powayseller, I do not wish to make you look like a fool, & any efforts I put forth couldn’t match your own…
I do not disagree that real estate in San Diego is a risky proposition, especially for recent purchasers, and that prices have peaked and are starting to decline, but to what degree and extent is currently unknown. I do not agree with Mr. Gin’s analysis, my point is that citing anecdotal evidence and conflicting data is no better than lashing out at someone for errors in their (Gin’s) forecasting model. Also, labeling someone ignorant is vastly different than calling them a liar.
As for conflicting data, above you quote a 10-15% decline in *price* and then qualify it with an increase in *sales* of upper end homes (?). You state that “price drops are occurring everywhere”, which I assume you mean to be all price brackets, couple this with recent statistics of a huge buildup of inventory on the upper-end and slowing sales in the high-end bracket, which would pull the last reported median down (more than 1%). Also, the Case-Shiller index is also down less than 1% as of May06 from what appears to be the peak in San Diego prices 4Q/2005 (and its up yoy). So what you’re observing in the market vs. what is actually occurring *overall* may be different -OR- it may be the same and about to be reported in the new numbers (since these indexes lag a month or two)… which brings me to the point about CME futures.
Since you possess a wealth of insider knowledge regarding local conditions in the *overall* market, and have tracked a major disparity between current real prices and the last reported median & Case-Shiller index values, selling housing futures would present a perfect opportunity for you & others (I’ve considered these myself). Also note that the Case-Shiller index compares *same* house sales where possible, vs. median prices, also note that the co-creator of the index (Shiller) went on record last year proclaiming a housing bubble, so I doubt the index is biased to the upside or that he is “lying”…
You’re statement that you would not trade the Case-Shiller index because it is not liquid enough does not make sense.
Liquidity isn’t an issue with the large price disparity you are quoting. As you put it, “a 10-20% drop or MORE!” (which has yet to hit the index) would easily cover the spread, and you could sell a May07 contract and wait unitl “delivery”, avoiding any trades, or buy a put option to limit your downside.
Also, you appear to quote numerous books, columnists, and other sources, yet appear to have no insights of your own. By posting these viewpoints you are benefiting users on this board, generating discussion and the like, but you must ultimately come to your own decisions, based on your own values and analysis, not because someone else said it was so (which is what got alot of real-estate “investors” in trouble in the first place).
