Mortgage broker predicts further collapse in housing

[briansd1]

[quote=4plexowner][img_assist|nid=12707|title=US Home Ownership Bubble|desc=|link=node|align=left|width=400|height=340]

Here’s another way of looking at the bubble – the chart shows the percentage of homes in America that are owned

Bubble theory says we will retrace this bubble to its start in 1995 or so

There may have been some structural changes in our economy such that this bubble will only collapse to the 65/66% level and not all the way to 64%

On the chart I have marked:
– 1987 when Greenspan became Fed Chairman – did the credit/debt bubble start all the way back then?
– 1997 when the capital gains exemption was enacted (http://www.nytimes.com/2008/12/19/business/19tax.html)
– 1998 when San Diego metrics departed from their historic range
– 2002 when massive monetary easing began
– 2006/7 when San Diego’s peak occurred

To do a thorough job of analyzing the housing bubble we might want to ask the question, “Is this JUST a housing bubble or is there a bubble in credit/debt that is collapsing along with the housing markets?”

IF there is a credit/debt bubble collapsing, we might have to go all the way back to 1987 when Greenspan took over the printing presses or even 1971 when Nixon closed the gold window

Regardless of where the ultimate bottom is, that bottom is far below current levels …[/quote]

I love the chart.

jpinpb would periodically remind of of the effects of the 1997 capital gains exemption. That got homeowners to play the property ladder and speculate on their own houses.

I would add the massive liquidity pumped into the economy prior to Year 2000. Remember the Y2K bug was going to cause the ATM and credit card machines to stop working? What a scam that was.

[sdduuuude]

I can’t say I’m a fan of using the fact that “bubbles revert to pre-bubble levels” as a justification for any predictions.

That is because “pre-bubble levels” is not really known until the bubble has stopped deflating.

Of course bubbles revert to pre-bubble levels becase those levels are defined by the end of the bubble. They are not, however, known in mid-bubble.

Yes, we revert to the mean, but the mean also reverts to the current trend, by definition, although slowly.

The question still remains – to what level are we reverting and none of these charts really shed any light on that.

I’m with davelj re: being sure about anything.

I think housing is stable this year, with minor pain at the high end, then bad next year.

[sdduuuude]

I can’t say I’m a fan of using the fact that “bubbles revert to pre-bubble levels” as a justification for any predictions.

That is because “pre-bubble levels” is not really known until the bubble has stopped deflating.

Of course bubbles revert to pre-bubble levels becase those levels are defined by the end of the bubble. They are not, however, known in mid-bubble.

Yes, we revert to the mean, but the mean also reverts to the current trend, by definition, although slowly.

The question still remains – to what level are we reverting and none of these charts really shed any light on that.

I’m with davelj re: being sure about anything.

I think housing is stable this year, with minor pain at the high end, then bad next year.

[sdduuuude]

I can’t say I’m a fan of using the fact that “bubbles revert to pre-bubble levels” as a justification for any predictions.

That is because “pre-bubble levels” is not really known until the bubble has stopped deflating.

Of course bubbles revert to pre-bubble levels becase those levels are defined by the end of the bubble. They are not, however, known in mid-bubble.

Yes, we revert to the mean, but the mean also reverts to the current trend, by definition, although slowly.

The question still remains – to what level are we reverting and none of these charts really shed any light on that.

I’m with davelj re: being sure about anything.

I think housing is stable this year, with minor pain at the high end, then bad next year.

[sdduuuude]

I can’t say I’m a fan of using the fact that “bubbles revert to pre-bubble levels” as a justification for any predictions.

That is because “pre-bubble levels” is not really known until the bubble has stopped deflating.

Of course bubbles revert to pre-bubble levels becase those levels are defined by the end of the bubble. They are not, however, known in mid-bubble.

Yes, we revert to the mean, but the mean also reverts to the current trend, by definition, although slowly.

The question still remains – to what level are we reverting and none of these charts really shed any light on that.

I’m with davelj re: being sure about anything.

I think housing is stable this year, with minor pain at the high end, then bad next year.

[sdduuuude]

I can’t say I’m a fan of using the fact that “bubbles revert to pre-bubble levels” as a justification for any predictions.

That is because “pre-bubble levels” is not really known until the bubble has stopped deflating.

Of course bubbles revert to pre-bubble levels becase those levels are defined by the end of the bubble. They are not, however, known in mid-bubble.

Yes, we revert to the mean, but the mean also reverts to the current trend, by definition, although slowly.

The question still remains – to what level are we reverting and none of these charts really shed any light on that.

I’m with davelj re: being sure about anything.

I think housing is stable this year, with minor pain at the high end, then bad next year.

[Anonymous]

I find this chart regarding the total credit markets to be informative (and more colorful!):

Note the emergence of GSE and financial sector debt in the past few decades.

I’m curious how they measure household debt. For example: Like many here I always have a revolving balance of several thousand dollars on my credit card, but I pay it off every month. My “debt” is backed by liquid assets, but I suspect it is still measured as debt in this chart. (I know credit rating agencies count this debt as well, even though it really adds zero risk.)

[Anonymous]

I find this chart regarding the total credit markets to be informative (and more colorful!):

Note the emergence of GSE and financial sector debt in the past few decades.

I’m curious how they measure household debt. For example: Like many here I always have a revolving balance of several thousand dollars on my credit card, but I pay it off every month. My “debt” is backed by liquid assets, but I suspect it is still measured as debt in this chart. (I know credit rating agencies count this debt as well, even though it really adds zero risk.)

[Anonymous]

I find this chart regarding the total credit markets to be informative (and more colorful!):

Note the emergence of GSE and financial sector debt in the past few decades.

I’m curious how they measure household debt. For example: Like many here I always have a revolving balance of several thousand dollars on my credit card, but I pay it off every month. My “debt” is backed by liquid assets, but I suspect it is still measured as debt in this chart. (I know credit rating agencies count this debt as well, even though it really adds zero risk.)

[Anonymous]

I find this chart regarding the total credit markets to be informative (and more colorful!):

Note the emergence of GSE and financial sector debt in the past few decades.

I’m curious how they measure household debt. For example: Like many here I always have a revolving balance of several thousand dollars on my credit card, but I pay it off every month. My “debt” is backed by liquid assets, but I suspect it is still measured as debt in this chart. (I know credit rating agencies count this debt as well, even though it really adds zero risk.)

[Anonymous]

I find this chart regarding the total credit markets to be informative (and more colorful!):

Note the emergence of GSE and financial sector debt in the past few decades.

I’m curious how they measure household debt. For example: Like many here I always have a revolving balance of several thousand dollars on my credit card, but I pay it off every month. My “debt” is backed by liquid assets, but I suspect it is still measured as debt in this chart. (I know credit rating agencies count this debt as well, even though it really adds zero risk.)

[davelj]

[quote=4plexowner][img_assist|nid=12708|title=Debt Bubble|desc=|link=node|align=left|width=400|height=270]

davelj, I assume you are referring to Jeremy Grantham

he believes there is a global bubble, not just in housing but in debt as well

Jeremy Grantham On Popping Financial Bubble
(http://www.parapundit.com/archives/005907.html)

Jeremy Grantham: World’s a Bubble Except for Trees
(http://www.tradersnarrative.com/jeremy-grantham-worlds-a-bubble-except-for-trees-907.html)

snippets from this 2007 article:

4. All global assets reflect this and are overpriced and show, probably for the first time, a negative return to risk taking.

6. Global credit is more extended and more complicated than ever before so that no one is sure where all the increased risk has ended up.

7. Every bubble has always burst.

8. The bursting of the bubble will be across all countries and all assets, with the probable exception of high grade bonds. Risk premiums in particular will widen. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity.[/quote]

Agreed, and none of this contradicts anything I wrote in my response to your last post, so I’m not sure what your point is.

[davelj]

[quote=4plexowner][img_assist|nid=12708|title=Debt Bubble|desc=|link=node|align=left|width=400|height=270]

davelj, I assume you are referring to Jeremy Grantham

he believes there is a global bubble, not just in housing but in debt as well

Jeremy Grantham On Popping Financial Bubble
(http://www.parapundit.com/archives/005907.html)

Jeremy Grantham: World’s a Bubble Except for Trees
(http://www.tradersnarrative.com/jeremy-grantham-worlds-a-bubble-except-for-trees-907.html)

snippets from this 2007 article:

4. All global assets reflect this and are overpriced and show, probably for the first time, a negative return to risk taking.

6. Global credit is more extended and more complicated than ever before so that no one is sure where all the increased risk has ended up.

7. Every bubble has always burst.

8. The bursting of the bubble will be across all countries and all assets, with the probable exception of high grade bonds. Risk premiums in particular will widen. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity.[/quote]

Agreed, and none of this contradicts anything I wrote in my response to your last post, so I’m not sure what your point is.

[davelj]

[quote=4plexowner][img_assist|nid=12708|title=Debt Bubble|desc=|link=node|align=left|width=400|height=270]

davelj, I assume you are referring to Jeremy Grantham

he believes there is a global bubble, not just in housing but in debt as well

Jeremy Grantham On Popping Financial Bubble
(http://www.parapundit.com/archives/005907.html)

Jeremy Grantham: World’s a Bubble Except for Trees
(http://www.tradersnarrative.com/jeremy-grantham-worlds-a-bubble-except-for-trees-907.html)

snippets from this 2007 article:

4. All global assets reflect this and are overpriced and show, probably for the first time, a negative return to risk taking.

6. Global credit is more extended and more complicated than ever before so that no one is sure where all the increased risk has ended up.

7. Every bubble has always burst.

8. The bursting of the bubble will be across all countries and all assets, with the probable exception of high grade bonds. Risk premiums in particular will widen. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity.[/quote]

Agreed, and none of this contradicts anything I wrote in my response to your last post, so I’m not sure what your point is.

[davelj]

[quote=4plexowner][img_assist|nid=12708|title=Debt Bubble|desc=|link=node|align=left|width=400|height=270]

davelj, I assume you are referring to Jeremy Grantham

he believes there is a global bubble, not just in housing but in debt as well

Jeremy Grantham On Popping Financial Bubble
(http://www.parapundit.com/archives/005907.html)

Jeremy Grantham: World’s a Bubble Except for Trees
(http://www.tradersnarrative.com/jeremy-grantham-worlds-a-bubble-except-for-trees-907.html)

snippets from this 2007 article:

4. All global assets reflect this and are overpriced and show, probably for the first time, a negative return to risk taking.

6. Global credit is more extended and more complicated than ever before so that no one is sure where all the increased risk has ended up.

7. Every bubble has always burst.

8. The bursting of the bubble will be across all countries and all assets, with the probable exception of high grade bonds. Risk premiums in particular will widen. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity.[/quote]

Agreed, and none of this contradicts anything I wrote in my response to your last post, so I’m not sure what your point is.

[Author]

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