Talked to Thornberg

[23109VC]

What a great guy. I emailed him and told him how much I enjoyed his youtube videos..told him I had a couple of questions, he said to call him up and chat. so I did…and I chatted for a few minutes. maybe 5 minutes. didn’t want to monompoilze his time.

i asked general questions about the local housing market…what would happen, where woudl things go…

he basically said he thinks that things will go to 2004 price levels. but of course it “could” be worse…

he said if prices were to revert to actual 2003 dollar prices that would be on order of a 50-60% actual price drop.

he said he sees prices slowlys sliding downward over the next several years. not a fast quick huge drop all at once. slow declines, over years.

he said by 2009 we will see CA prices at 2004 levels.

he said it is the biggest RE bubble in history and the only thing that is close to it is the crash in Japan..and theer he said prices fell a few % a year for a decade….

he didn’t give me any hard core predictions just general info…

he did also give some general advice. like why are you buyin ga house. as an investment or for your family. if you are buying to live in it..for a family..and need a certain school district…or a certain location.and you bite off only as much loan as you can chew – and you take out “normal” loans.. i.e. no toxic ARMs..etc…. and you plan to live there for 10+ eyars…then he said buy it. and enjoy it. but just keep in mind the financial implications and what will likely happen over the next several years.

so it’s not hard to see prices coming down to 2004 levels.. maybe even 03?

he seems like a nice guy. not a lot of “experts” are willing to offer free advice and pointers to a novice over the phone…for free. My hat is off to Mr. Thornberg.

and if you watch his youtube video..he is a very intersting speaker. well spoken, articulate…entertaining to listen to..which you can’t say about a lot of the investment advisors…

thank you Mr. Thornberg!!

[Anonymous]

It appears that prices are already at 2004 levels in many parts of San Diego. I think Mr. Thornberg is living in a time warp.

[Anonymous]

It appears that prices are already at 2004 levels in many parts of San Diego. I think Mr. Thornberg is living in a time warp.

[(former)FormerSanDiegan]

“It appears that prices are already at 2004 levels in many parts of San Diego. I think Mr. Thornberg is living in a time warp.”

Sounds like think his thoughts/advice were for CA, not specifically for San Diego. In this cycle SD will fare the worst, IMO.

[(former)FormerSanDiegan]

“It appears that prices are already at 2004 levels in many parts of San Diego. I think Mr. Thornberg is living in a time warp.”

Sounds like think his thoughts/advice were for CA, not specifically for San Diego. In this cycle SD will fare the worst, IMO.

[no_such_reality]

SD will be fine compared to Sacramento, the IE, Bakersfield, etc.

[no_such_reality]

SD will be fine compared to Sacramento, the IE, Bakersfield, etc.

[Bugs]

If I were a professional economist and my reputation mattered to me, I’d be a bit circumspect, too. Since nobody knows or cares who I am I can get away with not having to worry about that on this blog.

He somewhat has to express his public opinions in conservative tones. Nobody can account for the unforseeable. Better to be wrong by degree than by direction. He gets almost full credit for being right even if the market winds up overshooting his initial projections.

As for where it settles, I spent a couple hours over the weekend looking at all the closed sales so far from May 2007 in the MLS for Carlsbad and Oceanside. I was looking for properties with recent prior sales from 2003-2006. I found a number of examples of current sale prices matching previous sales prices on the same home from mid to late 2004. That doesn’t include the losses from 2005 and 2006.

The 05/2007 price didn’t retract to the 2004 price in 100% of the examples I saw, but it was more than 70%.

[Bugs]

If I were a professional economist and my reputation mattered to me, I’d be a bit circumspect, too. Since nobody knows or cares who I am I can get away with not having to worry about that on this blog.

He somewhat has to express his public opinions in conservative tones. Nobody can account for the unforseeable. Better to be wrong by degree than by direction. He gets almost full credit for being right even if the market winds up overshooting his initial projections.

As for where it settles, I spent a couple hours over the weekend looking at all the closed sales so far from May 2007 in the MLS for Carlsbad and Oceanside. I was looking for properties with recent prior sales from 2003-2006. I found a number of examples of current sale prices matching previous sales prices on the same home from mid to late 2004. That doesn’t include the losses from 2005 and 2006.

The 05/2007 price didn’t retract to the 2004 price in 100% of the examples I saw, but it was more than 70%.

[Anonymous]

I agree that a publicly watched economist must be somewhat cautious on the doom and gloom scenarios. But to predict a return to 2004 prices, give me a break. That is pure incompetance. Most of these so called economists provide no value. If they are unwilling to make a realistic prediction, then they should find another line of work.

[Anonymous]

I agree that a publicly watched economist must be somewhat cautious on the doom and gloom scenarios. But to predict a return to 2004 prices, give me a break. That is pure incompetance. Most of these so called economists provide no value. If they are unwilling to make a realistic prediction, then they should find another line of work.

[barnaby33]

I remember PS analysis of his symposium a year or so ago. Even then that was his prediction. No massive retrenchment, just a slow lowering of prices over the next couple of years. Yes he left himself several defensive caveats, like if the economy tanks all bets are off.

I enjoyed the videos very much but do tend to agree that his predictions are far to conservative in light of what is happening in credit markets. Let alone a coming general recession in our economy.

Josh

[barnaby33]

I remember PS analysis of his symposium a year or so ago. Even then that was his prediction. No massive retrenchment, just a slow lowering of prices over the next couple of years. Yes he left himself several defensive caveats, like if the economy tanks all bets are off.

I enjoyed the videos very much but do tend to agree that his predictions are far to conservative in light of what is happening in credit markets. Let alone a coming general recession in our economy.

Josh

[PerryChase]

I pretty much agree with Thornberg and Bugs.

Negativity is frowned upon and one never predicts gloom and doom because, if one is not 100% right, one will get crucified. On the other hand, predicting pie-in-the-sky without backing it up with hard facts is OK. You can always come back with reasons why. Think Iraq.

By all account, we’re already at 2004 prices. I think that we can expect house prices sliding and stagnating for years to come. In the mean time, new products will built (for you guys looking for brand new houses). Think buying a large screen plasma or LCD in 2005.

[PerryChase]

I pretty much agree with Thornberg and Bugs.

Negativity is frowned upon and one never predicts gloom and doom because, if one is not 100% right, one will get crucified. On the other hand, predicting pie-in-the-sky without backing it up with hard facts is OK. You can always come back with reasons why. Think Iraq.

By all account, we’re already at 2004 prices. I think that we can expect house prices sliding and stagnating for years to come. In the mean time, new products will built (for you guys looking for brand new houses). Think buying a large screen plasma or LCD in 2005.

[Author]

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