LA Times: Real Estate Dot-Com Bust -Crimes Against Humanity

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THE NATION

Putting Stock in Property

Echoing the dot-com boom, many middle- class investors are rushing into real estate.
By David StreitfeldTimes Staff WriterMarch 27, 2005SAN FRANCISCO — Chris Boome, an insurance agent in the suburb of Burlingame, doesn't want to work the rest of his life. Who does? But at 58, Boome knows he hasn't saved enough to retire.

So a few weeks ago, he revamped his retirement accounts. He sold most of the mutual fund shares and used the cash to buy an $83,500 chunk of land in the Nevada hills, a stretch of ground he had seen only in a photograph.

"This is more exciting than a mutual fund," Boome said. "It feels safer too. You buy a piece of dirt, you feel you'll always have a piece of dirt."

The astounding rise in home values is enticing many middle-class Californians to bet on dirt, gambling their retirements that they can do better with property than with any other investment.

In the same way that the stock market's apparently limitless ascent in the late 1990s seduced investors into buying shares in untested dot-coms, relentlessly rising house and land prices are spurring people to do things that used to be considered unusual — if not irresponsible.

They're cashing in retirement funds, selling stock and taking out second mortgages. They're pouring the money into real estate, often in distant states, often without seeing the property."

Markets are ruled by either fear or greed," said Robert Campbell, a San Diego investor who has written a book on timing the real estate market. "At the moment, it's all about greed. Huge numbers of people are buying in at very high prices.

"Economists have been wondering for at least a year if real estate is in a manic phase that will end unhappily.

Federal Reserve Chairman Alan Greenspan, whose policy of low interest rates gets credit for launching the real estate boom, also has begun to fret. "I think we're running into certain problems in certain localized areas," he told a congressional hearing last month.

Some speculators have already been burned in Las Vegas, until recently the hottest market in the country. But for most investors everywhere else, any risks are outweighed by the potential rewards.

"People who did this five years ago aren't working today," Boome said…..zzzzzz