[pemeliza]

“Price inflation can be caused by other factors”

One such factor is the devaluation of the currency which the good is priced in. When you erase the gains due to dollar weakness, prices may not seem as bubbly.

[pemeliza]

“Price inflation can be caused by other factors”

One such factor is the devaluation of the currency which the good is priced in. When you erase the gains due to dollar weakness, prices may not seem as bubbly.

[pemeliza]

“Price inflation can be caused by other factors”

One such factor is the devaluation of the currency which the good is priced in. When you erase the gains due to dollar weakness, prices may not seem as bubbly.

[pemeliza]

esmith:

“Every commodity that can be cheaply stored for extended periods of time is a bubble”

Ah then by your definition OIL is a bubble because it would be the most non-perishable commodity on the planet.

But … it isn’t a bubble because there is a shortage and we use as much as we can produce.

But … you never considered that there actually may be a genuine shortage in certain grains. Wheat for example. The push for ethanol has led to growers putting out record corn crops at the expense of soybean acres. What does this to the bean supply? But then beans go up and more acres for beans, etc. etc. The bottom line is that with the droughts and increased demand there is not a super surplus of grains anymore. There are so many tillable acres and climate change is occuring. We have to feed all those darn chickens and cows with something.

I agree the prices are frothy at these points and I would say there is a certain bubble element to them. But the days of $2 corn are over. Noone can grow it for that given the spectacular rise in input costs.

“The only reason we see (price) inflation is because of appreciating oil and bubbles in various commodities.”

Why stop there? How about the following statement which would be just as hard to refute:

“The only reason we EVER see (price) inflation is because of bubbles in various goods and services.”

Since all price inflation can be explained away via bubble theories it is best to measure monetary inflation. But you argue there hasn’t been any of that either. Geez I wonder where all the money comes up from to blow all the bubbles then?

Never mind the fact that countries like Japan and China have been exporting monetary inflation in the form of cheap long bonds and carry trades for some time now.

I’m not arguing that there isn’t some degree of truth to your statements but just that there are IMHO some oversimplifications.

[pemeliza]

esmith:

“Every commodity that can be cheaply stored for extended periods of time is a bubble”

Ah then by your definition OIL is a bubble because it would be the most non-perishable commodity on the planet.

But … it isn’t a bubble because there is a shortage and we use as much as we can produce.

But … you never considered that there actually may be a genuine shortage in certain grains. Wheat for example. The push for ethanol has led to growers putting out record corn crops at the expense of soybean acres. What does this to the bean supply? But then beans go up and more acres for beans, etc. etc. The bottom line is that with the droughts and increased demand there is not a super surplus of grains anymore. There are so many tillable acres and climate change is occuring. We have to feed all those darn chickens and cows with something.

I agree the prices are frothy at these points and I would say there is a certain bubble element to them. But the days of $2 corn are over. Noone can grow it for that given the spectacular rise in input costs.

“The only reason we see (price) inflation is because of appreciating oil and bubbles in various commodities.”

Why stop there? How about the following statement which would be just as hard to refute:

“The only reason we EVER see (price) inflation is because of bubbles in various goods and services.”

Since all price inflation can be explained away via bubble theories it is best to measure monetary inflation. But you argue there hasn’t been any of that either. Geez I wonder where all the money comes up from to blow all the bubbles then?

Never mind the fact that countries like Japan and China have been exporting monetary inflation in the form of cheap long bonds and carry trades for some time now.

I’m not arguing that there isn’t some degree of truth to your statements but just that there are IMHO some oversimplifications.

[pemeliza]

esmith:

“Every commodity that can be cheaply stored for extended periods of time is a bubble”

Ah then by your definition OIL is a bubble because it would be the most non-perishable commodity on the planet.

But … it isn’t a bubble because there is a shortage and we use as much as we can produce.

But … you never considered that there actually may be a genuine shortage in certain grains. Wheat for example. The push for ethanol has led to growers putting out record corn crops at the expense of soybean acres. What does this to the bean supply? But then beans go up and more acres for beans, etc. etc. The bottom line is that with the droughts and increased demand there is not a super surplus of grains anymore. There are so many tillable acres and climate change is occuring. We have to feed all those darn chickens and cows with something.

I agree the prices are frothy at these points and I would say there is a certain bubble element to them. But the days of $2 corn are over. Noone can grow it for that given the spectacular rise in input costs.

“The only reason we see (price) inflation is because of appreciating oil and bubbles in various commodities.”

Why stop there? How about the following statement which would be just as hard to refute:

“The only reason we EVER see (price) inflation is because of bubbles in various goods and services.”

Since all price inflation can be explained away via bubble theories it is best to measure monetary inflation. But you argue there hasn’t been any of that either. Geez I wonder where all the money comes up from to blow all the bubbles then?

Never mind the fact that countries like Japan and China have been exporting monetary inflation in the form of cheap long bonds and carry trades for some time now.

I’m not arguing that there isn’t some degree of truth to your statements but just that there are IMHO some oversimplifications.

[pemeliza]

esmith:

“Every commodity that can be cheaply stored for extended periods of time is a bubble”

Ah then by your definition OIL is a bubble because it would be the most non-perishable commodity on the planet.

But … it isn’t a bubble because there is a shortage and we use as much as we can produce.

But … you never considered that there actually may be a genuine shortage in certain grains. Wheat for example. The push for ethanol has led to growers putting out record corn crops at the expense of soybean acres. What does this to the bean supply? But then beans go up and more acres for beans, etc. etc. The bottom line is that with the droughts and increased demand there is not a super surplus of grains anymore. There are so many tillable acres and climate change is occuring. We have to feed all those darn chickens and cows with something.

I agree the prices are frothy at these points and I would say there is a certain bubble element to them. But the days of $2 corn are over. Noone can grow it for that given the spectacular rise in input costs.

“The only reason we see (price) inflation is because of appreciating oil and bubbles in various commodities.”

Why stop there? How about the following statement which would be just as hard to refute:

“The only reason we EVER see (price) inflation is because of bubbles in various goods and services.”

Since all price inflation can be explained away via bubble theories it is best to measure monetary inflation. But you argue there hasn’t been any of that either. Geez I wonder where all the money comes up from to blow all the bubbles then?

Never mind the fact that countries like Japan and China have been exporting monetary inflation in the form of cheap long bonds and carry trades for some time now.

I’m not arguing that there isn’t some degree of truth to your statements but just that there are IMHO some oversimplifications.

[pemeliza]

esmith:

“Every commodity that can be cheaply stored for extended periods of time is a bubble”

Ah then by your definition OIL is a bubble because it would be the most non-perishable commodity on the planet.

But … it isn’t a bubble because there is a shortage and we use as much as we can produce.

But … you never considered that there actually may be a genuine shortage in certain grains. Wheat for example. The push for ethanol has led to growers putting out record corn crops at the expense of soybean acres. What does this to the bean supply? But then beans go up and more acres for beans, etc. etc. The bottom line is that with the droughts and increased demand there is not a super surplus of grains anymore. There are so many tillable acres and climate change is occuring. We have to feed all those darn chickens and cows with something.

I agree the prices are frothy at these points and I would say there is a certain bubble element to them. But the days of $2 corn are over. Noone can grow it for that given the spectacular rise in input costs.

“The only reason we see (price) inflation is because of appreciating oil and bubbles in various commodities.”

Why stop there? How about the following statement which would be just as hard to refute:

“The only reason we EVER see (price) inflation is because of bubbles in various goods and services.”

Since all price inflation can be explained away via bubble theories it is best to measure monetary inflation. But you argue there hasn’t been any of that either. Geez I wonder where all the money comes up from to blow all the bubbles then?

Never mind the fact that countries like Japan and China have been exporting monetary inflation in the form of cheap long bonds and carry trades for some time now.

I’m not arguing that there isn’t some degree of truth to your statements but just that there are IMHO some oversimplifications.

[pemeliza]

There are so many wildcards right now it boggles my mind.

The biggest of which IMHO is interest rates. We have already shut out the subpar buyers with tighter lending standards. Substantially higher interest rates from here would be a death blow to the perma-bulls. A month ago I would have said that rates are going to go down to record lows and possibly reignite the market. They went down but couldn’t hold.

I don’t buy the ‘seller holdout’ theory. Entire communities were built at the peak of the market (e.g. Encinitas Ranch, La Costa Oaks to name a few) and are already underwater. Sure some folks can ride it out but whole communities?

I have more confidence in the built areas like La Jolla and Point Loma. Good deals will happen but they will be far in few between. I think the drops in the rock solid ‘built areas’ will max out at 30%.

In the newer areas we could see price drops approaching 50% especially if they are in the lesser school districts. Those with the best schools will fair better.

[pemeliza]

There are so many wildcards right now it boggles my mind.

The biggest of which IMHO is interest rates. We have already shut out the subpar buyers with tighter lending standards. Substantially higher interest rates from here would be a death blow to the perma-bulls. A month ago I would have said that rates are going to go down to record lows and possibly reignite the market. They went down but couldn’t hold.

I don’t buy the ‘seller holdout’ theory. Entire communities were built at the peak of the market (e.g. Encinitas Ranch, La Costa Oaks to name a few) and are already underwater. Sure some folks can ride it out but whole communities?

I have more confidence in the built areas like La Jolla and Point Loma. Good deals will happen but they will be far in few between. I think the drops in the rock solid ‘built areas’ will max out at 30%.

In the newer areas we could see price drops approaching 50% especially if they are in the lesser school districts. Those with the best schools will fair better.

[pemeliza]

There are so many wildcards right now it boggles my mind.

The biggest of which IMHO is interest rates. We have already shut out the subpar buyers with tighter lending standards. Substantially higher interest rates from here would be a death blow to the perma-bulls. A month ago I would have said that rates are going to go down to record lows and possibly reignite the market. They went down but couldn’t hold.

I don’t buy the ‘seller holdout’ theory. Entire communities were built at the peak of the market (e.g. Encinitas Ranch, La Costa Oaks to name a few) and are already underwater. Sure some folks can ride it out but whole communities?

I have more confidence in the built areas like La Jolla and Point Loma. Good deals will happen but they will be far in few between. I think the drops in the rock solid ‘built areas’ will max out at 30%.

In the newer areas we could see price drops approaching 50% especially if they are in the lesser school districts. Those with the best schools will fair better.

[pemeliza]

There are so many wildcards right now it boggles my mind.

The biggest of which IMHO is interest rates. We have already shut out the subpar buyers with tighter lending standards. Substantially higher interest rates from here would be a death blow to the perma-bulls. A month ago I would have said that rates are going to go down to record lows and possibly reignite the market. They went down but couldn’t hold.

I don’t buy the ‘seller holdout’ theory. Entire communities were built at the peak of the market (e.g. Encinitas Ranch, La Costa Oaks to name a few) and are already underwater. Sure some folks can ride it out but whole communities?

I have more confidence in the built areas like La Jolla and Point Loma. Good deals will happen but they will be far in few between. I think the drops in the rock solid ‘built areas’ will max out at 30%.

In the newer areas we could see price drops approaching 50% especially if they are in the lesser school districts. Those with the best schools will fair better.

[pemeliza]

There are so many wildcards right now it boggles my mind.

The biggest of which IMHO is interest rates. We have already shut out the subpar buyers with tighter lending standards. Substantially higher interest rates from here would be a death blow to the perma-bulls. A month ago I would have said that rates are going to go down to record lows and possibly reignite the market. They went down but couldn’t hold.

I don’t buy the ‘seller holdout’ theory. Entire communities were built at the peak of the market (e.g. Encinitas Ranch, La Costa Oaks to name a few) and are already underwater. Sure some folks can ride it out but whole communities?

I have more confidence in the built areas like La Jolla and Point Loma. Good deals will happen but they will be far in few between. I think the drops in the rock solid ‘built areas’ will max out at 30%.

In the newer areas we could see price drops approaching 50% especially if they are in the lesser school districts. Those with the best schools will fair better.

[pemeliza]

Great posts.

For me and DW it was easier just to come up with a price point for what we want and be ready for it if it comes.

As we see it there are only 3 possibly outcomes:

1.) The price point will arrive we will buy and just happen to have timed the bottom (extremely unlikley)
2.) The price point will arrive we will buy and the prices will continue to decrease or stay flat.
3.) Our price point will never arrive.

Our criteria are:

1.) Great Schools
2.) 2500+ ft single level 3000+ ft if double level
3.) price : 600-650k
4.) 4+ BR
5.) Good lot (decent size, quiet, no power lines)

After that we have a whole list of “like to haves”.

Rather than trying to predict the market, we based these
criteria on what it would take for us to move away from our current situation and be happy about it. We will be paying cash so are immune to financing issues.

Some areas we are looking at are probably 20% apart from us in price …

Frankly timing the bottom (or top) just isn’t something we are very good at.

[pemeliza]

Great posts.

For me and DW it was easier just to come up with a price point for what we want and be ready for it if it comes.

As we see it there are only 3 possibly outcomes:

1.) The price point will arrive we will buy and just happen to have timed the bottom (extremely unlikley)
2.) The price point will arrive we will buy and the prices will continue to decrease or stay flat.
3.) Our price point will never arrive.

Our criteria are:

1.) Great Schools
2.) 2500+ ft single level 3000+ ft if double level
3.) price : 600-650k
4.) 4+ BR
5.) Good lot (decent size, quiet, no power lines)

After that we have a whole list of “like to haves”.

Rather than trying to predict the market, we based these
criteria on what it would take for us to move away from our current situation and be happy about it. We will be paying cash so are immune to financing issues.

Some areas we are looking at are probably 20% apart from us in price …

Frankly timing the bottom (or top) just isn’t something we are very good at.

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