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ParticipantI’ll wager that it wasn’t people from your generation who financed your Antarctic adventure. Upon your return, your disgust of American excess wasn’t strictly limited to the excesses of the boomers.
Like I said, your generation will have its day. Hopefully by then your peers will have made better choices than my peers have made. It doesn’t look that way so far, but it’s not over yet.
ParticipantCA,
I’ll not disagree that Boomers are responsible for some of the problems our society faces, but to suggest that GenX is – as a group – acting more responsibility is completely unsupportable at this point.
It’s true that the boomers are now running the country – poorly. But that is a function of their age and tenure in the workplace. Your generation simply hasn’t been around long enough to attain those positions of power yet.
Boomers do send out the credit cards, but you guys are still using them. Boomers do set interest rates, but you guys are still buying with credit. I’m pretty sure that if you guys weren’t following our lousy example we would be modifying our companies’ marketing efforts to suit. You guys could be leading but so far you seem to be following.
It’s simply a matter of numbers. Our generation has the impact that it does because of its sheer size. Your generation has less impact because it is so much smaller. In some ways an individual GenXer can be considered lucky because they’ll have a lot less competition for some types of opportunities than did the boomers. Don’t forget, much of the wealth attributable to the boomers was earned only in the last 10 years or so. Prior to that we were where you are now.
Once this economic spike unwinds you’ll get your opportunities to make your money. Be smart and you guys could wind up a lot better off than we ever were. But if you continue to do what we’ve been doing you can look forward to the same future we face.
ParticipantCA,
I’ll not disagree that Boomers are responsible for some of the problems our society faces, but to suggest that GenX is – as a group – acting more responsibility is completely unsupportable at this point.
It’s true that the boomers are now running the country – poorly. But that is a function of their age and tenure in the workplace. Your generation simply hasn’t been around long enough to attain those positions of power yet.
Boomers do send out the credit cards, but you guys are still using them. Boomers do set interest rates, but you guys are still buying with credit. I’m pretty sure that if you guys weren’t following our lousy example we would be modifying our companies’ marketing efforts to suit. You guys could be leading but so far you seem to be following.
It’s simply a matter of numbers. Our generation has the impact that it does because of its sheer size. Your generation has less impact because it is so much smaller. In some ways an individual GenXer can be considered lucky because they’ll have a lot less competition for some types of opportunities than did the boomers. Don’t forget, much of the wealth attributable to the boomers was earned only in the last 10 years or so. Prior to that we were where you are now.
Once this economic spike unwinds you’ll get your opportunities to make your money. Be smart and you guys could wind up a lot better off than we ever were. But if you continue to do what we’ve been doing you can look forward to the same future we face.
ParticipantIf I was seeing a GenX that was behaving more responsibly I’d agree with you. But I’m not. If anything, I’m seeing a younger generation whose primary attribute so far has been the extension of their childhood at all costs; most of which are being paid by their parents.
Your time will come soon enough, and when it does I’m pretty sure the generation behind yours’ will have similar criticisms.
ParticipantIf I was seeing a GenX that was behaving more responsibly I’d agree with you. But I’m not. If anything, I’m seeing a younger generation whose primary attribute so far has been the extension of their childhood at all costs; most of which are being paid by their parents.
Your time will come soon enough, and when it does I’m pretty sure the generation behind yours’ will have similar criticisms.
ParticipantThat action occurs it pieces at different times of the year. There will be more pricing movement during some months and basically no movement in other months.
I highly doubt the rate of decline here will reach a 15% pace for an entire year. A decline of 12% is pretty steep. I think a 10% decline is probably more likely. The last bust averaged less than 10%/year, but then again the last peak was 1/3 the size of this one.
Most of the homeowners in trouble will try to hang on. The prices will be sticky all the way down. I think this bust will take at least 3 or 4 more years before it’s played out.
ParticipantThat action occurs it pieces at different times of the year. There will be more pricing movement during some months and basically no movement in other months.
I highly doubt the rate of decline here will reach a 15% pace for an entire year. A decline of 12% is pretty steep. I think a 10% decline is probably more likely. The last bust averaged less than 10%/year, but then again the last peak was 1/3 the size of this one.
Most of the homeowners in trouble will try to hang on. The prices will be sticky all the way down. I think this bust will take at least 3 or 4 more years before it’s played out.
ParticipantI’m not buying this time around, but if I were I’d approach pricing with an open mind. As SDR said, instead of looking for specific pricing I’d be looking for that point of equilibrium between inventory and sales activity. Like when the number of actives approaches 300% – 350% of the number of monthly sales.
Right after the market reaches that point I think the volumes will pick up and start creating shortages of inventory in the better areas. Once the buyers are competing with each other the pricing will start to increase.
Where that point will occur is anyone’s guess, even if using the past trends as an indicator. I think anyone who uses an absolute as their point of reference has an 80% change of being wrong because the trend could wind up bottoming out higher or lower than that. It would be a real shame to miss an opportunity simply because you thought it *should* go lower. Market psychology is an economic fundamental in the residential RE business, and there is no way of knowing when that psychology is going to turn.
Depending on prevailing interest rates, I think a lot of people might take a more positive view of buying once the monthly rent multiplier for an average house drops to about 175 or so – meaning a sale price for that house would equal 175x that monthly rent. $2,000/month rent x 175 = $350,000.
The more pessimistic players will wait until that rent multiplier drops to 150. $2,000/month rent x 150 = $300,000.
The last time around the typical GRMs dropped to as low as 120 in some areas.
ParticipantI’m not buying this time around, but if I were I’d approach pricing with an open mind. As SDR said, instead of looking for specific pricing I’d be looking for that point of equilibrium between inventory and sales activity. Like when the number of actives approaches 300% – 350% of the number of monthly sales.
Right after the market reaches that point I think the volumes will pick up and start creating shortages of inventory in the better areas. Once the buyers are competing with each other the pricing will start to increase.
Where that point will occur is anyone’s guess, even if using the past trends as an indicator. I think anyone who uses an absolute as their point of reference has an 80% change of being wrong because the trend could wind up bottoming out higher or lower than that. It would be a real shame to miss an opportunity simply because you thought it *should* go lower. Market psychology is an economic fundamental in the residential RE business, and there is no way of knowing when that psychology is going to turn.
Depending on prevailing interest rates, I think a lot of people might take a more positive view of buying once the monthly rent multiplier for an average house drops to about 175 or so – meaning a sale price for that house would equal 175x that monthly rent. $2,000/month rent x 175 = $350,000.
The more pessimistic players will wait until that rent multiplier drops to 150. $2,000/month rent x 150 = $300,000.
The last time around the typical GRMs dropped to as low as 120 in some areas.
ParticipantDaC,
It’s true enough that we do live in the present, but it doesn’t strike me as being prudent to completely ignore the lessons of the past. “It hasn’t happened yet” isn’t a strong argument for “you might as well have a good time now and not worry about the future”. Especially when it has happened before.
I’ll bet there’s at least some percentage of the folks who have lost everything in the last year who would like to reconsider some of their past decisions.
ParticipantDaC,
It’s true enough that we do live in the present, but it doesn’t strike me as being prudent to completely ignore the lessons of the past. “It hasn’t happened yet” isn’t a strong argument for “you might as well have a good time now and not worry about the future”. Especially when it has happened before.
I’ll bet there’s at least some percentage of the folks who have lost everything in the last year who would like to reconsider some of their past decisions.
ParticipantMyito,
I wouldn’t call myself bitter at all. I’m simply acknowledging that my decisions are all compromises and – good or bad – I am the sum of those compromises.
The reason I’m holding is because it’s cheaper for me on a monthly basis than renting would be. That’s one of the benefits of buying at the better end of the cycle. I don’t need any luck to continue holding.
The reason I let those clients go and I allow some of my peers to be angry at me is because I know from experience that in the long run my professional reputation is worth a lot more to me than the fees lost during a boom. I recognize that any idiot can make money when times are good, which is why so many idiots think they’re geniuses right now. The mark of a winner in my line of work is how well I do when times are bad, not how much money I make when times are good. And I need to maintain a good reputation in order to do well during these more difficult times. It paid off very nicely during the last bust when a lot of those types of clients and a lot of those types of appraisers got starved out, and I expect it will be even more pronounced this time.
I do regret the MBZ, though, ’cause I feel like it makes me look like a yuppie and I absolutely detest yuppies. I’ll probably have to sell it in order to resolve that conflict. It’s either that or try to pretend I’m 30 again and need to impress other people.
ParticipantMyito,
I wouldn’t call myself bitter at all. I’m simply acknowledging that my decisions are all compromises and – good or bad – I am the sum of those compromises.
The reason I’m holding is because it’s cheaper for me on a monthly basis than renting would be. That’s one of the benefits of buying at the better end of the cycle. I don’t need any luck to continue holding.
The reason I let those clients go and I allow some of my peers to be angry at me is because I know from experience that in the long run my professional reputation is worth a lot more to me than the fees lost during a boom. I recognize that any idiot can make money when times are good, which is why so many idiots think they’re geniuses right now. The mark of a winner in my line of work is how well I do when times are bad, not how much money I make when times are good. And I need to maintain a good reputation in order to do well during these more difficult times. It paid off very nicely during the last bust when a lot of those types of clients and a lot of those types of appraisers got starved out, and I expect it will be even more pronounced this time.
I do regret the MBZ, though, ’cause I feel like it makes me look like a yuppie and I absolutely detest yuppies. I’ll probably have to sell it in order to resolve that conflict. It’s either that or try to pretend I’m 30 again and need to impress other people.
ParticipantAs more or less rational people we’d like to think that other people think and behave in a similarly rational fashion. Unfortunately, it’s been my experience that while individuals are often smart, “the people” are as dumb as a bag of rocks and have a memory span that’s half as long.
After the last bust I was SURE that the lesson had been driven home and that people would never make those mistakes again. I was so wrong about that the measure is in magnitudes, not percentages.
The one element that might change the way “the people” operate in the future is the increased availability of the information and opinions. By the time this bust is over a lot of the losers are going to look back to see where they went wrong. When they do, they’ll see that there were people who KNEW in advance that all this was going to happen and they’ll see what types of data and analysis could have prevented their losses. At least some people will learn from their mistakes.
It could be that the shills won’t be as able to exploit the stupidity of the masses because the level of knowledge among the masses will increase. Unlike with other financial investments it is completely possible for a real estate investor to know what they’re getting into without having to rely on information or promises made by the sellers of real estate.
If the cycles flatten out as a result of a more informed market that means the lows will never go that low and the highs will never go that high. If so, it really could be 20 years before some of these people could get out from under their 2005 purchase prices.
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