Knife catchers jump in

[poorsaver]

I have been renting for three years now, and I don’t plan on catching any knives any time soon. When I feel the bottom is in, perhaps in late 2010, I think the bargains will be plentiful and very few will be wanting to buy. That’s when I’ll make my move. I don’t care what the interest rates will be, as I’ll be paying all cash. I have two other friends that also are sitting on the fence with all cash. I can’t believe we are isolated examples. Unless we enter another Great Depression or some other geo-political disaster, I think the next cycle up will be a strong one with so many people waiting with lots of cash. But I don’t think there will be any hurry to catch the knife, as when there is a true bottom, like I said, everyone will be thoroughly disgusted with real estate.

[Eugene]

At the bottom, the market will suddenly reheat, there will be many buyers and (relatively) few sellers. Many areas will overcorrect and rebound. People will sit on sidelines till they are sure that it is the bottom, then everyone will rush in at the same time. On the other hand, nobody except banks will really want to sell at the bottom. It would be harder to get awesome deals. Best deals are scored during late stages of the decline and off the beaten path, when banks are overwhelmed and buyers are rare. It’s better to buy 6 months too early than 6 months too late.

My personal goal is to snatch myself a house I like and pay a 2001-2002 price for it. A year ago, it would have been unimaginable. This summer, I’m starting to see some opportunities. Am I in a hurry to catch a knife? No. Am I going to start looking around, making offers, and eventually move forward if I make an offer at a 2001 price and it is accepted? Absolutely.

[Eugene]

At the bottom, the market will suddenly reheat, there will be many buyers and (relatively) few sellers. Many areas will overcorrect and rebound. People will sit on sidelines till they are sure that it is the bottom, then everyone will rush in at the same time. On the other hand, nobody except banks will really want to sell at the bottom. It would be harder to get awesome deals. Best deals are scored during late stages of the decline and off the beaten path, when banks are overwhelmed and buyers are rare. It’s better to buy 6 months too early than 6 months too late.

My personal goal is to snatch myself a house I like and pay a 2001-2002 price for it. A year ago, it would have been unimaginable. This summer, I’m starting to see some opportunities. Am I in a hurry to catch a knife? No. Am I going to start looking around, making offers, and eventually move forward if I make an offer at a 2001 price and it is accepted? Absolutely.

[Eugene]

At the bottom, the market will suddenly reheat, there will be many buyers and (relatively) few sellers. Many areas will overcorrect and rebound. People will sit on sidelines till they are sure that it is the bottom, then everyone will rush in at the same time. On the other hand, nobody except banks will really want to sell at the bottom. It would be harder to get awesome deals. Best deals are scored during late stages of the decline and off the beaten path, when banks are overwhelmed and buyers are rare. It’s better to buy 6 months too early than 6 months too late.

My personal goal is to snatch myself a house I like and pay a 2001-2002 price for it. A year ago, it would have been unimaginable. This summer, I’m starting to see some opportunities. Am I in a hurry to catch a knife? No. Am I going to start looking around, making offers, and eventually move forward if I make an offer at a 2001 price and it is accepted? Absolutely.

[Eugene]

At the bottom, the market will suddenly reheat, there will be many buyers and (relatively) few sellers. Many areas will overcorrect and rebound. People will sit on sidelines till they are sure that it is the bottom, then everyone will rush in at the same time. On the other hand, nobody except banks will really want to sell at the bottom. It would be harder to get awesome deals. Best deals are scored during late stages of the decline and off the beaten path, when banks are overwhelmed and buyers are rare. It’s better to buy 6 months too early than 6 months too late.

My personal goal is to snatch myself a house I like and pay a 2001-2002 price for it. A year ago, it would have been unimaginable. This summer, I’m starting to see some opportunities. Am I in a hurry to catch a knife? No. Am I going to start looking around, making offers, and eventually move forward if I make an offer at a 2001 price and it is accepted? Absolutely.

[Eugene]

At the bottom, the market will suddenly reheat, there will be many buyers and (relatively) few sellers. Many areas will overcorrect and rebound. People will sit on sidelines till they are sure that it is the bottom, then everyone will rush in at the same time. On the other hand, nobody except banks will really want to sell at the bottom. It would be harder to get awesome deals. Best deals are scored during late stages of the decline and off the beaten path, when banks are overwhelmed and buyers are rare. It’s better to buy 6 months too early than 6 months too late.

My personal goal is to snatch myself a house I like and pay a 2001-2002 price for it. A year ago, it would have been unimaginable. This summer, I’m starting to see some opportunities. Am I in a hurry to catch a knife? No. Am I going to start looking around, making offers, and eventually move forward if I make an offer at a 2001 price and it is accepted? Absolutely.

[urbanrealtor]

[quote=peterb]I see way too much eagerness to buy on this site. And I would have thought it would have been more bearish. The sure sign of a bottom is improving fundementals with a high level of negative sentiment. Many people here are thinking that it’s “so cheap compared to where it was.”… Like that is how the market works. I heard the same thing about a year ago here. And this year the fundementals and outlook, are far worse!!!

So in my estimation, we’re still far away from it.[/quote]

The problem with what you are saying (and a problem with indicting “knifecatchers” in general) is that your are presenting this as a game in which the winners are the most effective and strategic market timers. That does not hold and here is why:

1
Many of the fundamentals are here now and performing nicely. Of course the usual caveats apply with regard to micro markets and unseen costs. However, cash buyers tend to be willing to get their feet wet at anything with a cap of over 6% (though that seems insanely low IMHO). The financed buyers tend to be okay with even lower ROE’s.

2
A tolerance for poor numbers is born out by the nature of the market in question. The housing market does not conform to most models (for sales of anything) currently at play in the US. This is due to the goods not being interchangeable, the actors’ inability to view the market dispassionately, relative lack of information (and ensuing opportunity cost) and the relatively high cost of purchase as a function of personal wealth. I mean seriously, how many people think about a house the same way they shop for groceries?

3
Negative sentiment is pretty widespread but the contrary nature of market watchers tends to mitigate that. I mean I have never dealt with more all-cash buyers than I am doing right now.
Chula Vista, Temecula, and the gnarliest parts of the downtown melt are seeing cash lurkers around every corner. Waiting for public sentiment to meet a particular threshold here may be a fools errand. Almost everyone who stops by one of my open houses comments that they are looking because things are now affordable to them.

Bottomline: timing a vital resource has some value when the resource seems intuitively over-priced, however, calling a bottom can be as productive as calling a top.

[urbanrealtor]

[quote=peterb]I see way too much eagerness to buy on this site. And I would have thought it would have been more bearish. The sure sign of a bottom is improving fundementals with a high level of negative sentiment. Many people here are thinking that it’s “so cheap compared to where it was.”… Like that is how the market works. I heard the same thing about a year ago here. And this year the fundementals and outlook, are far worse!!!

So in my estimation, we’re still far away from it.[/quote]

The problem with what you are saying (and a problem with indicting “knifecatchers” in general) is that your are presenting this as a game in which the winners are the most effective and strategic market timers. That does not hold and here is why:

1
Many of the fundamentals are here now and performing nicely. Of course the usual caveats apply with regard to micro markets and unseen costs. However, cash buyers tend to be willing to get their feet wet at anything with a cap of over 6% (though that seems insanely low IMHO). The financed buyers tend to be okay with even lower ROE’s.

2
A tolerance for poor numbers is born out by the nature of the market in question. The housing market does not conform to most models (for sales of anything) currently at play in the US. This is due to the goods not being interchangeable, the actors’ inability to view the market dispassionately, relative lack of information (and ensuing opportunity cost) and the relatively high cost of purchase as a function of personal wealth. I mean seriously, how many people think about a house the same way they shop for groceries?

3
Negative sentiment is pretty widespread but the contrary nature of market watchers tends to mitigate that. I mean I have never dealt with more all-cash buyers than I am doing right now.
Chula Vista, Temecula, and the gnarliest parts of the downtown melt are seeing cash lurkers around every corner. Waiting for public sentiment to meet a particular threshold here may be a fools errand. Almost everyone who stops by one of my open houses comments that they are looking because things are now affordable to them.

Bottomline: timing a vital resource has some value when the resource seems intuitively over-priced, however, calling a bottom can be as productive as calling a top.

[urbanrealtor]

[quote=peterb]I see way too much eagerness to buy on this site. And I would have thought it would have been more bearish. The sure sign of a bottom is improving fundementals with a high level of negative sentiment. Many people here are thinking that it’s “so cheap compared to where it was.”… Like that is how the market works. I heard the same thing about a year ago here. And this year the fundementals and outlook, are far worse!!!

So in my estimation, we’re still far away from it.[/quote]

The problem with what you are saying (and a problem with indicting “knifecatchers” in general) is that your are presenting this as a game in which the winners are the most effective and strategic market timers. That does not hold and here is why:

1
Many of the fundamentals are here now and performing nicely. Of course the usual caveats apply with regard to micro markets and unseen costs. However, cash buyers tend to be willing to get their feet wet at anything with a cap of over 6% (though that seems insanely low IMHO). The financed buyers tend to be okay with even lower ROE’s.

2
A tolerance for poor numbers is born out by the nature of the market in question. The housing market does not conform to most models (for sales of anything) currently at play in the US. This is due to the goods not being interchangeable, the actors’ inability to view the market dispassionately, relative lack of information (and ensuing opportunity cost) and the relatively high cost of purchase as a function of personal wealth. I mean seriously, how many people think about a house the same way they shop for groceries?

3
Negative sentiment is pretty widespread but the contrary nature of market watchers tends to mitigate that. I mean I have never dealt with more all-cash buyers than I am doing right now.
Chula Vista, Temecula, and the gnarliest parts of the downtown melt are seeing cash lurkers around every corner. Waiting for public sentiment to meet a particular threshold here may be a fools errand. Almost everyone who stops by one of my open houses comments that they are looking because things are now affordable to them.

Bottomline: timing a vital resource has some value when the resource seems intuitively over-priced, however, calling a bottom can be as productive as calling a top.

[urbanrealtor]

[quote=peterb]I see way too much eagerness to buy on this site. And I would have thought it would have been more bearish. The sure sign of a bottom is improving fundementals with a high level of negative sentiment. Many people here are thinking that it’s “so cheap compared to where it was.”… Like that is how the market works. I heard the same thing about a year ago here. And this year the fundementals and outlook, are far worse!!!

So in my estimation, we’re still far away from it.[/quote]

The problem with what you are saying (and a problem with indicting “knifecatchers” in general) is that your are presenting this as a game in which the winners are the most effective and strategic market timers. That does not hold and here is why:

1
Many of the fundamentals are here now and performing nicely. Of course the usual caveats apply with regard to micro markets and unseen costs. However, cash buyers tend to be willing to get their feet wet at anything with a cap of over 6% (though that seems insanely low IMHO). The financed buyers tend to be okay with even lower ROE’s.

2
A tolerance for poor numbers is born out by the nature of the market in question. The housing market does not conform to most models (for sales of anything) currently at play in the US. This is due to the goods not being interchangeable, the actors’ inability to view the market dispassionately, relative lack of information (and ensuing opportunity cost) and the relatively high cost of purchase as a function of personal wealth. I mean seriously, how many people think about a house the same way they shop for groceries?

3
Negative sentiment is pretty widespread but the contrary nature of market watchers tends to mitigate that. I mean I have never dealt with more all-cash buyers than I am doing right now.
Chula Vista, Temecula, and the gnarliest parts of the downtown melt are seeing cash lurkers around every corner. Waiting for public sentiment to meet a particular threshold here may be a fools errand. Almost everyone who stops by one of my open houses comments that they are looking because things are now affordable to them.

Bottomline: timing a vital resource has some value when the resource seems intuitively over-priced, however, calling a bottom can be as productive as calling a top.

[urbanrealtor]

[quote=peterb]I see way too much eagerness to buy on this site. And I would have thought it would have been more bearish. The sure sign of a bottom is improving fundementals with a high level of negative sentiment. Many people here are thinking that it’s “so cheap compared to where it was.”… Like that is how the market works. I heard the same thing about a year ago here. And this year the fundementals and outlook, are far worse!!!

So in my estimation, we’re still far away from it.[/quote]

The problem with what you are saying (and a problem with indicting “knifecatchers” in general) is that your are presenting this as a game in which the winners are the most effective and strategic market timers. That does not hold and here is why:

1
Many of the fundamentals are here now and performing nicely. Of course the usual caveats apply with regard to micro markets and unseen costs. However, cash buyers tend to be willing to get their feet wet at anything with a cap of over 6% (though that seems insanely low IMHO). The financed buyers tend to be okay with even lower ROE’s.

2
A tolerance for poor numbers is born out by the nature of the market in question. The housing market does not conform to most models (for sales of anything) currently at play in the US. This is due to the goods not being interchangeable, the actors’ inability to view the market dispassionately, relative lack of information (and ensuing opportunity cost) and the relatively high cost of purchase as a function of personal wealth. I mean seriously, how many people think about a house the same way they shop for groceries?

3
Negative sentiment is pretty widespread but the contrary nature of market watchers tends to mitigate that. I mean I have never dealt with more all-cash buyers than I am doing right now.
Chula Vista, Temecula, and the gnarliest parts of the downtown melt are seeing cash lurkers around every corner. Waiting for public sentiment to meet a particular threshold here may be a fools errand. Almost everyone who stops by one of my open houses comments that they are looking because things are now affordable to them.

Bottomline: timing a vital resource has some value when the resource seems intuitively over-priced, however, calling a bottom can be as productive as calling a top.

[LA_Renter]

From what I am reading across the blogs, there is increased investor activity in certain segments of the market which is showing up as increased purchases in the data, albeit from volumes we have literally not seen since the 1970’s. I have no reason to doubt that, but it does make you think exactly how many all cash buyers are out there? It sounds to me that for people that really know what they are doing, there are profits to be had right now. I imagine at this stage of the correction much of this was to be anticipated. I don’t think that there has ever been this steep of a price decline in such a short period especially in the lower to mid tiered markets. I agree with Bugs when he pointed out that there were at least three mini rallies during the last downturn only to fizzle out. I guess you can call these bear market rallies. These rallies can be persuasive, not to compare the stock market to RE but Wall Street rallied to 13,000 off of the Jan lows, even I started to consider maybe the worst really is behind us. I am glad I didn’t put any money on that bet. I am on the sidelines because I think the credit crisis is going to be deeper and take longer to correct than what is being bandied about by the MSM and many pollyanna economists. Ground zero of that distress is Cal RE. I usually go with my gut on these things and my gut tells me this thing is far from over.

[LA_Renter]

From what I am reading across the blogs, there is increased investor activity in certain segments of the market which is showing up as increased purchases in the data, albeit from volumes we have literally not seen since the 1970’s. I have no reason to doubt that, but it does make you think exactly how many all cash buyers are out there? It sounds to me that for people that really know what they are doing, there are profits to be had right now. I imagine at this stage of the correction much of this was to be anticipated. I don’t think that there has ever been this steep of a price decline in such a short period especially in the lower to mid tiered markets. I agree with Bugs when he pointed out that there were at least three mini rallies during the last downturn only to fizzle out. I guess you can call these bear market rallies. These rallies can be persuasive, not to compare the stock market to RE but Wall Street rallied to 13,000 off of the Jan lows, even I started to consider maybe the worst really is behind us. I am glad I didn’t put any money on that bet. I am on the sidelines because I think the credit crisis is going to be deeper and take longer to correct than what is being bandied about by the MSM and many pollyanna economists. Ground zero of that distress is Cal RE. I usually go with my gut on these things and my gut tells me this thing is far from over.

[LA_Renter]

From what I am reading across the blogs, there is increased investor activity in certain segments of the market which is showing up as increased purchases in the data, albeit from volumes we have literally not seen since the 1970’s. I have no reason to doubt that, but it does make you think exactly how many all cash buyers are out there? It sounds to me that for people that really know what they are doing, there are profits to be had right now. I imagine at this stage of the correction much of this was to be anticipated. I don’t think that there has ever been this steep of a price decline in such a short period especially in the lower to mid tiered markets. I agree with Bugs when he pointed out that there were at least three mini rallies during the last downturn only to fizzle out. I guess you can call these bear market rallies. These rallies can be persuasive, not to compare the stock market to RE but Wall Street rallied to 13,000 off of the Jan lows, even I started to consider maybe the worst really is behind us. I am glad I didn’t put any money on that bet. I am on the sidelines because I think the credit crisis is going to be deeper and take longer to correct than what is being bandied about by the MSM and many pollyanna economists. Ground zero of that distress is Cal RE. I usually go with my gut on these things and my gut tells me this thing is far from over.

[LA_Renter]

From what I am reading across the blogs, there is increased investor activity in certain segments of the market which is showing up as increased purchases in the data, albeit from volumes we have literally not seen since the 1970’s. I have no reason to doubt that, but it does make you think exactly how many all cash buyers are out there? It sounds to me that for people that really know what they are doing, there are profits to be had right now. I imagine at this stage of the correction much of this was to be anticipated. I don’t think that there has ever been this steep of a price decline in such a short period especially in the lower to mid tiered markets. I agree with Bugs when he pointed out that there were at least three mini rallies during the last downturn only to fizzle out. I guess you can call these bear market rallies. These rallies can be persuasive, not to compare the stock market to RE but Wall Street rallied to 13,000 off of the Jan lows, even I started to consider maybe the worst really is behind us. I am glad I didn’t put any money on that bet. I am on the sidelines because I think the credit crisis is going to be deeper and take longer to correct than what is being bandied about by the MSM and many pollyanna economists. Ground zero of that distress is Cal RE. I usually go with my gut on these things and my gut tells me this thing is far from over.

[Author]

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