PS, I abandoned work on a ‘predict peak’ model. It’s not difficult to do (I had a model that nicely modeled both peaks and troughs, except for the highest ‘greed’ peak, and I’d merely need to refocus and refine it), but I don’t need it, so I’m not going to work on it. I know the predictors for a peak model are different, because the predictors for my nicely fitting ’88-’03 up/down/up model were different from those in my ’90-’97 up only model.
Median price for San Diego County resale homes troughed in December 1995 at $163K ($162.5K, specifically), not $168K. I don’t concern myself with the fact that prices at close reflect transactions that were negotiated 30-60 days earlier. Maybe I should, but it would only confuse things (heck, some are having a hard time understanding this model!).
OFHEO data would not solve the ‘lagging by 30-60 days’ problem, PS. It’s based on closed sales and refinancings on conforming transactions compiled by FNMA/Freddie Mac. Thus, it, too suffers from the 30-60 day lag problem.
I’d forget about OFHEO for forecasting purposes; median prices for resale homes from DataQuick come out monthly, 15 days after month end. OFHEO gets updated quarterly, two months after quarter end. Per my graph, the median prices for resale homes per DataQuick and the index per OFHEO correlate very well.
I agree wholeheartedly, PS, that this will be a unique downturn (they all must be, I think, truly). I have no idea whatsoever how, mechanically, the personal debt (mortgage, HELOC, credit card), Federal deficit and debt, unfunded/underfunded state and city promises on pensions and benefits, war on terrorism, etc. will impact this downturn. But, I’m guessing it will be really, really bad.
I believe that buying at absolute trough will not be a major worry in the depths of the depression. Protecting one’s savings, and one’s family from Al Qaeda nuts coming in via Mexico with Iranian nukes and chemical weapons, will be the major concerns.
