Asset bubbles and bursts are hugely influenced by the emotions of buyers and sellers?
Fundamentals get way out of balance first. Those that understand the fundamentals are first to exit. Emotion is what fuels the steep parts of both curves, (up and down)…
That this emotional factor is inherently difficult to assess?
Actually no I do not think the emotional factor is difficult to assess, I think it is painfully easy to assess.
Very few people successfully time major turns in asset cycles?
This is true. However not timing real estate valleys does not harm a homeowner who is buying for owner occupancy. If they are on either side of the valley by a year or so then I see no harm at all. The fallacy is trying to time the bottom.
Seeing beyond the emotion and focusing a variety of concrete factors is the only way of possibly divining when such turns in asset markets occur?
Yes looking beyond emotion is crucial.
A weakening dollar combined with a global economic expansion outside of the US means that foreign buyers in the neighborhoods I want to buy in (Scripps, CV, 4S, etc.) make dramatic drops there less certain?
I can say with 100% confidence that dramatic drops in these areas have no bearing on foreign buyers. Drops in these areas is substantially dependent on employment. A layoff at Qualcomm, many engineering firms, and biotech firms will have more impact on these neighborhoods then the value of the dollar.
How many foreign buyers have you assisted in those areas that 1) have the money (even more if their wealth was from non-US $ assets) and 2) largely ignore many of the finer economic points we banter about here and just buy because the like it, the schools are good, and their friends live there???
In fact none. Every buyer I have assisted in these areas have made their income and augmented their savings through gainful employment here in the United States.
Stabilizing inventory always occurs as a leading indicator before any RE cycle turn?
Yes but that may occur years before the bottom. I can honestly say that I have never ever seen pricing this far extended. It is WAY more extended then in the previous cycles. So if there is any indication of how this will play it, it is on the longer side of a depreciation cycle, not a shorter one. I think you are not considering cyclical inventory cycles as you seem to dismiss them with no thought at all.
What other indicators besides inventory are you considering? Do you think that is the only indicator you should follow? What other indicators to you point to us reaching the bottom of this cycle?
