bear market strategies to readers of his column in TheStreet.com. Here's what he wrote on Oct. 21 of that year:"Put simply, stocks are as expensive as they've ever been and the economy is running out of slack. Labor is so tight that companies are having to pay up to keep good people. Health care and energy costs are rising again, and interest rates are up across the yield curve. The inevitable result: higher costs of borrowing and doing business, lower corporate profits and sinking stock prices."Rubino was clear-headed enough at the height of the stock market bubble to see the tunnel at the end of the light. Now he is sounding the alarm about the housing bubble. It's well worth listening to.You don't need to be an economist or a financial expert to grasp the warning signals he points to: credit policies that have become shockingly easy, to the point where a down payment on a home has become optional; high levels of consumer debt, and soaring home prices. Meanwhile, job creation and income growth are stuck in neutral and profligate government spending has undermined the value of the dollar and left the U.S. up to its neck in debt to the rest of the world. Rock-bottom interest rates have been pumping air into the bubble, of course, but so has the relatively new process of securitization, a feat of financial engineering that allows government-sponsored agencies like Fannie Mae and Freddie Mac to create a virtual bottomless pit of new credit that is beyond the reach of anyone to regulate. Rubino does an admirable job of walking the reader, step by step, through this financial maze, explaining how it has held together so far, and how it could fall apart. He posits a number of scenarios for how things could play out, from the merely worrisome to the terrifying. There are so many moving parts to the global financial engine, it's best not to get too hung up on exactly how or when the bubble will pop. Inevitably it will, and you'll understand why after you've finished the first half of the book. The second half of the book is your roadmap. It outlines a variety of strategies for sheltering your investment portfolio as well as your real estate assets from the post-bubble fallout. These include investing in commodities, particularly gold; selling stocks short, buying stocks in recession-resistant sectors, and buying bear-market mutual funds. Even if you don't think there is a housing bubble, the second half of the book offers a good investing overview that will serve you well no matter where you think we are in the business cycle. Rubino also offers a variety of defensive moves for home owners ranging from the drastic - selling, trading down to a smaller house, or moving to a less-overpriced housing market - to the less drastic but more complicated strategy of shorting housing stocks to hedge the valu

The whole "How to Profit" thing is a little overdonethese days, but this book's timing is good enough tomake up for the unoriginal title. Here in California,real estate is clearly a bubble, and Rubino does agood job of laying out the causes and consequences.Then he fits the housing bubble into the big picturewhich, if he's right, is absolutely terrifying. In anutshell, we've been borrowing like crazy for the pasttwenty years, and now we're eating our home equity.Pretty soon we'll run out of wiggle room and the wholesystem will crumble. People who borrowed to the max onovervalued houses will go bankrupt and the companiesthat are inflating the housing bubble will crash. Andthe east and west coasts, where home prices arehighest, will have the hardest time. All thingsconsidered, it's a tightly-reasoned, well-written,very scary argument.One tip for readers: You can skip the "Housinghistory" section (it's interesting but not necessaryto understanding today's housing bubble) and gostraight to the second section, where Rubino explainshow the housing bubble happened and why it's going topop.