Why I predict a 55% nominal price drop in North County

[sdduuuude]

Again – when I talk about predictions, I predict a specific measure that can be verified. To me, the “peak” is the highest median price, so it is easy to see the peak because it is specific.

For predictions that include only a number, without clarification – yes, the peak is hard to define.

[sdrealtor]

Pick a number, any number. It will all show pretty much the same thing.

[sdduuuude]

My “SWAG” analysis is – this seems 2 to 3 times worse than the last bubble, which resulted in a trough-to-peak reduction in median price of about 10%. So, call it 25%.

Why median price? Because it is measureable. Why predict something you can’t measure, practically – like same house value.

Depending on the figure you use, 7 years of inflation could put this pretty close to 50%, inflation-adjusted, by the way.

[sdrealtor]

I agree with your rough number. BTW, I can measure same house value.

It’s late…nite nite

[sdrealtor]

I agree with your rough number. BTW, I can measure same house value.

It’s late…nite nite

[sdduuuude]

Bonus nachos.

[Anonymous]

Rich, I don’t think the Fed can inflate us out of this one. Yes, the Fed may raise short-term rates to speed up the economy, short-term. But, as we saw over the last two years, Fed-controlled short-term rates have no effect on market-controlled long-term rates. And, we’re now seeing decreasing purchases of our long-term debt by foreigners:

http://www.treas.gov/tic/tressect.txt

And, we’re seeing a reduction in holdings by our largest creditor, Japan:

http://www.treas.gov/tic/mfh.txt

While exporters such as China want to lend us dollars to fund our consumption, they’ll be less willing, I’m guessing, if they realize that they’ll be getting a big haircut in redemption value via high U.S. inflation.

I think the “funding U.S. consumption by lending the U.S. dollars” is nearing its end, and I’m wagering that there will be weakening demand for the U.S. dollar. Hence, while I have a home downpayment in hot standby, sitting in U.S. Treauries, ready for use, every single other cent of mine is in precious metals stocks.

[Author]

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