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  • March 10, 2009 at 10:17 PM #15276
    Diego Mamani
    Participant

    Article republished by msn money:

    http://realestate.msn.com/article.aspx?cp-documentid=18279824&gt1=35000

    It makes the sensible argument that price-to-income ratios are returning to reality.

    My answer to the article’s title is “depends”. The Inland Empire for example has seen price drops of over 50% with respect to the 2006 peaks. However, some upper middle class areas in Southern California has seen drops of only 20%-25%. So, I think that IE prices are much closer to the bottom than the rest of So Cal.

    I think a good benchmark is given by prices in the year 2000. Prices in 1996-97 were too depressed. And after 2001, prices were simply in fairy-tale fantasy land (or strtaosphere, to be precise). We won’t see the 2005-2006 prices again in many, many years, unless of course inflation shoots up.

    Which brings me to my final point. I would take year 2000 prices, then inflate them by no more than 30% to account for CPI inflation since then, and that should give us reasonable prices in today’s dollars. (As we know, comparing today’s dollars with yesterday’s is like comparing apples and oranges.)

    March 10, 2009 at 11:07 PM #363739
    underdose
    Participant

    Why do you say no more than 30% for inflation? That is an extremely modest 3-4% per year, and the arguably grossly understated CPI was running 6% for much of the bubble. (Shadowstats put it closer to 14%.) But besides that, the bottom has nothing to do with matching reasonable prices. Usually the bottom overshoots the mean just because there is as much bearish momentum on the way down (and bad leverage wiping people out) as there was bullish momentum overshooting the mean on the way up.

    I think the mainstream news will be about as accurate at predicting a bottom as they were at predicting a top. Seeing as they didn’t predict a top, we all know what their track record is. Anyone calling bottom now is being silly with foreclosures still on the rise and a slew of Alt-A resets coming over this year and next. Then, next year starts what I call the “retirement boom”. If 1945 was the start of the “baby boom”, 2010 is 65 years later, so look for even more asset liquidation. Also, any arguments concerning price to income while unemployment is soaring (therefore aggregate income is dropping) is also silly. msn money is good for a laugh, but little else…

    March 10, 2009 at 11:07 PM #364220
    underdose
    Participant

    Why do you say no more than 30% for inflation? That is an extremely modest 3-4% per year, and the arguably grossly understated CPI was running 6% for much of the bubble. (Shadowstats put it closer to 14%.) But besides that, the bottom has nothing to do with matching reasonable prices. Usually the bottom overshoots the mean just because there is as much bearish momentum on the way down (and bad leverage wiping people out) as there was bullish momentum overshooting the mean on the way up.

    I think the mainstream news will be about as accurate at predicting a bottom as they were at predicting a top. Seeing as they didn’t predict a top, we all know what their track record is. Anyone calling bottom now is being silly with foreclosures still on the rise and a slew of Alt-A resets coming over this year and next. Then, next year starts what I call the “retirement boom”. If 1945 was the start of the “baby boom”, 2010 is 65 years later, so look for even more asset liquidation. Also, any arguments concerning price to income while unemployment is soaring (therefore aggregate income is dropping) is also silly. msn money is good for a laugh, but little else…

    March 10, 2009 at 11:07 PM #364026
    underdose
    Participant

    Why do you say no more than 30% for inflation? That is an extremely modest 3-4% per year, and the arguably grossly understated CPI was running 6% for much of the bubble. (Shadowstats put it closer to 14%.) But besides that, the bottom has nothing to do with matching reasonable prices. Usually the bottom overshoots the mean just because there is as much bearish momentum on the way down (and bad leverage wiping people out) as there was bullish momentum overshooting the mean on the way up.

    I think the mainstream news will be about as accurate at predicting a bottom as they were at predicting a top. Seeing as they didn’t predict a top, we all know what their track record is. Anyone calling bottom now is being silly with foreclosures still on the rise and a slew of Alt-A resets coming over this year and next. Then, next year starts what I call the “retirement boom”. If 1945 was the start of the “baby boom”, 2010 is 65 years later, so look for even more asset liquidation. Also, any arguments concerning price to income while unemployment is soaring (therefore aggregate income is dropping) is also silly. msn money is good for a laugh, but little else…

    March 10, 2009 at 11:07 PM #364332
    underdose
    Participant

    Why do you say no more than 30% for inflation? That is an extremely modest 3-4% per year, and the arguably grossly understated CPI was running 6% for much of the bubble. (Shadowstats put it closer to 14%.) But besides that, the bottom has nothing to do with matching reasonable prices. Usually the bottom overshoots the mean just because there is as much bearish momentum on the way down (and bad leverage wiping people out) as there was bullish momentum overshooting the mean on the way up.

    I think the mainstream news will be about as accurate at predicting a bottom as they were at predicting a top. Seeing as they didn’t predict a top, we all know what their track record is. Anyone calling bottom now is being silly with foreclosures still on the rise and a slew of Alt-A resets coming over this year and next. Then, next year starts what I call the “retirement boom”. If 1945 was the start of the “baby boom”, 2010 is 65 years later, so look for even more asset liquidation. Also, any arguments concerning price to income while unemployment is soaring (therefore aggregate income is dropping) is also silly. msn money is good for a laugh, but little else…

    March 10, 2009 at 11:07 PM #364184
    underdose
    Participant

    Why do you say no more than 30% for inflation? That is an extremely modest 3-4% per year, and the arguably grossly understated CPI was running 6% for much of the bubble. (Shadowstats put it closer to 14%.) But besides that, the bottom has nothing to do with matching reasonable prices. Usually the bottom overshoots the mean just because there is as much bearish momentum on the way down (and bad leverage wiping people out) as there was bullish momentum overshooting the mean on the way up.

    I think the mainstream news will be about as accurate at predicting a bottom as they were at predicting a top. Seeing as they didn’t predict a top, we all know what their track record is. Anyone calling bottom now is being silly with foreclosures still on the rise and a slew of Alt-A resets coming over this year and next. Then, next year starts what I call the “retirement boom”. If 1945 was the start of the “baby boom”, 2010 is 65 years later, so look for even more asset liquidation. Also, any arguments concerning price to income while unemployment is soaring (therefore aggregate income is dropping) is also silly. msn money is good for a laugh, but little else…

    March 10, 2009 at 11:43 PM #363758
    barnaby33
    Participant

    Take 2000 prices, add in zero for inflation and you have reasonable prices in todays dollars. Salaries not going up? Prices must come down. I earn LESS now than I did then in real terms and so is most everyone else.
    Josh

    March 10, 2009 at 11:43 PM #364240
    barnaby33
    Participant

    Take 2000 prices, add in zero for inflation and you have reasonable prices in todays dollars. Salaries not going up? Prices must come down. I earn LESS now than I did then in real terms and so is most everyone else.
    Josh

    March 10, 2009 at 11:43 PM #364046
    barnaby33
    Participant

    Take 2000 prices, add in zero for inflation and you have reasonable prices in todays dollars. Salaries not going up? Prices must come down. I earn LESS now than I did then in real terms and so is most everyone else.
    Josh

    March 10, 2009 at 11:43 PM #364204
    barnaby33
    Participant

    Take 2000 prices, add in zero for inflation and you have reasonable prices in todays dollars. Salaries not going up? Prices must come down. I earn LESS now than I did then in real terms and so is most everyone else.
    Josh

    March 10, 2009 at 11:43 PM #364352
    barnaby33
    Participant

    Take 2000 prices, add in zero for inflation and you have reasonable prices in todays dollars. Salaries not going up? Prices must come down. I earn LESS now than I did then in real terms and so is most everyone else.
    Josh

    March 10, 2009 at 11:50 PM #364362
    underdose
    Participant

    Add a zero? Wow, that’s like 900% inflation. Quite a disparity between 30% and 900%. Maybe somewhere in between for the past 8 years? Hopefully not more than that in the future…

    March 10, 2009 at 11:50 PM #364250
    underdose
    Participant

    Add a zero? Wow, that’s like 900% inflation. Quite a disparity between 30% and 900%. Maybe somewhere in between for the past 8 years? Hopefully not more than that in the future…

    March 10, 2009 at 11:50 PM #364214
    underdose
    Participant

    Add a zero? Wow, that’s like 900% inflation. Quite a disparity between 30% and 900%. Maybe somewhere in between for the past 8 years? Hopefully not more than that in the future…

    March 10, 2009 at 11:50 PM #364056
    underdose
    Participant

    Add a zero? Wow, that’s like 900% inflation. Quite a disparity between 30% and 900%. Maybe somewhere in between for the past 8 years? Hopefully not more than that in the future…

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