Most Reliable Housing Forecast?

[Dino]

Besides everyone who actively participates in this forum (of course), who is the most reliable source for housing projections? moodyseconomy.com looks pretty reliable, but a report for $3995? A little out of my price range. There’s NAR, NAMB, Dataquick, the media such as CNNMoney.com and Fortune. There’s the Fed, educators and even the Bush Administration. The Burnham-Moores Center just had a conference, but sorting through all this data, who is going to be the most reliable? In my opinion, we need to look at track records. So again, I pose the question. Who has had the best record in forecasting the direction of the housing market, particularly in San Diego? Anybody?

[nla]

powayseller

j/k

[4plexowner]

If I had to limit myself to one source of data for San Diego real estate it would be Robert Campbell and his Real Estate Timing Letter.

http://www.sandiegorealestatereport.com

[guitar187]

I think the Campbell Method is quite valuable. I purchased two homes in Phoenix/Glendale based on his method. Both have significant equity and positive cash flow.

The good thing about the method is that it makes you find the numbers for a specific location. Why pay $3995 when you can do the research and develop your own report? His method gives you a great starting point for prospecting.

[NeetaT]

I read the attachment and it lost credibility with me when I read the below excerpt.

LEGAL DISCLAIMER

I reserve the right to stop taking new subscriptions at any time. This is due to the fact that any market timing advantage can be lost or diminished when too many people have access to the same information.

[Anonymous]

I agree with 4plex and guitar; Campbell’s approach is based on economic fundamentals, which ultimately drive the home market.

I like my adaptation/simplification of Campbell’s approach, but his approach, unalloyed, makes great sense to me, too.

[pencilneck]

I don’t know anything about him, but I like how Campbell lists the 1994 buy signal that turned out to be a questionable call.

Because our market is so credit dependent, my favorite housing forecast is the national debt service ratio. The data only goes back to 1980, but it has a good correlation with local real estate with a 2-4 year lead. I would never just use one data source to make a decision as large as purchasing a home, but this is my favorite.

Economagic has the best chart on this data, but I was unable to link it. Google “debt service ratio” for a variety of nice charts.

[(former)FormerSanDiegan]

I wouldn’t label the 1994 buy signal such a bad call.

In retrospect the sell signal in 2002 was much worse.
Prices peaked at least 40-50% above 2002 values.

[waiting hawk]

Year 2001 or 2002

My website tracking Inland Empire

[powayseller]

The best market timer is my friends bds (see more below).

Campbell’s track record is mediocre. His sell signal came in 2002, way too early. He had a buy signal in 1994, a sell signal in 1995.

I think too many real estate bloggers have alienated themselves in an ivory tower. Campbell included. They pore over data, which is months old and lagging by one year or more. While it’s all very interesting, they miss out on what is happening, because they’re not out showing homes, talking with people, identifying new trends, changes in activity, or talking with someone doing those things.

Which real estate blogger made money during the real estate boom? Our host, Rich, didn’t buy any real estate at all, and missed out on the biggest real estate boom in San Diego history. I also failed to participate, but the point is that bloggers are also late in understanding the cycles. Not talking with realtors makes it even more difficult for them to spot changes in the trend.

The best market timer in this cycle is the person who identified spring 2004 as the peak in the San Diego housing market. The only people who got that right are sdrealtor, Bob Casagrand, and my friend bds. Even Rich and I missed it, because we were relying on the data. As I’ve learned, in real estate, the data lags and is biased. You simply cannot time the market by poring over data. You’ve got to be out in the streets working with clients and showing homes, or regularly talking with people who are.

My friend bds used market timing in her own real estate investing, buying at the lows and selling at the top in 3 real estate cycles in Southern CA. She is clever enough to get *two* (that’s right, 2) $500K capital gains tax write-offs in this housing cycle!

So anybody who claims to be a good market timer, should have profited handsomely from this housing boom, not just writing about it. Who fits that description?

[Anonymous]

So, ps, you’re not going forward with your website/forecasting service, since you didn’t hit anything out of the ballpark in this run up?

In my opinion, this ain’t rocket science. Looking at the data from the last upturn, three factors — notices of default moving down, employment moving up, resale home sales moving up — gave a heads up that resale home prices would soon be moving up.

http://piggington.com/node/1693

Maybe things will be different in the upcoming upturn, many years from now. I guarantee that I will be all ears and all eyes over these next years, looking for signs of a sustained upturn. But, until I find evidence to the contrary, I feel very comfortable with the logic of my three factor model, and feel comfortable that prices aren’t going to start moving north until defaults, employment, and sales are all moving in the right direction.

But, the real buy signal will come from my wife, who will say, “Prices are low enough, now, let’s buy.” The good news is that with my luck over the last two years in gold mining mutual funds, I’ll be credible with her when I say, “Let’s wait a bit longer. If we wait until all three of the fundamentals are moving in the right direction, prices may continue to move lower and we can get an even better deal, then.”

[admin]

Our host, Rich, didn’t buy any real estate at all, and missed out on the biggest real estate boom in San Diego history.

Please do not post factually incorrect personal information about “your host.”

[powayseller]

Rich, I was quoting the Wall Street Journal story about you, and I’ve not heard that you disputed their story. They said you didn’t buy any real estate when you moved here because you thought it was overvalued, but you kept your house in Texas as a rental.

[blahblahblah]

Forecasting models like Campbell’s probably couldn’t account for the effects of massive subprime, variable-rate mortgage lending and 50+% DTI ratios. That completely distorted things this time around. Also, the internet helped the get-rich-quick stories disseminate more widely and quickly this time. Hence the big, big bubble. These two factors are also going to help make this crash worse than the last one.

[Anonymous]

ps: “So anybody who claims to be a good market timer, should have profited handsomely from this housing boom, not just writing about it. Who fits that description?”

So, Roubini, who probably made no money in the run up (he’s a professor, not a real estate flipper; he’s held onto his condo during this run up and run down) should not comment? Gimme a break.

I appreciate insightful analysis (e.g., Roubini, Rich), even if the person isn’t a billionaire from this past run up.

I have friends who’ve done very well in commercial real estate during the boom. The real question is, how much are they going to hold onto if we have a downturn.

How’s that website coming along? Can’t wait for it to come online.

[Author]

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