[studenteconomist]

One of the interesting conclusions from this data is that the previous runup (1980’s and pre-internet) took over 3 years to go from peak sales to peak prices. This time, with the internet blogs such as this one and electronic tracking, the public (especially the RE watching public) is much better informed and the time from peak sales to peak price was under 2 years. Better data collecting and more rapid dissemination of that data has resulted in a 14 month drop in the lag time between the variables!! This is huge and will have important ramifications for the timing of the bottom of the market. Instead of a 6-7 year wait, we may only have a 4-5 year peak appreciation to bottom of the market. That is why I feel (and now have data to support) that this downturn will be quicker and more dramatic than the last one (and may even hit bottom in the next 12-18 months. Faster (and better) information leads to faster market revaluation and leads to faster market correction.
So keep up the posts Piggingtons, you are helping the RE industry reach toward a more rational and correct market pricing system.

[studenteconomist]

There have been a lot of market discussions in this forum, from labor issues to free trade to US competitiveness. Each one I have fairly strong opinions on and think about them more than most I know. Here are my thoughts.

We should be lucky that well-trained foreigners want to move from their homelands to work in the US (most would prefer to stay near family and a culture they fit into if they could find the same jobs). And we should feel even more lucky that the multi-national companies still want to have their jobs located in the US. As the world gets more competitive, both the foreigners and the companies will have more options. I am certain that they will increasingly mean that both the foreigners will choose to stay in their home country and the multi-national companies will choose to locate new jobs to those other countries (mainly in Asia). Who wins if this happens? US citizens might get higher jobs, but with less workers and less jobs our economy will be much smaller, and so thus will our overall prosperity.

Most of the posts are from a personal or microeconomic point of view. That’s natural but from the macroeconomic point of view, H1-B visas are a winner for the US. We get to have many of the best and the brightest from other parts of the world for no cost to US taxpayers!! They come all grown up, ready to work and contribute to the rest of our society, including the slackers who don’t even exert themselves here. Many become permanent residents or citizens, but some move back home (thus forfitting their Social Security). More than 50% of my friends and co-workers are foreign-born, and I know the benefits well. As for those hurt in this area (US workers), you have to ask yourself, am I committed to free trade (and labor) even when I am the loser or do I favor free trade just when it helps me? A truly free market (without corruption) will cause everyone to adapt to the needs of the market. If that could ever be achieved, then we would all collectively be better off, worldwide.

One last comment. Think about jobs from the executive’s point of view of a multi-national company. Exxon, Coca-cola, Motorola or any other number of billion dollar companies are not American. I repeat they are not American, nor are they working in the interests of the US. They are global, and care about maximizing their global business, which means increasing their profits everywhere on earth. This concept of meta-nationalism is so utterly foreign for most people, because for the last 200 years nationalism has been so dominant. These executives have a choice as to where to keep jobs, and if business is too expensive in the US, they will go someplace cheaper. One way of keeping them in the US is to have the best employees, regardless of if they are US born or not. H1-B visas help keep jobs in the US, even if it is not Americans who fill them (but they do pay taxes for the rest of us, and buy stuff here to so our country benefits about the same as native workers).

I would appreciate your comments.

[studenteconomist]

Powayseller,

The problem with timing the market is that you have to combine fundamental analysis with behavior finance. The fundamentals can all be there, but you have to know what the physocology of the buyer is. While the fundamentals may indicate a good time to buy (which is when I want to buy) the public may not know this for a while still. Since aggregate market behavior can be irrational and last longer than you can stay solvent, you cannot really predict the absolute bottom. Even knowing what the realtors know will not be sufficient to know the aggregate market physocology. I think most of us would be happy buying around the trough, but knowing that it may drop a bit more or take a few years to climb out of it.

[studenteconomist]

We just talked about this last week in my internation finance class. Residents of the middle east only control about 4% of all foreign direct investment in the US. This is nothing compared to Europe. Even if it increases quickly right now, they will not be able to stop a slowing market. It is simply not a large enough pool of money to make a difference.

[studenteconomist]

As some posters already mentioned, the secret here is divorce. All the couples mentioned were divorced, and the monetary costs of divorce (for the middle class) is enormous. You usually end up having each parent live in separate apartments, whereas before they shared the same one. In San Diego, where housing costs are the biggest cost of living, having to pay two rents is the difference between making it or not for these people.

[studenteconomist]

I live in the UTC area and was wondering what the rent is going for the 2 complexes that are now renting out apartments? Do you know bubble_contagion? I actually visited the Verano and Vicenza apartments and took a tour of their offerings (to buy) last summer. I was shocked at how much they cost, Verano was trying to sell its 2bed for $450 and 1 bed for $310. It was a total ripoff, and I am sure they will not be able to sell all their units. They will have to go back to significant rentals soon. The funny thing is a friend bought a place late last year in Vicenza and she thinks that her place is worth more now than 6 months ago!!! She is in the mortgage business too. She is going to lose money on her condo and maybe lose her job, yet she still believes that everything is ok. Denile is just too easy.

[studenteconomist]

I was reading this post yesterday and felt that I had to reply today. I am a graduate student at UCSD with about 5 months to go before I get my PhD. If you are wondering how graduate students (22k a year) and post-docs (35-40k) make it in San Diego I can tell you. They are delaying all decisions that cost money until the future. They drive old “college” cars, rent 1-2 bedroom apartments, and won’t think of having kids until they find a better job (which by then they will be around 35 years old. Many young people are in this boat, which is why the number of American children in San Diego is dropping quickly (replaced by immigrant children). It doesn’t say much for the future of the county, but then again, most of us moved here to experience it for a while and most of us will move somewhere else when we are done.

[studenteconomist]

I was reading this post yesterday and felt that I had to reply today. I am a graduate student at UCSD with about 5 months to go before I get my PhD. If you are wondering how graduate students (22k a year) and post-docs (35-40k) make it in San Diego I can tell you. They are delaying all decisions that cost money until the future. They drive old “college” cars, rent 1-2 bedroom apartments, and won’t think of having kids until they find a better job (which by then they will be around 35 years old. Many young people are in this boat, which is why the number of American children in San Diego is dropping quickly (replaced by immigrant children). It doesn’t say much for the future of the county, but then again, most of us moved here to experience it for a while and most of us will move somewhere else when we are done.

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