San Diego Housing Bubble News and Analysis

Why do so many people take economists predictions as gospel? They are notorious for being wrong, and most of the people on this board probably have an equal to or better chance of being correct than anyone else, especially economists. Leamer was one of those people that said the correction would be in real terms, and that nominal prices would not go down much if at all. Now here he is changing his tune. Roubini has predicted a recession since he was born, and still not been proven correct. Yes he had the housing bubble pegged, but so did everyone who participates here.

Do your own research and make your own decisions. Seeking out others opinions that are similar to yours, is not going to enhance your odds of being correct. I seek out opinions that are the opposite of my own, just to see if they contain merit that would warrant re-evaluating my own. It is one of the main reasons I still hang around in here from time to time, reading opinions that are the opposite of mine to see if I have missed anything worth considering.

Economists have correctly predicted 9 of the last 5 recessions. Thats some good odds Chris. In America we have a culture of belief in expertise, the more arcane the subject the more we need experts. Since most people, myself included have only a fraction of an inkling of how our economy works, we tend to defer to experts; at least those that share our bias.

Americans need experts so badly that they don't even bother to check most of the time the actual qualifications of said experts. There are a lot of experts out there, many masquerading as economists.

I want that extra 10% IQ, at least I think I do.
Josh

Even geeks need rock stars. Chris I'm not saying I listen and folow in lockstep to the predictions of all economists but it is a nice temperature guage. The fact that Leamer has changed his tune and that bloomberg couldn't find anyone to defend housing is indicative of expert sentiment. The market reacts to the experts and the media. I know what the fundamentals are and where they should be but the rest of the people in the country determine the market, not just me. Two years ago my research didn't jive with market behavior, it took a while for a ship this large to turn around but turn around it did. Now I use economists like these to break things down like the Bush/Paulson plan down for me because I don't have the time to do it myself. I also watch Inside the NFL, read three or four ESPN colunists and then take what I have seen with my own eyes to for an opinion, yet things happen on Sunday that I didn't expect nor did any of my sources predict. Yet they watch more film than I do and they can offer insight that I cannot find on my own with a reasonable amount of time that I have for that pursuit. I don't bet on football but I like the analysis and it improves my experience as a fan. I also am not involved in R/E for a living, I may buy one or two homes, but again I enjoy the analysis.

I feel kinda bad. One of my relatives appears on CNBC and bloomberg all the time, and I never listen to what my relative recommends :)

Temeculaguy, this clip though is pretty interesting.

I'm not sure they all agreed, TG. For years, Shiller was the voice in the wilderness, saying forthrightly that home prices were an unsupportable bubble. Now he cheers government measures to support home prices, unlike the other two economists here. I can only conclude that his love of a bigger role for government in this case is greater than his love for telling the truth like it is.

I can understand this, although I think it's a net loss for us all. For years, Shiller has pushed all sorts of new financial instruments to help improve people's lives by insuring them against risks not currently covered by financial institutions. He is probably frustrated by private insitutions not picking up enough of his ideas and sees a brighter future for his ideas in front of a government audience. So he's paying some govt dues now.

Patient renter in OC

Patient, I agree, something is amuck with shiller these days. I realize that he is an academic and doesn't want to see real pain but he has been pretty flat over the last few months. He seems to also really respect Paulson and doesn't want to throw him down, but shiller is a bright guy and in the spirit of Chris' post, just because I think he is off base a little doesn't mean I should ignore him, homeboy has more than the 10% margin of I.Q. points on me. The other two were pretty entertaining, they seem to share my opinion that the bandaid should be ripped off quickly, take the quick pain and the recovery will ensue. Meddling will only postpone the inevitable, the sooner we restore order to the universe the better and perhaps we can avoid inflation and a weak dollar in the process. But I'm a jerk, I watch the forclosure numbers like a football game, feeling no sympathy and rooting for the ruin of others, karma will get me I'm sure of it. Personally I don't agree with all that American Dream of home ownership, I've owned for all of my adult life with the exception of now and I'm happier than I have eve been. I was enjoying a steak at Morton's the other day with some buddies and thinking to myself, this bitter renter lifestyle aint half bad. I was the only renter at the table and I picked up the tab, I figured it was the least I could do, I was the only one at the table not losing a thousand dollars a week in equity.

"I feel kinda bad. One of my relatives appears on CNBC and bloomberg all the time, and I never listen to what my relative recommends :)"

Lawrence Yun is your relative??? ;)

FLU didn't say it was a male relative and since the word he or she was cleverly avoided as was aunt, uncle, neice, nephew, I'm going with "she." Since the women of cnbc are hotter than the women of porn, I say FLU invites said relative to the meetup and FLU's drinks are on me. My place has one decoration missing, an 8x10 of me holding up a drink in one arm and with Maria Bartiromo draped on the other. FLU, hook me up.

See tg... your posts don't really get good until after 11pm.

Saturday nite posts always seem to have that extra special tinge to them as well.

I know what you are thinking my friend. One you know FLUs wife is asian thus the said relative is more then likely to be asian. Two you know CNBC women are attractive.

Oh yeah and let's hope Vince Young doesn't have some landmark day against the our defense. If Ted does not blitz the guy I am going to be one bitter joe...

SD Realtor

Thanks, SD, ever since VO mentioned "the proper alchemy" for creativity I've decided on a two drink minimum before posting. I forgot about FLU's asian wife, that rules out Maria, Courtney and Diana. It doesn't matter, as long as it's a female, the drinks are still on me. Come to think of it, that may be my epitaph.

I'm with you on the importance of today's game, the way to beat Vince Young and the Titans has been clearly demonstrated this season. If Norv and Ted mismanage this game I will be beyond frustrated, especially since Spanos says Norv will be back next year no matter what. I never really understood what it was like to live in Cuba or to be a Raider fan, to know the owner/president was completely nuts and would never go away until this season. It's like Spanos is under an evil spell, that every person in the country knows A.J., Norv and Ted are a disaster but spanos has those swirling cartoon eyes because he's hypnotized. I've figured it out though. I was at Mortons steakhouse and I was peeking in all the glass doors of the wine lockers in the lobby. I was spotting 1971 Staggs leaps, some mid 80's Moutons and just salivating over the collections like I was in a card shop looking at a Babe ruth rookie card. Then I find the locker with Spanos' name on it. Every bottle was from the same winery, his winery with his name on it. Then I understood the blind faith he has in his own decisions. He probably has sex dreams about his own wife. I think when it's over and done with it's going to have a scooby doo ending, we will find out that there is a hypnotic drug in the spanos label wine that is put there by A.J. who is working for Dr. Evil who wants to run down the price of the team so he can buy it and move it to L.A.

Other than that I can think of no better theory, so I'm going with that one.

This response may need to be cut out and framed tg.

Right now I am tivoing the game as we are getting ready to take the kids out.

I am praying that as I type the chargers are unleashing a blitz.

SD Realtor

Shiller may be getting some pressure from the PPT to "can it." However, he is kind of an odd duck anyway. The Leamer flip flop to me is one of the first signs of capitulation in sentiment. Once even the most bullish of people get bearish, I will be buying additional properties. The question is, who is the current poster child for the bulls?

Shiller has been right and also more consistent than just about anyone out there. He was way ahead of the curve in stating there was a housing market bubble and he has always advocated an extremely conservative approach to investing. He's weird as an economist only because he worries alot about the impact of finacial manias/busts on actual people rather than making a fetish of the market itself. He thinks that there is a role for the government to play in regulating markets so that manias don't grow out of control and in protecting people from fraud, and yes, bad decisions. But I really don't see much inconsistency from him. As for being an odd duck, what's the comparison? He's smarter than just about anyone on how financial markets actually operate. And, he has also developed some of the most useful data streams on the actual state of the real-estate market. That's all I really care about.

brian, I hear you. I agree that Shiller is owed some respect because of all he said when he was a voice in the wilderness, but I think he's sdefinitely pulling his punches now. I don't think what he says is exactly the same as what he thinks any more. He's become an actor in the play, modifying his message to get the results he wants, not just transmitting everything he knows and trusting that someone else will act correctly on it.

He's still really smart, and we all owe him one, and he will doubtless produce useful things in the future, but right now he's hitched his carriage to the PPT horse.

Patient renter in OC

I read somewhere that shiller moderated his public speaking when the options started trading on his housing index (march 2006) - he has some liability from the options trade that he didn't have before - him being cautious in his public speech to avoid legal liability could also be perceived as pulling punches - its hard to fart in this country anymore without risking a law suit

Some time in 2004 or so, I typed "real estate, bubble, mania, California" or something to that effect into google. From that search, I found piggington, and something about shiller's irrational exuberance book (the second edition, which had a bunch of stuff on the emerging housing bubble). At the time, I was begining to feel like a tinfoil hat wearing guy talking about the market in LA. Shortly after reading shiller, I decided to just keep my mouth shut and my wallet closed. I was more or less priced out of the market anyway, but anytime I felt any cognitive dissonance, I would reread Shiller or check to see if Rich had written any new posts.

Shiller seems like an extremely conservative guy (not in the political sense, but dispositionally). Even in his book, he would lay out data that just seemed devestating and he would follow it with "but, it is impossible to predict what will happen in the short term in any market," or some other huge hedge. He just seems like one of those (rare) people who is actually a little uncomfortable about people following his advice. Ironically, it makes me trust him more. I'll admit I don't really follow what he is saying about the market these days...it just seems pretty self-evident to everyone how screwed everything is.

4plex, I've followed a lot of Shiller's work (on other subjects too) for several years now, and I agree that something happened around the time those CME housing futures based on his index first were launched.

It could be legal liability related to his role in the index that's making him generally cautious, and anxious not to say clearly when he thinks house prices need to decline more than the PPT consensus. But I think it's more than that. In the YouTube debate TG linked to here, Shiller is not so much trying to appear neutral on the outlook for future home prices as he is advocating a bigger role for government action to support house prices. He doesn't have to do the second to avoid legal liability.

I think what's happened to Shiller is that he became very tired of proposing, for 20 years, a lot of interesting new types of insurance, with no one picking them up. He probably began to realize that he could end his acadamic career with a pile of ideas, every last one of which was just collecting dust. Now that the housing futures are in place, he realizes he's inside the tent with all the people who make things happen, and he desperately wants to make sure he's not kicked out. He has lots of other ideas besides the housing futures that he wants to make happen.

To a significant extent, he's been co-opted, and what he says has to be taken with big chunks of salt. Pity.

Patient renter in OC

Interesting and informative video, and yes, I was also surprised/disappointed in how Shiller responded to the interview questions. He did say what he thought, but it was very obvious that he didn't want to. It was disappointing to watch him.

it's a shame that 'fitting in' so often means putting a filter on what comes out of our mouths

"go along to get along" and "don't rock the boat" come to mind

"I feel kinda bad. One of my relatives appears on CNBC and bloomberg all the time, and I never listen to what my relative recommends :)"

Lawrence Yun is your relative??? ;)

Hell no. I would file for disowning that person as a relative if it were true. 

FLU didn't say it was a male relative and since the word he or she was cleverly avoided as was aunt, uncle, neice, nephew, I'm going with "she." Since the women of cnbc are hotter than the women of porn, I say FLU invites said relative to the meetup and FLU's drinks are on me. My place has one decoration missing, an 8x10 of me holding up a drink in one arm and with Maria Bartiromo draped on the other. FLU, hook me up.

Sorry i missed a few posts. Been kinda busy. Sorry temeculaguy, you're too late. He/she is engaged :). SDR is right on ethnicity. The good news is that you still won't be able to figure out which one, because their are quite a few on all the time. Person is not in the RE space, but does financial "stuff".

雲(Yun): Cloud, as in up up in the cloud.

how fitting to have NAR pick Mr. Cloud to be its head spinster at a time like this.