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September 8, 2006 at 10:01 PM in reply to: 95% of US economists missed the last recession AFTER it had already started #34792
powayseller
ParticipantToday’s CNN article about the slowing housing market in Eden Prairie, Minnesota, 10 miles from downtown Minneapolis. I don’t see any reason that land anywhere is going to appreciate; this entire country is in a housing bubble, and all decisions should be made based on the likelihood that prices will drop over the next 5 years.
ParticipantParticipantvcguy, you are so sweet to be concerned about my reputation:) Thank you. I did not tell any of them what I thought their home was worth, but I gave realtor #3 an earful!
(This realtor guy was kind of deceitful; he arrived to the agent open house at the same time I did, and left when the owner returned home, 15 min. later, and then had the balls to tell her, “Our agent tour went well and is just winding down”. She had left the house for one hour for the supposed agent tour. What a joke!)
ParticipantWhy would Minneapolis be least affected? They’ve got housing bubble trouble too.
Let’s compare foreclosure.com information. Minneapolis (San Diego) has 590 (613) foreclosures and 2 (4083) preforeclosures, 1101 (1784) bankruptcies, and 9 (15,508) tax liens.
In August, Inman News listed Minnesota has one of 7 states with the highest month over month increase in foreclosures, at 31%.
If you google “housing bubble minneapolis”, you get plenty of hits, including the one I read from the Federal Reserve, showing Mpls. had the highest bubblicious appreciation in the 9th district.
vrudny, land speculators are in as much denial as anyone else. Ask your brother for hard data on inventory and sales, months on market. I would guess the outlying land he is buying now is cheaper than a few months ago, so he thinks it’s a bargain, not realizing the reduced prices are due to the bubble popping. My sister’s boyfriend is building a McMansion on a lake in North Dakota bordering Canada, and he still believes that Californians will pay him top dollar when construction is complete. After all, Californians have been buying up homes all over the lake. He also insists his car dealerships will continue doing well, since there is no way a recession is coming; the economy is too strong. So much for people in the business having clear vision.
Participantdavelj, that’s a gem of information. I wouldn’t have figured that one out. Yet, the takeover rumor does worry me from a shorting perspective.
ParticipantBugs, were you asking my opinion? I have 0% certainty regarding the recovery. Once the option-ARMs have finished adjusting in 2008, and unemployment hits 10%, the economy ought to be balanced enough to start its next upcycle, (unless we get a slump like Japan). Maybe we won’t hit a big slump since we are the superpower with the reserve currency. Once consumers emerge from their slump, the economy ought to pick up again.
Participantbgates, the data you provided goes only until 2003. Further, while GDP has risen quite a lot, US military spending has taken up the bulk of the new wealth, which could instead have been used for healthcare, education, or research. The US spends half of the Earth’s military budget.
The military budget is 4% of GDP. But “the recent invasions of Iraq and Afghanistan are funded outside the Federal Budget (i.e. are paid for through supplementary spending bills) and are therefore external to the military budget figures.” – Wikipedia
Wars are inflationary, and the effects of these wars will be felt soon enough. Could these wars be partly responsible for the commodity bubble and rising inflation?
ParticipantWhy are people having too much fun with this post?
Have you contacted a realtor to find out prices of recent sold properties? They’ll promise you the moon if you list with them, but ask for a list of sold properties. An experienced, honest realtor could give you some advice on values for the area.
ParticipantA friend told me that the number of parents asking for payment plans for the kids’ Poway school bus passes went from 100 to 400 in the last year. The parents, esp. on the west side of I-15, complain about the high mortgages. Some parents live in a 3-generation house, and get spending money from their own parents. This friend told me he has seen this housing cycle really hit families hard. He remembers all the foreclosures around Poway the last 2 cycles. The more expensive neighborhoods were full of foreclosures…
If I have a conversation, I typically tell people I am 100% certain their house will be worth 50% less in 3 years. This accomplishes two goals: 1) I can be really annoying by pretending to know something with 100% certainty, and 2) I like to shake things up by being contrarian. (The above was just a joke, but I think some of you think I am truly like this, hahahahahahaha). Honestly, I just say, “We sold our house because we believe prices will drop in half.”
September 8, 2006 at 4:19 PM in reply to: 95% of US economists missed the last recession AFTER it had already started #34750ParticipantRouhini’s recession call is based on a repeat of what happened to GDP in the last recession. We went from 5.6% in Q1 to 2.9% in Q2. He expects this slowdown to continue, so that by Q1 07, this GDP growth is negative. This same trend happened in 2000: we went from approx 5% to approx 2% growth qoq, and then the next quarter we had negative growth. It took only 2 quarters to move from over 5% GDP growth to negative GDP growth. I was also surprised that it can happen that quickly.
A recession is negative qoq growth in GDP for at least 2 quarters.
I agree that the slowdown will exacerbate after the recession offically begins, so this is probably going to be one of our longer recessions.
ParticipantDoes he have proof that the stock market follows the number of people aged 40-54? He’s right that 70% of GDP is consumer spending, but I have never read that most of that spending is done by middle-aged people. According to this guy, as the 40-54 yr old age group shrinks, the stock market will bust, leading to a great depression. This seems questionable without further proof.
ParticipantRead Roubini’s blog, where he makes an excellent case for the recession. Read my comments and analysis on the same topic going back to last spring. Then, form your own opinion.
ParticipantWaMu sold 71% of its Option ARMs. What happens to the neg-am income they’ve recorded? Do they keep it, or sell it too?
ParticipantI didn’t realize that it’s improper to have 100% conviction. What etiquette rule did I break?
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