[Diego Mamani]

Us renters will help prop up house prices in the near future. I’m talking about those of us who sold at the peak (2004-06) and now are renting and sitting on large piles of cash. I don’t think we are in the majority by any stretch of the imagination, but we’ll start buying at some point (the smart ones will wait more than only 3 or 5 years).

This is why it is said that speculators actually provide a public service by making markets less volatile… See, by selling at the peak we made the peak a little less, and by purchasing on the way down, we’ll make the trough less deep.

When we taught this in a microeconomics class in college, many kids were shocked: they had been taught that speculators are always evil people. The point is that markets work, and capitalism explains why some countries end up like Cuba or the late USSR, and why others end up super rich like the USA.

[Diego Mamani]

It’s not “FED”, it’s Fed, short for Federal Reserve Board.

[Diego Mamani]

Not original, but how about these for newbie Realtors[TM] who got their licenses in the last few crazy years?

“Want any fries with that?”

“Care for a lapdance, cowboy?”

[Diego Mamani]

And, if they lived in the house, they saved about $50K in rent.

[Diego Mamani]

Thank you for sharing Rich. Naturally, BofA is a lender in the mortgage market. Therefore, this BofA economist has conflict of interest up the wahoo!!! Which agrees with what we were talking about yesterday, of how media outlets keep asking these questions to “experts” who have all the incentives not to be objective. The real experts, I’d argue, are scholars who are not funded by the RE industry and who conduct independent research, such as Leamer or Shiller.

OTOH, defining what soft vs. hard landing is, is very subjective. A 15% drop in nominal prices in 1 or 2 years may sound “soft” to me, but to a person who makes a living selling or building houses, or financing them, it may feel pretty “hard”.

[Diego Mamani]

P-seller: I don’t think it’s a matter of being allowed or not. After all, Peach is entitled to his own professional opinion. All we can ask for, is full disclosure of all potential conflicts of interest. This is of course a tricky area; just because Peach used to be with the MBA and the NAR doesn’t necessarily mean that he’s biased.

Rich: I think that what we have here is an example of selection bias, in the sense that we were far more likely to hear opinions of industry-affiliated economists. No one bothered to go ask a few econ professors what their opinion was. Shiller got press coverage b/c he had predicted the dot-com bust, while Leamer leads the respected UCLA/Anderson Forecast.

I personally was convinced by 2002-3 that prices were out of whack. When a neighbor sold his house in 2004 for almost double what he paid in 2000-01, I decided to sell too! I have graduate training in econ and statistics, and all my colleagues I talked to about this issue agreed that prices had balloned up to ridiculous levels, if we were to simply compare them to rents or incomes.

[Diego Mamani]

Not hard to explain. Smallish houses in SD (under 1500 sf) behave more like condos: many were bought recently by investors who now can’t wait to sell them, and so those prices are dropping. OTOH, medium sized houses (2000-2400 sf) haven’t dropped in prices yet because many are actually owner-occupied, and are therefore less liquid. These prices will drop too, but it’ll take some more time–the owners are still in denial and hoping that prices will come back up again next spring. Of course, we know prices can only go down.

BTW, when I read that a segment dropped by 7 or 8%, I interpret that as an actual drop. OTOH, if a segment is up only 0.6%, I of course interpret that as “flat”. Variations less than 1% or 2% (whether up or down), on a y-o-y basis, are within the margin of error.

[Diego Mamani]

Yes, The Economist (UK weekly) called the bubble a while ago, as well as Ed Leamer (UCLA professor), and Robert Shiller, to mention only a few. Greenspan’s “regional froth” speech was a kind way of saying that “the bubble will bust harder in some areas than others” without scaring too many people.

I don’t know to what economists Rich refers to. Other than academic economists like Leamer or Shiller, there are the non-univesity types who focus on specific regions or industries, who may or may not be affected by conflicts of interest, depending on who their clients are.

Problem was, the mainstream media kept asking “experts” like Lereah for advice, and then reported their bullish views as if they were objective.

[Diego Mamani]

Since there are so many homosexuals nowadays…

What? Dear Native, with all due respect, I think that as our society becomes less ignorant and more tolerant, more gay people choose to get out of the closet. To the extent that homosexuality is determined by biology and birth, its incidence shouldn’t go up or down over time.

I agree with you about family size: that’s up to every family to decide. My wife and I are happily childless, but I wouldn’t even think of imposing my views or standards on others.

[Diego Mamani]

Yes, it is the same property. The flipper should just cut her losses, price the property right, and get out before it gets uglier. It’s interesting how the novice “investor” started her post stating that she got into this after attending a seminar.

It surprises me how people still believe in these get-rich-quick schemes and seminars. Isn’t it obvious? If the scammer, er… sorry, if the “instructor” really had a system to make millions by investing in RE, do you think he’ll waste his time giving these seminars? It’s plainly clear to me that the fool-proof system to make money consists in giving these seminars and charging attendees.

The really shrewd “instructors” offer these seminars for free. Of course, once the suckers, er… prospective investors, come in, they use high pressure sales tactics to get them to “invest” in real estate. Done properly, these “free” seminars yield higher profits than charging for attendance.

I’m 40 years old, but sometimes I feel super old every time I read or hear of people falling for the same old schemes. Nihil novi sub sole my ancestors would have said.

[Diego Mamani]

Nice graph. I was just telling a friend how back in the early 90s we used to read a lot about repo men taking cars at midnight, etc. and how often TV news shows would include such stories. But I haven’t seen or heard any of that since the mid or late 90s.

I guess we’ll be seeing a lot of repo action in the following months and years. House foreclosures too…

[Diego Mamani]

Diego, you must be an agent.

Perhaps for the next housing boom…

[Diego Mamani]

Obviously, CBB is not the only factor that will determine whether a property sells fast. If I want to sell my house before market prices deteriorate even more, I’d make sure that each of the following is competitive (in no particular order):

– CBB among the highest in the neighborhood (not just in line with the rest).
– Price that is realistic given the market conditions today.
– Aggressive marketing by my agent.
– Proper staging and attention to curb appeal.
– etc.

I’m not surprised that you found no correlation between CBB and whether a house sold fast or not. For that, you would need to control for all the other variables. A house priced right will sell no matter how low the CBB is. Similarly, an undesirable house with freeway noise or poor maintenance will be slow to sell, no matter how low the price or high the CBB. CBB matters, but is not the only factor of interest.

If you are a seller you need to make sure your CBB is not average or below average, but you also need to pay attention to price and other aspects which are equally important.

[Diego Mamani]

Commission rate?
The market is getting very competitive, so that the right price and the MLS may not be enough any more. What commission are you offering? I’d recommend you increase the rate ASAP before inventory gets even higher.

[Diego Mamani]

If you live there, and you like the place, then you have nothing to worry about. Prices will go up and down, that’s how it is. Houses or condos, shoudn’t be seen as investment vehicles, unless you are a professional RE investor.

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