Forum Replies Created
-
AuthorPosts
-
powayseller
ParticipantHe went from “prices will NOT decline, but will stay flat until fundamentals catch up”, to “prices will drop 10%”. He is a lagging economist. He waits until stuff has happened, then tells us about it. How did he ever get so popular???????
I can give better forecasts than he can. I say prices will drop 35%, and we are heading into a recession.
I wonder, seriously, why he has so many followers. He had one good forecast, and people still remember that. Ever since, he’s been lousy.
ParticipantThanks, Daniel. ” Although real estate is not their sole source of wealth, it remains a staple for many. Forty-six percent of those surveyed own investment real estate like a second home or rental properties.
Seventy percent of the households, meanwhile, owned stocks and bonds, and 68 percent owned mutual funds.”
If they did not sell yet, their net worth is decreasing with the real estate market. I wonder how many bought second homes in San Diego, Nevada, Arizona, or elsewhere in bubble cities. How many of these people are buying second homes in San Diego, and propping us real estate values here?
ParticipantThanks, Daniel. ” Although real estate is not their sole source of wealth, it remains a staple for many. Forty-six percent of those surveyed own investment real estate like a second home or rental properties.
Seventy percent of the households, meanwhile, owned stocks and bonds, and 68 percent owned mutual funds.”
If they did not sell yet, their net worth is decreasing with the real estate market. I wonder how many bought second homes in San Diego, Nevada, Arizona, or elsewhere in bubble cities. How many of these people are buying second homes in San Diego, and propping us real estate values here?
Participantjepsd, I love your explanation of the tax deduction. and I laughed really hard.
The NAR seems like a prime target for lawsuits. Are any lawyers around, who know if they are breaching their fiduciary duty by encouraging people to buy homes when the market is clearly falling?
ParticipantI don’t get why now is a good time to buy. Neither do the other buyers, as many are fence sitters in lieu of buying.
When buyers are buying it is a buyer’s market. But sales are way down, so how can it be a buyer’s market?
I too am sick of hearing the phrase “buyer’s market”. What the heck does that mean? Isn’t it the NAR’s definition of a market where months inventory is above 7 or 8, i.e. buyers are retreating? Buyers are losing interest, not buying, so it definitely is not a buyer’s market.
It is a renter’s market. Ben Jones is right.
August 20, 2006 at 10:52 AM in reply to: Iraq is like the housing market – but not like you think #32483ParticipantThe Holocaust happened. My mother was a child in Germany in WW II, and her family had a bunker behind the house. I played in it as a child. She remembers eating dandelion soup and hunkering down in the bunker while planes bombed overhead. For a few years, American soldiers took over their house and trashed it. My grandfather hated Hitler, but what could he do?
ParticipantVery interesting, and thanks for sharing your results. The strategy calls for buying in the fall of the mid-year cycle, and I noticed a number of your years are buying in the spring. So what are the results if you buy in October every year?
Bill Fleck and a trader on his site both told me that 1982 and 1990, both recession years, were different than today. Stocks rose in those mid-election years because inflation and interest rates were declining, and the recession was either behind us or close to it.
Why are you considering this short-term rally as a “still going” category? This rally is just a Fed-is-done rally. Historically the stock market falls into the fall, and I anticipate this year is the same.
I studied these last decades also, and this is the first time that we are entering into a recession in the mid-year cycle. There is no way this rule can work entering into a recession. I am guessing the commercials will not go long, and so this trade won’t be executed.
The danger of following patterns is they are backward looking. Perhaps the pattern is, “Stock markets rally in mid-year presidential election years as long as we are not facing rising inflation or an economic slowdown”. People looking backward, not aware of the full rule, don’t realize the markets rallied in those years only because there was not an economic slowdown.
For this reason, technical and fundamental analysis have to work hand in hand. The COT report shows what the insiders are doing, and rest assured, they follow the fundamentals. So using the COT report can be a proxy for studying the economy. Let them do it for you, right? This is my understanding of the insiders, but perhaps Chris can correct me if this is not accurate. Going into a recession, perhaps the COT will show insiders playing some rallies, but not going long.
Once we are in a recession, and stocks are hammered, that’s when I want to get back in the market. The economy will turn around during the recession, and the economists won’t report it until several quarters later. Again, I am interested in whether the COT report shows the insiders getting in early.
Chris, what is the rate of return earned in the stock market if someone followed only the COT report, and did exactly what they do? How much better are they are predicting the market?
ParticipantI have a way to get affordability to 65%. Assume a 40% downpayment, a 1.5% intro teaser rate, buy the median priced condo in National City. Voila! All we have to do to sustain this is build more condos in NC and lower lending standards so everyone can keep getting teaser rates.
ParticipantWhat do you mean?
ParticipantI wish docteur were still posting, so I could ask him to elaborate on what you are seeing. He saw 2 downturns, yet he says coastal values will stay flat or increase slightly due to building restrictions and wealthy people wanting those coastal homes. He says coastal values have never gone down, but steadily increased over the years. Perhaps he was not following the residential market in the last 2 downturns. Bugs, what happened to coastal values during the last 2 downturns? Coastal to me is within a few blocks of the beach, but I think others define it as a larger area. Could you give some information for both definitions of coastal?
With all that spec building going on, the building restrictions in place are certainly not limiting supply. Supply clearly exceeds demand. And where are the wealthy people who are supposed to gobble up these homes?
I can see how a unique area like RSF Covenant would hold fairly steady through a downturn. It is unique, stunning, and presumably owned by people who won’t lower the area’s property values through foreclosures.
How many wealthy people does San Diego have? Maybe a few hundred, a few thousand? They already have homes. Why would we have an influx of wealthy people to buy these homes? There really isn’t a business reason to come here. San Diego is a beautiful city, but the business community is not drawing new companies or new investors here.
In real estate, a high months inventory is a leading indicator of lower prices. This is a chart I’m working on when I get back from my vacation. High months inventory shows the demand is simply getting weaker, so motivated sellers end up lowering their prices. In areas like RSF Covenant, any house listed would presumably get snatched up pretty fast. The months inventory would stay very low, so prices can stay high. But once supply exceeds demand, pricing power is lost.
How long will builders keep adding to the supply? Do you see any new projects starting, or just old ones in progress?
The lenders are certainly not part of the reason for a sales decline. Investors are still gobbling up the MBS, so lending standards appear to get more lax, as lenders try to keep up volume.
ParticipantIn the comments for the article, a Canadian who sold a Georgia home, noted that in his visits to the southern US, he noticed 80% of the workers are migrant workers. Thus, a slowdown in construction employment wouldn’t show up in the numbers.
Actually, they would show up in the household survey, but not in the offical unemployment report.
Is it true that so many construction workers are migrant, i.e. illegal aliens from Mexico?
ParticipantThey are investing in us because they are co-dependent. I think Germany, like China, has more exports than imports. Why would they stop selling to their biggest customer? The only one creating a problem by selling to us, as far as I know, is China. They are making their dependency worse, because they have pegged the renminbi (the name for the currency; yuan is the name of the coins and bills themselves) to the dollar.
It goes like this. China Toys gets $25mil for selling us games and stuffed animals, and takes it to the bank in China to get yuan. The bank does not want to exchange the dollars into yuan, because that would make their currency appreciate. So they print the $25 mil worth of yen, and give that to China Toys. Then the $25 mil they got from China Toys is invested in MBS, Treasury bills, etc. So the more they export, the more their economy overheats, because they are printing so much money. This is why economists say the only way that China can slow its quick growth is by letting its currency float.
What China really needs to do, is turn its citizens into consumers.
Some Chinese economists and politicians have made statements about diversifying out of dollars, and buying euros and gold.
I also wonder about their thinking, and why they would continue buying more and more Treasuries. Now they have so many Treasuries, although Japan has twice as much as China, that selling them would lower the dollar’s value enough to hurt China’s holdings. So they would need to sell them gradually. How long will they keep funding our deficit?
Roubini and Brad Setser (RGE Economics) write almost daily in their blogs about China. Roubini expects China to make a sudden 5% change in the yen. Sudden, so the markets can’t exploit an expected appreciation with currency trading. He also explains why the rest of the world will “catch a cold when the US sneezes”, i.e. a global recession is in the pipeline.
ParticipantWhat do you mean with “wannabe RSF”?
What kind of pricing drops have you seen in Carmel Valley and RSF, and in coastal properties (within a few blocks of the beach)?
Do you see a slowdown in refinancing yet?
Participanttickets, how did you learn about MBS structuring? Why is this topic so shrouded in mystery?
“If you get a big enough interest rate you can suck up a lot of losses”. – Are they demanding a risk premium large enough for the exposure they are taking on?
Overall, the bundling sounds really safe for the AAA paper. You’d need more than half to go into foreclosure to have a hit to the principal. That seems unlikely even to a bear like me. So I was wrong about the Delware Investment Fund’s Fixed Income fund being risky.
-
AuthorPosts
