sales figures vs prices

[Bugs]

Cashman,

We’ve said many times that LA County isn’t on the same clock as San Diego is. We are not part of your region, except by connection via Riverside County.

You should be seeing the wave coming towards your area from the east. Its going to take awhile and I still wouldn’t say it’s just around the corner.

And when that wave does come to town it’s not going to produce 20% decreases in a year nor is it going to be finished in 18 months; it’s going to be more like 10% -12% a year for several years.

[Fearful]

Why does anyone expect prices that rose over several years to drop overnight? In general assets fall over about the same time period as they rose – the humps are roughly symmetrical.

One reason for this is people are loathe to realize gains. They hate to sell stocks, and houses, that have lost money. The smart money walks away from losing investments. In equity markets there is a lot more smart money than dumb, while in housing markets there is a lot more dumb money than smart.

So in the housing markets you have a minority that is put into a must-sell mode, while the majority sit tight until they are inclined to sell. Very few have the fortitude to sell because they expect future price declines. Rich is right to be monitoring NOD’s as a leading indicator of housing prices, because must-sell is the predominant driver of declines.

All depending on the mix of must-sell houses to come, but it would not surprise me if the decline will be longer and slower than the rise. I wish it were otherwise, because I too am itching to buy a house, but I will wait until no one ever expects to make money on a house again.

[Fearful]

Why does anyone expect prices that rose over several years to drop overnight? In general assets fall over about the same time period as they rose – the humps are roughly symmetrical.

One reason for this is people are loathe to realize gains. They hate to sell stocks, and houses, that have lost money. The smart money walks away from losing investments. In equity markets there is a lot more smart money than dumb, while in housing markets there is a lot more dumb money than smart.

So in the housing markets you have a minority that is put into a must-sell mode, while the majority sit tight until they are inclined to sell. Very few have the fortitude to sell because they expect future price declines. Rich is right to be monitoring NOD’s as a leading indicator of housing prices, because must-sell is the predominant driver of declines.

All depending on the mix of must-sell houses to come, but it would not surprise me if the decline will be longer and slower than the rise. I wish it were otherwise, because I too am itching to buy a house, but I will wait until no one ever expects to make money on a house again.

[Nancy_s soothsayer]

Sheesh, we keep on harping at the slowness of decline. From where I sit, I am panicking at the drastic sharpness of the decline! My family net worth lost more than 15K in two days (Thursday and today) through 401K stock accounts via limited selection of mutual funds. There was no way to escape the bath we just took. What was the cause of all that loss? Hmmm? The housing market. That’s right. The housing bubble is now the major cause of the credit implosion – it is all over the news now – no more hiding that. Every joe schmuck who watches the news should now be aware that the problem has a bottom line – the housing bubble. It hurts to see your 401K dwindle portions away caused by the housing market. Now, where is that bottle of sweet red wine…..

[Nancy_s soothsayer]

Sheesh, we keep on harping at the slowness of decline. From where I sit, I am panicking at the drastic sharpness of the decline! My family net worth lost more than 15K in two days (Thursday and today) through 401K stock accounts via limited selection of mutual funds. There was no way to escape the bath we just took. What was the cause of all that loss? Hmmm? The housing market. That’s right. The housing bubble is now the major cause of the credit implosion – it is all over the news now – no more hiding that. Every joe schmuck who watches the news should now be aware that the problem has a bottom line – the housing bubble. It hurts to see your 401K dwindle portions away caused by the housing market. Now, where is that bottle of sweet red wine…..

[kev374]

The problem is that even now there are creative financing schemes that are keeping this circus alive… http://www.quickenloans.com is an example. People with “good credit” (mid 600s FICO) can still get creative financing schemes and that is just prolonging this madness. When will it TRULY end?

[kev374]

The problem is that even now there are creative financing schemes that are keeping this circus alive… http://www.quickenloans.com is an example. People with “good credit” (mid 600s FICO) can still get creative financing schemes and that is just prolonging this madness. When will it TRULY end?

[Nancy_s soothsayer]

Those creative financing schemes are just now plain “bait” advertising for the remaining credit saints or greater fools who have high FICO scores and steady secure jobs. Almost every sucker and his relatives have already piled in during the last three years into the Trump-wannabe club. There are just a few remaining stragglers of naive, innocent, high-fico owners out there who are not Piggington readers who will fall for these greater-fool baits. Their numbers are dwindling. Soon enough, it will be Piggington’s turn to swoop in and buy at prime time.

[Nancy_s soothsayer]

Those creative financing schemes are just now plain “bait” advertising for the remaining credit saints or greater fools who have high FICO scores and steady secure jobs. Almost every sucker and his relatives have already piled in during the last three years into the Trump-wannabe club. There are just a few remaining stragglers of naive, innocent, high-fico owners out there who are not Piggington readers who will fall for these greater-fool baits. Their numbers are dwindling. Soon enough, it will be Piggington’s turn to swoop in and buy at prime time.

[cashman]

Bugs, I know it is delayed in LA County, and I’m really trying to be patient. I do feel that it’s coming my way. It’s just painful to see $2700 going out every month for the last year and a half, and not see much declines in resales. I figure I’ve spent $51,300 so far on rent, and the average home here in Diamond Bar has not declined by that much, yet. At that rate, I am just mirroring any declines at best.
For those of you that asked, Diamond Bar is on the eastern edge of LA county, just north of Orange County and west of San Bernadino County. Prices are extremely sticky here. For 550K you get a 1300 sq. ft. 40 year old POS. Really sad. 100 percent overpriced.

[cashman]

Bugs, I know it is delayed in LA County, and I’m really trying to be patient. I do feel that it’s coming my way. It’s just painful to see $2700 going out every month for the last year and a half, and not see much declines in resales. I figure I’ve spent $51,300 so far on rent, and the average home here in Diamond Bar has not declined by that much, yet. At that rate, I am just mirroring any declines at best.
For those of you that asked, Diamond Bar is on the eastern edge of LA county, just north of Orange County and west of San Bernadino County. Prices are extremely sticky here. For 550K you get a 1300 sq. ft. 40 year old POS. Really sad. 100 percent overpriced.

[temeculaguy]

Fearful, I get your rationale about why the downside will likely mirror the upside and I agree. But in reading your post you alluded to Rich tracking the NOD’s and every month he posts the new chart which includes the last cycle. Every month I look at it to see if it has tapered off or jogged down for one month because stocks and other equities don’t go up or down in a straignt line, they tend to look like an EKG readout. It also was a little jumpy in the last down cycle. But the NOD graph Rich posts looks like the flight plan for the space shuttle, it’s almost a straight line up and each month it just keeps going straight up. It is that graph alone that makes me doubt my own belief that this crash will follow the rules.

[temeculaguy]

Fearful, I get your rationale about why the downside will likely mirror the upside and I agree. But in reading your post you alluded to Rich tracking the NOD’s and every month he posts the new chart which includes the last cycle. Every month I look at it to see if it has tapered off or jogged down for one month because stocks and other equities don’t go up or down in a straignt line, they tend to look like an EKG readout. It also was a little jumpy in the last down cycle. But the NOD graph Rich posts looks like the flight plan for the space shuttle, it’s almost a straight line up and each month it just keeps going straight up. It is that graph alone that makes me doubt my own belief that this crash will follow the rules.

[Fearful]

The steepness and severity of the NOD graph, looking a bit like a rocket launch, gives one pause. My only guess is that it will affect the depth and length of the decline, less so the slope. Here’s why: The only sellers I see rapidly becoming aggressive on pricing are the builders. Banks are hard to predict; sometimes they will auction, sometimes they will market in the conventional way. Individual sellers will tend more to let the house sit on the market than to price aggressively. If an enormous supply of houses, priced conservatively, is suddenly dumped on the market, that has little effect on the house selling prices because those houses just sit there – the transactions are what determine the house prices. A large inventory will thus take a long time to make its effects on house prices felt.

If all houses were sold at auction, with immediate effect on house prices, the NOD chart would portend a precipitous drop indeed.

[Fearful]

The steepness and severity of the NOD graph, looking a bit like a rocket launch, gives one pause. My only guess is that it will affect the depth and length of the decline, less so the slope. Here’s why: The only sellers I see rapidly becoming aggressive on pricing are the builders. Banks are hard to predict; sometimes they will auction, sometimes they will market in the conventional way. Individual sellers will tend more to let the house sit on the market than to price aggressively. If an enormous supply of houses, priced conservatively, is suddenly dumped on the market, that has little effect on the house selling prices because those houses just sit there – the transactions are what determine the house prices. A large inventory will thus take a long time to make its effects on house prices felt.

If all houses were sold at auction, with immediate effect on house prices, the NOD chart would portend a precipitous drop indeed.

[Author]

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