The Ongoing Case-Shiller Fallacy/Shadow Inventory

[enron_by_the_sea]

Let me post following line from Jim Grant’s latest article:
“The error of optimism dies in the crisis, but in dying it gives birth to an error of pessimism. This new error is born not an infant, but a giant.”

[temeculaguy]

Thanks JP,it’s usually about me, but it wasn’t this time, I was trying to illustrate how the sweeping bear comments just don’t make sense anymore. We are down to area specific anomolies. The region as a whole is fundamentally sound again, but some areas are not and some areas may have overshot and bounced a bit, some areas may still overshoot to the downside. There are still some ripples and wrinkles to be ironed out, bugs used to talk about the butterfly effect, that it wont drop everywhere at the same time, that it takes years to settle. I still think you will get what you want, you’ve always known your chosen location would be at the back of the line and you are patient. If i were you, I would still wait, a 15% drop from peak is unacceptable and unsustainable, but when it gets to it’s pre bubble numbers, then that’s it, you gotta switch camps.

I am rooting for you and you are one of the reasons I still love this place.

Enron, I dig that quote, it’s so easy to get caught up in hysteria and so difficult to slow down and have alittle perspective, thanks for providing mine today.

[temeculaguy]

Thanks JP,it’s usually about me, but it wasn’t this time, I was trying to illustrate how the sweeping bear comments just don’t make sense anymore. We are down to area specific anomolies. The region as a whole is fundamentally sound again, but some areas are not and some areas may have overshot and bounced a bit, some areas may still overshoot to the downside. There are still some ripples and wrinkles to be ironed out, bugs used to talk about the butterfly effect, that it wont drop everywhere at the same time, that it takes years to settle. I still think you will get what you want, you’ve always known your chosen location would be at the back of the line and you are patient. If i were you, I would still wait, a 15% drop from peak is unacceptable and unsustainable, but when it gets to it’s pre bubble numbers, then that’s it, you gotta switch camps.

I am rooting for you and you are one of the reasons I still love this place.

Enron, I dig that quote, it’s so easy to get caught up in hysteria and so difficult to slow down and have alittle perspective, thanks for providing mine today.

[temeculaguy]

Thanks JP,it’s usually about me, but it wasn’t this time, I was trying to illustrate how the sweeping bear comments just don’t make sense anymore. We are down to area specific anomolies. The region as a whole is fundamentally sound again, but some areas are not and some areas may have overshot and bounced a bit, some areas may still overshoot to the downside. There are still some ripples and wrinkles to be ironed out, bugs used to talk about the butterfly effect, that it wont drop everywhere at the same time, that it takes years to settle. I still think you will get what you want, you’ve always known your chosen location would be at the back of the line and you are patient. If i were you, I would still wait, a 15% drop from peak is unacceptable and unsustainable, but when it gets to it’s pre bubble numbers, then that’s it, you gotta switch camps.

I am rooting for you and you are one of the reasons I still love this place.

Enron, I dig that quote, it’s so easy to get caught up in hysteria and so difficult to slow down and have alittle perspective, thanks for providing mine today.

[temeculaguy]

Thanks JP,it’s usually about me, but it wasn’t this time, I was trying to illustrate how the sweeping bear comments just don’t make sense anymore. We are down to area specific anomolies. The region as a whole is fundamentally sound again, but some areas are not and some areas may have overshot and bounced a bit, some areas may still overshoot to the downside. There are still some ripples and wrinkles to be ironed out, bugs used to talk about the butterfly effect, that it wont drop everywhere at the same time, that it takes years to settle. I still think you will get what you want, you’ve always known your chosen location would be at the back of the line and you are patient. If i were you, I would still wait, a 15% drop from peak is unacceptable and unsustainable, but when it gets to it’s pre bubble numbers, then that’s it, you gotta switch camps.

I am rooting for you and you are one of the reasons I still love this place.

Enron, I dig that quote, it’s so easy to get caught up in hysteria and so difficult to slow down and have alittle perspective, thanks for providing mine today.

[temeculaguy]

Thanks JP,it’s usually about me, but it wasn’t this time, I was trying to illustrate how the sweeping bear comments just don’t make sense anymore. We are down to area specific anomolies. The region as a whole is fundamentally sound again, but some areas are not and some areas may have overshot and bounced a bit, some areas may still overshoot to the downside. There are still some ripples and wrinkles to be ironed out, bugs used to talk about the butterfly effect, that it wont drop everywhere at the same time, that it takes years to settle. I still think you will get what you want, you’ve always known your chosen location would be at the back of the line and you are patient. If i were you, I would still wait, a 15% drop from peak is unacceptable and unsustainable, but when it gets to it’s pre bubble numbers, then that’s it, you gotta switch camps.

I am rooting for you and you are one of the reasons I still love this place.

Enron, I dig that quote, it’s so easy to get caught up in hysteria and so difficult to slow down and have alittle perspective, thanks for providing mine today.

[CA renter]

[quote=Allan from Fallbrook]sdr: I think what everyone can agree on is that, statistically speaking, its hard to argue a sustainable recovery in the face of some of these numbers, most especially unemployment.

I’m a California kid and I have seen the ups and downs in this state since the 1970s. What I know for sure, is that we (as a state) have never been here before. Unemployment is soaring, businesses and people are leaving the state in droves, we’re broke (individually and collectively) and it looks like things might get worse, before they get better (if that new FDIC report is any indication). The state budget shortfall woes aren’t over. State revenues, which are largely driven by large earner incomes and sales, are slumping badly. The legislature doesn’t appear to have a clue as to how to fix things and states like Texas are cleaning our clock when it comes to wooing California residents and businesses away.

The government has done a masterful job of “pay no attention to the man behind the curtain” when it comes to manipulation of circumstances, but, if that FDIC report is correct, there are only so many bullets that they can fire, before the gun runs dry.

I think we’re close to that point. In spite of Bernanke and Co. assuring us that everything is okay, the recession is over, “green shoots” are sprouting, etc, most folks I know are not only skeptical, they’re downright convinced that this “recovery” isn’t a recovery at all.

Unemployment drives home sales and, consequently, home values. The health and wealth of the State of California exerts similar upward or downward pressure. Consumer sentiment and confidence weighs in as well. All of these factors are at their worst point in years, if not decades.

When I talk about a second leg down, this is exactly what drives my thinking. You and I share a common background as accountants and, as we both know, it either pencils or it doesn’t. This for me doesn’t pencil at all.[/quote]

^^^What Allan said.^^^

Also, just in case I’m coming across as a perma-bear; I’ve said since at least summer of 2008 that things were looking fairly realistic in the harder-hit areas.

Unfortunately, with all of the various credit/mortgage “stimuli” and supply manipulation (moratoriums, encouraging deadbeats, etc.), it looks like the govt will succeed in forming another bubble, especially in the lower-priced areas. Too much speculation going on again, which was one of the red flags during the bubble. This next batch of foreclosures will absolutely be on the govt tab, so not quite sure how they plan to deal with that in the future.

Still, I think dollar devaluation is a significant risk right now, so buying a house might not be the most foolish thing to do at this point. Personally, I’ve chosen other ways to (hopefully) hedge against a currency crisis, but would not fault anyone who bought a house as a hedge, either. We are always actively looking at RE, and will buy if anything looks remotely reasonable, too.

[CA renter]

[quote=Allan from Fallbrook]sdr: I think what everyone can agree on is that, statistically speaking, its hard to argue a sustainable recovery in the face of some of these numbers, most especially unemployment.

I’m a California kid and I have seen the ups and downs in this state since the 1970s. What I know for sure, is that we (as a state) have never been here before. Unemployment is soaring, businesses and people are leaving the state in droves, we’re broke (individually and collectively) and it looks like things might get worse, before they get better (if that new FDIC report is any indication). The state budget shortfall woes aren’t over. State revenues, which are largely driven by large earner incomes and sales, are slumping badly. The legislature doesn’t appear to have a clue as to how to fix things and states like Texas are cleaning our clock when it comes to wooing California residents and businesses away.

The government has done a masterful job of “pay no attention to the man behind the curtain” when it comes to manipulation of circumstances, but, if that FDIC report is correct, there are only so many bullets that they can fire, before the gun runs dry.

I think we’re close to that point. In spite of Bernanke and Co. assuring us that everything is okay, the recession is over, “green shoots” are sprouting, etc, most folks I know are not only skeptical, they’re downright convinced that this “recovery” isn’t a recovery at all.

Unemployment drives home sales and, consequently, home values. The health and wealth of the State of California exerts similar upward or downward pressure. Consumer sentiment and confidence weighs in as well. All of these factors are at their worst point in years, if not decades.

When I talk about a second leg down, this is exactly what drives my thinking. You and I share a common background as accountants and, as we both know, it either pencils or it doesn’t. This for me doesn’t pencil at all.[/quote]

^^^What Allan said.^^^

Also, just in case I’m coming across as a perma-bear; I’ve said since at least summer of 2008 that things were looking fairly realistic in the harder-hit areas.

Unfortunately, with all of the various credit/mortgage “stimuli” and supply manipulation (moratoriums, encouraging deadbeats, etc.), it looks like the govt will succeed in forming another bubble, especially in the lower-priced areas. Too much speculation going on again, which was one of the red flags during the bubble. This next batch of foreclosures will absolutely be on the govt tab, so not quite sure how they plan to deal with that in the future.

Still, I think dollar devaluation is a significant risk right now, so buying a house might not be the most foolish thing to do at this point. Personally, I’ve chosen other ways to (hopefully) hedge against a currency crisis, but would not fault anyone who bought a house as a hedge, either. We are always actively looking at RE, and will buy if anything looks remotely reasonable, too.

[CA renter]

[quote=Allan from Fallbrook]sdr: I think what everyone can agree on is that, statistically speaking, its hard to argue a sustainable recovery in the face of some of these numbers, most especially unemployment.

I’m a California kid and I have seen the ups and downs in this state since the 1970s. What I know for sure, is that we (as a state) have never been here before. Unemployment is soaring, businesses and people are leaving the state in droves, we’re broke (individually and collectively) and it looks like things might get worse, before they get better (if that new FDIC report is any indication). The state budget shortfall woes aren’t over. State revenues, which are largely driven by large earner incomes and sales, are slumping badly. The legislature doesn’t appear to have a clue as to how to fix things and states like Texas are cleaning our clock when it comes to wooing California residents and businesses away.

The government has done a masterful job of “pay no attention to the man behind the curtain” when it comes to manipulation of circumstances, but, if that FDIC report is correct, there are only so many bullets that they can fire, before the gun runs dry.

I think we’re close to that point. In spite of Bernanke and Co. assuring us that everything is okay, the recession is over, “green shoots” are sprouting, etc, most folks I know are not only skeptical, they’re downright convinced that this “recovery” isn’t a recovery at all.

Unemployment drives home sales and, consequently, home values. The health and wealth of the State of California exerts similar upward or downward pressure. Consumer sentiment and confidence weighs in as well. All of these factors are at their worst point in years, if not decades.

When I talk about a second leg down, this is exactly what drives my thinking. You and I share a common background as accountants and, as we both know, it either pencils or it doesn’t. This for me doesn’t pencil at all.[/quote]

^^^What Allan said.^^^

Also, just in case I’m coming across as a perma-bear; I’ve said since at least summer of 2008 that things were looking fairly realistic in the harder-hit areas.

Unfortunately, with all of the various credit/mortgage “stimuli” and supply manipulation (moratoriums, encouraging deadbeats, etc.), it looks like the govt will succeed in forming another bubble, especially in the lower-priced areas. Too much speculation going on again, which was one of the red flags during the bubble. This next batch of foreclosures will absolutely be on the govt tab, so not quite sure how they plan to deal with that in the future.

Still, I think dollar devaluation is a significant risk right now, so buying a house might not be the most foolish thing to do at this point. Personally, I’ve chosen other ways to (hopefully) hedge against a currency crisis, but would not fault anyone who bought a house as a hedge, either. We are always actively looking at RE, and will buy if anything looks remotely reasonable, too.

[CA renter]

[quote=Allan from Fallbrook]sdr: I think what everyone can agree on is that, statistically speaking, its hard to argue a sustainable recovery in the face of some of these numbers, most especially unemployment.

I’m a California kid and I have seen the ups and downs in this state since the 1970s. What I know for sure, is that we (as a state) have never been here before. Unemployment is soaring, businesses and people are leaving the state in droves, we’re broke (individually and collectively) and it looks like things might get worse, before they get better (if that new FDIC report is any indication). The state budget shortfall woes aren’t over. State revenues, which are largely driven by large earner incomes and sales, are slumping badly. The legislature doesn’t appear to have a clue as to how to fix things and states like Texas are cleaning our clock when it comes to wooing California residents and businesses away.

The government has done a masterful job of “pay no attention to the man behind the curtain” when it comes to manipulation of circumstances, but, if that FDIC report is correct, there are only so many bullets that they can fire, before the gun runs dry.

I think we’re close to that point. In spite of Bernanke and Co. assuring us that everything is okay, the recession is over, “green shoots” are sprouting, etc, most folks I know are not only skeptical, they’re downright convinced that this “recovery” isn’t a recovery at all.

Unemployment drives home sales and, consequently, home values. The health and wealth of the State of California exerts similar upward or downward pressure. Consumer sentiment and confidence weighs in as well. All of these factors are at their worst point in years, if not decades.

When I talk about a second leg down, this is exactly what drives my thinking. You and I share a common background as accountants and, as we both know, it either pencils or it doesn’t. This for me doesn’t pencil at all.[/quote]

^^^What Allan said.^^^

Also, just in case I’m coming across as a perma-bear; I’ve said since at least summer of 2008 that things were looking fairly realistic in the harder-hit areas.

Unfortunately, with all of the various credit/mortgage “stimuli” and supply manipulation (moratoriums, encouraging deadbeats, etc.), it looks like the govt will succeed in forming another bubble, especially in the lower-priced areas. Too much speculation going on again, which was one of the red flags during the bubble. This next batch of foreclosures will absolutely be on the govt tab, so not quite sure how they plan to deal with that in the future.

Still, I think dollar devaluation is a significant risk right now, so buying a house might not be the most foolish thing to do at this point. Personally, I’ve chosen other ways to (hopefully) hedge against a currency crisis, but would not fault anyone who bought a house as a hedge, either. We are always actively looking at RE, and will buy if anything looks remotely reasonable, too.

[CA renter]

[quote=Allan from Fallbrook]sdr: I think what everyone can agree on is that, statistically speaking, its hard to argue a sustainable recovery in the face of some of these numbers, most especially unemployment.

I’m a California kid and I have seen the ups and downs in this state since the 1970s. What I know for sure, is that we (as a state) have never been here before. Unemployment is soaring, businesses and people are leaving the state in droves, we’re broke (individually and collectively) and it looks like things might get worse, before they get better (if that new FDIC report is any indication). The state budget shortfall woes aren’t over. State revenues, which are largely driven by large earner incomes and sales, are slumping badly. The legislature doesn’t appear to have a clue as to how to fix things and states like Texas are cleaning our clock when it comes to wooing California residents and businesses away.

The government has done a masterful job of “pay no attention to the man behind the curtain” when it comes to manipulation of circumstances, but, if that FDIC report is correct, there are only so many bullets that they can fire, before the gun runs dry.

I think we’re close to that point. In spite of Bernanke and Co. assuring us that everything is okay, the recession is over, “green shoots” are sprouting, etc, most folks I know are not only skeptical, they’re downright convinced that this “recovery” isn’t a recovery at all.

Unemployment drives home sales and, consequently, home values. The health and wealth of the State of California exerts similar upward or downward pressure. Consumer sentiment and confidence weighs in as well. All of these factors are at their worst point in years, if not decades.

When I talk about a second leg down, this is exactly what drives my thinking. You and I share a common background as accountants and, as we both know, it either pencils or it doesn’t. This for me doesn’t pencil at all.[/quote]

^^^What Allan said.^^^

Also, just in case I’m coming across as a perma-bear; I’ve said since at least summer of 2008 that things were looking fairly realistic in the harder-hit areas.

Unfortunately, with all of the various credit/mortgage “stimuli” and supply manipulation (moratoriums, encouraging deadbeats, etc.), it looks like the govt will succeed in forming another bubble, especially in the lower-priced areas. Too much speculation going on again, which was one of the red flags during the bubble. This next batch of foreclosures will absolutely be on the govt tab, so not quite sure how they plan to deal with that in the future.

Still, I think dollar devaluation is a significant risk right now, so buying a house might not be the most foolish thing to do at this point. Personally, I’ve chosen other ways to (hopefully) hedge against a currency crisis, but would not fault anyone who bought a house as a hedge, either. We are always actively looking at RE, and will buy if anything looks remotely reasonable, too.

[Nor-LA-SD-guy]

Short term IMO as long the property could cash flow if needed, it is a super buy in Socal as far as I am concerned.

Also IMO (I will go out on a limb here), This winter 2009/10 season is probably going to be the last best chance to find a super deal in the LA/OC/SD region. After that it will become a lot harder (again just my Amateur opinion).

Either way SD/OC/LA will morph into one large super city within 25 years that is the one thing I am sure about, Believe it or not the SD/OC/LA population is still growing at a very rapid rate (with both domestic migration and a lot more immigration from Asia ” both legal and illegal immigration)

[Nor-LA-SD-guy]

Short term IMO as long the property could cash flow if needed, it is a super buy in Socal as far as I am concerned.

Also IMO (I will go out on a limb here), This winter 2009/10 season is probably going to be the last best chance to find a super deal in the LA/OC/SD region. After that it will become a lot harder (again just my Amateur opinion).

Either way SD/OC/LA will morph into one large super city within 25 years that is the one thing I am sure about, Believe it or not the SD/OC/LA population is still growing at a very rapid rate (with both domestic migration and a lot more immigration from Asia ” both legal and illegal immigration)

[Nor-LA-SD-guy]

Short term IMO as long the property could cash flow if needed, it is a super buy in Socal as far as I am concerned.

Also IMO (I will go out on a limb here), This winter 2009/10 season is probably going to be the last best chance to find a super deal in the LA/OC/SD region. After that it will become a lot harder (again just my Amateur opinion).

Either way SD/OC/LA will morph into one large super city within 25 years that is the one thing I am sure about, Believe it or not the SD/OC/LA population is still growing at a very rapid rate (with both domestic migration and a lot more immigration from Asia ” both legal and illegal immigration)

[Nor-LA-SD-guy]

Short term IMO as long the property could cash flow if needed, it is a super buy in Socal as far as I am concerned.

Also IMO (I will go out on a limb here), This winter 2009/10 season is probably going to be the last best chance to find a super deal in the LA/OC/SD region. After that it will become a lot harder (again just my Amateur opinion).

Either way SD/OC/LA will morph into one large super city within 25 years that is the one thing I am sure about, Believe it or not the SD/OC/LA population is still growing at a very rapid rate (with both domestic migration and a lot more immigration from Asia ” both legal and illegal immigration)

[Author]

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