San Diego Housing Bubble News and Analysis

Yeah, I think she used to be the most prolific poster here a few years back. I really enjoyed some of the heated discussions too, as I remember. I wonder if she checks in from time to time. Has it already been 3-4 years now? Man, time flies.

P.S. I still miss your old blog too. Bring it back, seriously.

Yes, we had many spirited discussions on this board involving powayseller.

LOL, well thats about the closest thing I'll ever see to an apology. I tried to explain essentially everything she admits she was wrong about to her but she was just too charged up to let any of it sink in. Its nice to see even a leopard can occasionally change their spots. Kudo's to her for coming around in a big way.

Wow, is that really her? She was THE BIGGEST bear ~3 years ago. It's amazing to see how her views have changed.

Come on...

She is no idiot... To continue to be a bear would be pure stupidity when the facts are now on the table.

Hindsight is 20/20 afterall.

Did any over here capital ventures make it?

CE

Holy smokes...is she wearing a "Realtor" pin on her lapel?

I saw her video a couple of days ago, and it seemed apologetic. Yep, if you know/read/replied to PS's post, you are definately a PIGG veteran.

What I can’t get over is how feisty she was with fellow realtors and now she is one herself. I guess the good old saying “if you can’t beat them join them” stands true.

There are still quite a few bears and they will tell you your facts are not complete. Seems like once she became a Realtor, her tune changed.

I dont think her perspective changed because she's a realtor. I think being a realtor allowed her to see the world for how it truly operates not how perpetual bears wish the market would operate.Her tune did not change when she became a realtor, it changed after she had a chance to be one for a year or more. RE is not a purely economic market unlike the stock market. There are so many things impacting it that are unique to it. Americans love their homes and cherish home ownership which causes them to make decisions that are not always logical or rational. The gov't will always do whjat it can to protect that because that is what the masses want. It may not make sense, it may be a destructive path to go down but thats the way it is and the way it will always be. Until you see it firsthand it is difficult to appreciate how it changes everything.

I miss her. She really contributed to substantive discussions on this board. If it weren't for powayseller, I'd never have found Roubini, and I never would have gotten out of the stock market in time to miss the crash he was predicting.

Regardless of the state of the real estate market, there will be those somewhat desperate souls with the burning desire to own, logic and rationality be damned. I think powayseller may have not initially recognized this or at least discounted it heavily in taking her bearish stance years ago. Her current recognition of this market force appears to be one of the foundations of the "new" powayseller position. A buyers' agent developing an opinion based upon clients' emotions, of course, lends itself to its own myopic tendencies. I would argue that there are an awful lot of bears still out there and not many of them are aggressively seeking real estate right now. Therefore leaving the buyers demographic (investors aside) to be comprised of those who may be less than financially rational and instead just want to get that home and get it now. So it's no surprise that is the mentality she is seeing - that's the demographic that's out there shopping.

Frankly I do not know where we stand as far as inventory goes - are we low on a historical basis? Very low? I know we have extremely low interest rates, government subsidies, properties slow to market due to lender strategies, etc. With this background, do we have enough logic-be-damned gotta buy now buyers to keep transactions flowing in a low inventory environment? Seems to be the case and that's what I would argue if we are in fact in a low inventory environment.

At the end of the day hindsight is of course 20/20. But I think powayseller was calling for an approximate 50% devaluation - is that about right? We have certainly seen that or something close to it in plenty of zip codes in SoCal, have we not? In a general sense, she was of the mindset that we were going to experience substantial devaluation, and we have seen just that in many areas. And I don't think we are even close to being done yet in the more upscale neighborhoods.

So I'm clearly not getting it, because massive damage has already been done, so she cannot possibly be changing her tune regarding those areas as the game is already over. Now we are left with better areas that have yet not experienced the same level of devaluation - so I'm assuming the new call is that it is these areas that will avoid massive devaluation? We'll see - as we have already seen, hindsight is 20/20 and the numbers will not lie.

FWIW, her calls were for 50% off in the prime neighborhoods (i.e. Carmel Valley) that havent devalued nearly that much. I remember her stating the high end would get hit harder. She was right about alot of things as we all were. Just not to the extent or velocity she was convinced was inevitable.

Watching that video she seems to really get it now.

I remember her very well. At some point many of us realized that conversing with her was pointless. I remember one thread where she was essentially saying "This is bad! High inflation is coming! Run for the hills!" while on another thread she was arguing something along the lines of "This is bad! deflation is coming! Run for the hills!"

When this type of inconsistencies were pointed out to her, she admitted that she enjoyed a good argument (!) In other words, being feisty and argumentative just for the sake of it. There was a collective feeling fo empathy for her husband...

As for the 50% drop in some upscale areas... that may still happen in inflation-adjusted dollars, which are the only measure that matters when we compare dollar prices over time.

Didn't Powayseller's aggressive *style* get her booted out of here?

I remember something about the friction getting to the point that Rich might have even asked her to leave and battle it out on her own blog?

I could be all wrong.....Hell, my memory retention is so bad/muddled that I can't even remember why I started reading this blog way back when. Hmm, Might have been the promise of real estate armageddon and Beach front properties for 50 cents on the dollar.

MURF2222

First of all, powayseller was always bi-polar as evidenced by many of her exagerated contradictory rants. But this "I was wrong" pro real estate bullcrap is just more evidence of this bi-polar disorder. Her housing crash calls were quite correct in the beginning. Claiming she was wrong now? We are really only at half-time of this game people.

If any of you really belive this is over, or that the high-end won't get hit, do you realize the Option ARM and Alt-A resets are due to hit in mass in 2010-2012? What % of these mortages do you think really got adjusted to fixed? How many of those adjusted will still go into default anyway? What more ammunition does the gov have to fend off this next foreclosure wave? Hard to lower interest rates any more than 0%.

I agree that Powayseller was right. She doesn't need to say she was wrong, because she was right. The housing market saw 40%+ declines in San Diego County, didn't it? And we did see a severe stock market correction.

Nobody can be right on timing 100% of the time, but she was absolutely right on the direction of the markets.

There are many of us who do daily battle with the concepts of inflation/deflation and which will win over time. I'm a long-time deflationist, but hedged against a dollar decline a few years ago because I was/am worried about a currency crisis (now out of those positions).

I thought powayseller was all about 50+% decline, not 40+%? Timing and magnitude is key, not direction. Almost everyone on here were predicting a decline in 2006. Like sdr said, I think she was predicting 50+% decline in nicer areas, not Temecula and Chula Vista. I'm still waiting for 50% decline in MM SFR, any chance that'll happen?

powayseller was predicting S&P500 @600 in 2007. If that's your definition of being correct, then I can predict SD housing market will double next year and NASDAQ will hit 5000 next year too. I might be off a few years to a few decade, but I'll be right eventually. Broken clock is right 2 times a day.

Well, this bubble still isn't over. I know everyone is out celebrating the "end of the recession," but I think we still have a long way to go.

I don't remember the exact details, but PS was predicting 40%+ (yes, probably 50%) at a time when most people thought we'd see no more than a 15% correction. I'd say she was more correct than the milder bears.

No one said this bubble is over.

Yes, she was all about 50+% decline, not 40+%. Who are these "most people" you're talking about. Even sdr, who back then many considered to be too bullish, were predicting around 30% decline in NCC areas. BTW, timing is key and by her prediction, we should be at 50% decline by now.

deadzone nailed it. We're not done by a longshot. I'd actually feel alright about buying in O'side (if I wanted to live there) right now as I think the downside risk from this point probably isn't too bad. But the $1 mil market in CV? Or Enci? C-Bad? Not a chance, not for me.

As long as Rich keeps this site up, we will be able to come back in several years and see who was right and who was wrong.

As for ps, I am willing to give credit where credit is due, she was right about massive devaluation. Please don't make me run through most zips in SD County to show how bad it has been. Devastating. Yes there are the hold-outs but as deadzone says we are not done yet. And if we end up 40% down in CV as opposed to 50%, I am still going to give ps credit for calling a big decline correctly. If we see a CV home that sold for $1.3 in '06 close for under $800K in a few years, I will say close enough, ps, pretty damn good call.

Make no mistake I am not a ps fan, especially in light of the recent flip-flop, but I call em like I see em and right is right and close enough counts in my book.

We are not at the bottom in all areas and any massive instability whether geopolitical, monetary or nature made disaster could easily reverse the trend. PS based her theory on previous factors. The massive bailouts changed the equation.

Powayseller made the right call indeed. What she (and many of us) did not expect was that the fed would take such great pains to prop up the housing market. Therefore, the magnitude of the decline has been much less than she predicted.

She is making the correct call again this time. At this time, it is fairly safe to say that, in terms of nominal home prices (i.e., before taking inflation into consideration), the downside risk is much smaller than the upside. The biggest risk is inflation. When that comes, asset (including homes) prices will start shooting up again.

I agree that Option ARMS are toast.
But your typical Alt-A 5/1 ARMs are currently resetting to levels at or below their initial rate. In fact, the LIBOR would have to jump by nearly 3 percentage points from topday's rates for the typical alt-A 5/1 ARMs to reset above 6%.

Are you suggesting that the Alt-As won't "recast" like the Option ARMs? Because when the reset hits, it's not just the interest rate. Nearly all of these borrorers are now well under water (See WSJ front page today). This means due to their decreasing LTV, monthly payment will still go up regardless of interest rate.

As far as I know she was banned because of her very vocal, and constant, critism of Rich. It is one thing to debate him but another to openly bad mouth his analysis on his own site. She bit the hand that feeds. But also there was a general "nastiness" to anyone how disagreed with her. She left a wave of negativity that wasn't good for anyone on this site.

As for her being right or wrong there have been many people who have made calls (really just educated guess) that have been off on timing or amplituded. So what! That is what this site is about. Make a guess and see if your theory pans out. If not... Then learn from the mistakes...

Powayseller was just intolerant and that was what seperated her from the rest of you (and yes I realize there have been many heated arguements here) but don't think anyone here had the same god complex she did.

CE

"Are you suggesting that the Alt-As won't "recast" like the Option ARMs? Because when the reset hits, it's not just the interest rate. Nearly all of these borrorers are now well under water (See WSJ front page today). This means due to their decreasing LTV, monthly payment will still go up regardless of interest rate."
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I think FSD's general point on this issue is that lower LIBOR = lower reset payments = no payment shock = no forced default. Maybe an oversimplification but that's the gist. I agree as I have for the past year.

Alot of the 3/1 and 5/1 ARMS in SD have 10 yr IO periods, so anyone in these loan products is probably paying less now than they were originally. If LIBOR had not fallen off a cliff but was still in the 5.5% range, we would probably have had a ton more defaults after reset than we have seen.

I believe a huge percentage of people underwater are not in default because their payments are so low right now. I think the mentality is to ride things out for awhile and see what happens down the road. This environment was created by LIBOR tanking - otherwise I thnk most of these people would have had their hand forced by a big payment spike on reset and many would have just defaulted.

Anything that threatens to throw large numbers of people out of their homes (recasts, etc...) and more importantly *threatens to stop monthly debt payments to banks* will get a bailout. End of story. It has happened before, it will happen again.

And don't worry about who will buy the debt instruments, the Fed will act as buyer of last resort.

How this all ends is anyone's guess. It is clearly unsustainable, but this is a big country. It could take decades or it could end tomorrow.

Powayseller is a nut-job. Anyone who compliments their own "bold writing syle" on a blog like this is a nut.

She did have a knack for finding interesting information on the web, though, and regurgitated it for us. That was fairly useful but heaven help you if you disagreed.

Like many people here, she knew the bubble would burst, but there are too many variables involved to get it exactly right, and she had no concept of how slowly economies move. She wasn't entirely wrong, and this could still be a head-fake (perhaps a long one ), so her predictions may yet come true if the macro-economic environment and govenrmnent intervention proves to be nsustainable.

Realizing that people really love their houses doesn't seem a very good reason for thinking the bubble has popped and that things will turn around.

I think this is her website Fidelity Pacific

Yep, that's her.

Not sure if you got to check out her videos, especially where she interviews people on the street to see what they think of the RE market. Very interesting!