All the ingredients are there All the ingredients are there so I’m voting for 2010:
– Commercial Real Estate crash
– Shadow inventory crisis
– Option ARM resets/foreclosure crisis #2
– More from the OTC CDS fiasco
– Higher interest rates due to rising inflation
What else?
SD Transplant
November 2, 2009 @
2:47 PM
– unemployment will put a – unemployment will put a major hurt on any hope for a quick recovery
Scarlett
November 2, 2009 @
3:16 PM
kev374 wrote:All the [quote=kev374]All the ingredients are there so I’m voting for 2010:
– Commercial Real Estate crash
– Shadow inventory crisis
– Option ARM resets/foreclosure crisis #2
– More from the OTC CDS fiasco
– Higher interest rates due to rising inflation
What else?[/quote]
Everything takes much longer to unfold than we think…and the prices take even longer to show up as declined….though I agree with you, I think 2011-2012 is more likely.
blahblahblah
November 2, 2009 @
3:34 PM
Further declines in house Further declines in house prices here in San Diego will benefit:
1) Prudent savers who have been priced out of the market.
2) Prudent savers who wish to purchase additional properties for investment purposes.
Further declines in house prices here in San Diego will hurt:
1) The state of California which needs the property tax revenue more than ever.
2) Banks and other holders of mortgages and mortgage-backed securities.
It is certainly possible, indeed even likely that home prices will still decline. However ask yourselves who has more power, those in the first group or those in the second. I think at this point we can only expect more bailouts, more government intervention, etc…
Yep, it’s not fair.
carlsbadworker
November 2, 2009 @
3:38 PM
kev374 wrote:All the [quote=kev374]All the ingredients are there so I’m voting for 2010:
– Commercial Real Estate crash
– Shadow inventory crisis
– Option ARM resets/foreclosure crisis #2
– More from the OTC CDS fiasco
– Higher interest rates due to rising inflation
What else?[/quote]
The governments around the world get so contented about the “recovery” that they will remove all the stimulus plans to prop up the market and start to focus on balancing the budget.
The market will crash as soon as the government life support system is removed.
Scarlett
November 2, 2009 @
3:52 PM
carlsbadworker wrote:
The [quote=carlsbadworker]
The governments around the world get so contented about the “recovery” that they will remove all the stimulus plans to prop up the market and start to focus on balancing the budget.
The market will crash as soon as the government life support system is removed.[/quote]
You know, that may be indeed the unplanned/unwanted effect of all this talk about recovery and over-inflating any bit of non-negative economical/financial news. It will be pretty ironic.
Scarlett
November 2, 2009 @
4:02 PM
ooops… I added another ooops… I added another choice and it deleted the previous votes
those 14 votes were:
2 in not in 10 yrs or never
1 not in 5 yrs but soon after
2 in 2011-2012
9 in 2010.
Those who were voting longer times may want to consider this additional choice
No need to re-vote otherwise.
briansd1
November 2, 2009 @
4:15 PM
I voted “it will be only a I voted “it will be only a continuous SLOW decline in prices, not a STEEP one” because the government will continue to intervene to prevent the pain.
The powers-that-be will sell-out the future and prolong the pain. We’ll see it happen in drip-drip-drip, inflation adjusted mode, especially in the upper-middle and high-end.
Scarlett
November 2, 2009 @
4:24 PM
Thank you. I often switch Thank you. I often switch back and forth betweem ‘oh, the tsunami HAS to come soon in the next couple years, look how everything is f–ked up’ and the more cynic, ‘ nah, the government will fight it to its last breath, and they still won’t win, but they will slow down the home price decline considerably.’….
[quote=briansd1]I voted “it will be only a continuous SLOW decline in prices, not a STEEP one” because the government will continue to intervene to prevent the pain.
The powers-that-be will sell-out the future and prolong the pain. We’ll see it happen in drip-drip-drip, inflation adjusted mode, especially in the upper-middle and high-end.[/quote]
Nor-LA-SD-guy
November 2, 2009 @
4:47 PM
I had to decline to Vote, not I had to decline to Vote, not enough choices
Need a category that says Low end is done declining for the most part may move up slowly from here in some area’s, high to mid range will continue to decline slowly over the next year or so then we start the long slow march forward.
Anyway these are just my thoughts.
OK I voted other.
Aecetia
November 2, 2009 @
6:00 PM
The declining dollar is not The declining dollar is not helping the fuel the recovery, even with very low interest rates. This is a faux recovery and the next leg down is coming soon.
moneymaker
November 2, 2009 @
7:36 PM
I agree with Aecetia. On a I agree with Aecetia. On a different note, I was noticing today how many places are still being built downtown. Investors like to pencil things out before they invest, pencil in the possibility of a 20% decline in rents, then we’ll see how many investors are eager to pay cash for properties! I think that will be the nail in the coffin for this so called recovery. Supply and demand has to put pressure on rents to go down.
temeculaguy
November 2, 2009 @
11:06 PM
Something is wrong with the Something is wrong with the poll, I keep trying to vote “never” and it doesn’t reflect my vote. I’ve cancelled my vote, tried again and still nothing.
I agree with NOR, different markets and different price ranges will behave differently. It’s hard to generalize all places and all price ranges when the disparity has been huge thus far, compression or convergence is not accounted for in the poll.
In case you missed it, Bugs jumped back on the radar, how can I vote to agree with him?
temeculaguy wrote:Something [quote=temeculaguy]Something is wrong with the poll, I keep trying to vote “never” and it doesn’t reflect my vote. I’ve cancelled my vote, tried again and still nothing.
I agree with NOR, different markets and different price ranges will behave differently. It’s hard to generalize all places and all price ranges when the disparity has been huge thus far, compression or convergence is not accounted for in the poll.
In case you missed it, Bugs jumped back on the radar, how can I vote to agree with him?
Russell wrote:temeculaguy [quote=Russell][quote=temeculaguy]Something is wrong with the poll, I keep trying to vote “never” and it doesn’t reflect my vote. I’ve cancelled my vote, tried again and still nothing.
I agree with NOR, different markets and different price ranges will behave differently. It’s hard to generalize all places and all price ranges when the disparity has been huge thus far, compression or convergence is not accounted for in the poll.
In case you missed it, Bugs jumped back on the radar, how can I vote to agree with him?
-The rally is bullshit
-Lot of pain coming
-Low end may be somewhat safe
-rents to fall
-CRE crash is in full effect
Everybody assuming the the .gov/banks has very much control over this is not paying attention. These things are not controlled by levers in the federal reserve, as much as they’d like to believe. The reason for the, increasingly severe, bottleneck in inventory is because they CANT process it that fast. The banks are overwhelmed and can only stay in business with, literally, fraudulent accounting practices. At this point, I would be less concerned with when they are going to release the inventory to market than I would about the viability of the whole system. Because from my view it looks like Weekend at Bernie’s and starting to stink. Simply, a slow painless decline IS NOT in the cards.
2009, in which most of the economic pain came, has not been recognized by the market. Most of the people are still sitting in their homes. The 2009 foreclosures were from 2008. Think about that. The majority of the pain from 2009, the worst year, has not been absorbed. If you think they can meter is out, nice and smooth like as to not be noticeable, you need to think again. They have bumbled around like keystone cops and have been wrong about everything so far there is no reason to think they can control it now.
From my other post:
-Printing has done nothing to stop the credit contraction, see liquidity trap, thus driving all economic deterioration and subsequent underlying price support
-The banks are overwhelmed and unable to process defaults in a efficient manor
-Defaults are still trending up through historical levels, on all fronts, while bottlenecking to market. Basically, building up downward pressure.
-Mitigation in defaults has done nothing, but temporarily distort the market and are, for the most part, a costly failure
-Underlying economic conditions are still deteriorating and will do so for the foreseeable future.
-Pool of willing and able buyers is dwindling
-Total losses said to be @ 25 trillion and counting
-No engine for job growth
-Market following a typical “bull trap” after a bubble collapse
What Bugs has overlooked is the extent of the credit contraction and subsequent economic deterioration that comes with it. We are going to be deflating (wage and employment) for at least another 18 months. He seems to be basing his analysis on local economic conditions as they are now and not deteriorating further when they have to, for the foreseeable future. CIT just went bankrupt yesterday and it extends credit to 1,000,000 small businesses, it’s said that almost 80% will have trouble finding credit now. Almost half of those businesses where retailers. That’s a lot of deflation that has to work through the system. Like another money vacuum bomb dropped into cities around the country.
Bugs:
I liken the current bounce to that of the stock market. There are people who are playing because they think there’s money on the table. If/when they figure out that there isn’t really that much money to be made they’re going to withdraw again.
So while they are pumping up and manipulating the markets to maintain price levels and confidence the support for those prices and fundamentals are eroding day by day. This will only go on so long.
We are about at another inflection point.
Nor-LA-SD-guy
November 3, 2009 @
7:14 AM
Arraya wrote:
-The rally is [quote=Arraya]
-The rally is bullshit
-Lot of pain coming
-Low end may be somewhat safe
-rents to fall
-CRE crash is in full effect
[/quote]
Sorry guy’s as much I like a good financial Armageddon as much as the next guy.
Although the stock market scares the heck out of me here just yet.
With rail road Car loads showing improvement and factory orders improving,
As perilous stimulus driven recovery as this may be I got to go with it is happening, it’s real and it seems to be occurring from the bottom up.
Nor-LA-SD-guy wrote:Arraya [quote=Nor-LA-SD-guy][quote=Arraya]
-The rally is bullshit
-Lot of pain coming
-Low end may be somewhat safe
-rents to fall
-CRE crash is in full effect
[/quote]
Sorry guy’s as much I like a good financial Armageddon as much as the next guy.
Although the stock market scares the heck out of me here just yet.
With rail road Car loads showing improvement and factory orders improving,
As perilous stimulus driven recovery as this may be I got to go with it is happening, it’s real and it seems to be occurring from the bottom up.
First of all that quote was a summary of what bugs said, which I and others agreed.
Sure we call all cherry pick data all day long while ignoring a mosaic of other data and fundamental structural problems to make us feel good, but it does not do anything for gaining a clear grasp of the future.
Buffet nor anybody in officialdom has an interest in telling the truth and most likely are somewhat delusional, themselves. Besides buffet has made out quite well from government bailouts just as wall street did. He is nobody’s friend.
Look at the long string of calls during the depression regarding recovery. They had plenty of data to cherry pick back then as well. That went on for a decade, until the war.
I bet if I was inclined to research those numbers it had something to do with defense, cash for clunkers or some sort of .gov spending. Or it’s just survey data and does not mean anything.
Credit has been the lifeblood of the economy for decades and the contraction is quantifiable and going to continue for at least another 15-18 months.
scaredyclassic
November 3, 2009 @
7:35 AM
i wish i could vote for “I i wish i could vote for “I really have no idea”.
We were looking at a place this weekend. 500k. amazing house. huge custom built property on land, slightly unfinished. Would take some cash to finish but, truly an amazing place. It’s been on the market for YEARS. money mught be tight, becaus ethis place was way over a million at peak, but nobody has a few bucks to finish it at this price???? man. i want to buy it, but im afraid it’ll be 400k ina few months….
NotCranky
November 3, 2009 @
7:47 AM
scaredycat wrote:i wish i [quote=scaredycat]i wish i could vote for “I really have no idea”.
We were looking at a place this weekend. 500k. amazing house. huge custom built property on land, slightly unfinished. Would take some cash to finish but, truly an amazing place. It’s been on the market for YEARS. money mught be tight, becaus ethis place was way over a million at peak, but nobody has a few bucks to finish it at this price???? man. i want to buy it, but im afraid it’ll be 400k ina few months….[/quote]Offer 400K as soon as you can.
Aecetia
November 3, 2009 @
11:08 AM
“The question to ask yourself “The question to ask yourself about this recession is whether you think it’s like the relatively mild downturns of 2001-2002, and 1991-1992 and even 1980 or is it really the worst economic downturn since the Great Depression? Because if you believe the latter, then that blue line has further to fall.”
“The Great Depression was not a sudden total collapse. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929.[6] Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the northern summer of 1930.”
“In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the American economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.”
I voted for the long, slow I voted for the long, slow decline for three reasons, all mentioned already.
First, the macroeconomic picture is pretty bad in the 2-5 year span.
Second, different behaviors in different neighborhoods result in a smoothing of the decline. i.e. Things will still head in a downward direction but solid ‘hoods will prevent the aggregate price chart from plummetting even if some neighborhoods go south quickly.
Third, current and past govt intervention has already made future price drops necessary.
outtamojo
November 3, 2009 @
12:55 PM
You could fit a whole RE You could fit a whole RE cycle in some of those time frames -allowing some of those guesses to be bailed out by the broken clock.
CricketOnTheHearth
November 3, 2009 @
1:42 PM
Russell– “Offer 400K as soon Russell– “Offer 400K as soon as you can.”
I agree.
Recently I answered an ad for a rental that was being offered at $1540/month, but the ad had been up for weeks. I offered $1400 and she immediately counteroffered $1450. After some consideration, I got cold feet and decided to stay in my $600 place; upon telling her this she immediately dropped her offer *again* to $1380.
Can’t hurt to offer what you want to spend on the place, you just never know.
CA renter
November 4, 2009 @
1:55 AM
CricketOnTheHearth [quote=CricketOnTheHearth]Russell– “Offer 400K as soon as you can.”
I agree.
Recently I answered an ad for a rental that was being offered at $1540/month, but the ad had been up for weeks. I offered $1400 and she immediately counteroffered $1450. After some consideration, I got cold feet and decided to stay in my $600 place; upon telling her this she immediately dropped her offer *again* to $1380.
Can’t hurt to offer what you want to spend on the place, you just never know.[/quote]
I agree as well, IF you can easily afford it, and have a fairly recession-resistant job/income. Mind you, public employees still haven’t seen the bottom as far as wages/benefits go, so if their job situation is soft, so is everyone else’s.
Tell us what you decide to do, and let us know how the whole process goes. Good luck! 🙂
Nor-LA-SD-guy
November 4, 2009 @
12:48 PM
It’s 2005 all over again I It’s 2005 all over again I guess unless you live in Temecula at least it seems (OK unless you live in the U.S.A).
Gee I guess we are creating bubbles everywhere but where they were attempting to (here in the U.S.A.)
The World Bank warned Tuesday that the sudden reappearance of billions of dollars in investment capital in East Asia is “raising concerns about asset price bubbles” in equity markets across Asia and in real estate in China, Hong Kong, Singapore and Vietnam. Also Tuesday, the International Monetary Fund cited “a risk” that surging Hong Kong asset prices are being driven by a flood of capital “divorced from fundamental forces of supply and demand.”
The symptoms of a frenzy are most evident in Asia and the Pacific, where economies are recovering most quickly. In Hong Kong, high-end real-estate prices are soaring. A luxury flat in the tony Midlevels district is expected to sell for US$55.6 million, or $9,200 a square foot, said developer Henderson Land Development Co. Elsewhere, a bidder at a city-run auction to operate food stands at February’s Lunar New Year celebration recently paid a record US$63,225 for the right to occupy a 400-square-foot stall to sell fish balls and other snacks. Prices in the auction of 180 stalls were up 33% from 2008.
Over the summer, a Singapore condominium developer raised prices 5% the day before units went on sale. After dozens of would-be buyers lined up on a steamy night, the developer — a joint venture of Hong Leong Group and Japan’s Mitsui Fudosan — held a lottery for a chance to bid on the units. Singapore home prices rose 15.8% in the third quarter, the fastest rate in 28 years.
Australian real-estate markets also have heated up. After a Melbourne property-research firm recently predicted that average home prices will double over the next 12 years, a news report in Australia’s Herald Sun said: “The staggering prediction shows the importance of buying a home as soon as you can afford it because the longer buyers delay, the more chance there is that their dream will slip out of their reach.”
The Australian dollar has jumped about 35% over the past 12 months as investors borrow in U.S. dollars to purchase Australian currency. The practice is propelling stock and bond markets faster than in the U.S. and Europe. Currency traders are betting that the Australian central bank, which raised interest rates by 0.25% on Tuesday, the second rise in two months, will continue tightening.
Asian stock prices are shooting up, in part due to low interest rates in the U.S. Investors looking for higher yields are borrowing in U.S. dollars and then pouring that money “into countries that are growing more rapidly,” said Stephen Cecchetti, chief economist at the Bank for International Settlements, the central banks’ central bank, which warned early of the last asset bubble and is beginning to do so again. “That runs the risk of creating property and equity booms in those countries.”
About $53 billion has gone into emerging-market stock funds this year, according to data collector EPFR Global. Through Monday’s trading, the broad MSCI Barra Emerging Markets Index this year was up 60.7%. Brazil was up 100%, and Indonesia had gains of 102.7%. Over the same period, the Dow Jones Industrial Average was up 11.5%.
Discerning a bubble is as difficult as preventing one. Rapidly rising prices aren’t definitive proof. Stocks in Asian emerging markets currently trade at about two times book value, about average for the past 20 years, according to UBS. From 2004 to 2008, the price-to-book-value average was about three times. “This doesn’t feel like a bubble,” said Hugh Simon, chief executive of Hamon Investment Group, which manages Asia-investment funds. “There’s too much skepticism” among investors.
To battle bubbles, policy makers are turning first to regulation. Singapore’s authorities tightened mortgage requirements, ended real-estate stimulus policies and pledged to make more land available for development. South Korea regulators tightened real-estate lending requirements in seven districts around Seoul where prices have jumped.
“Even those who say we should respond directly [and deflate bubbles] have no idea how to do it,” said Laurence Meyer, a former Fed governor. “It is easy to take a philosophical position, but hard to become operational and practical about it.”
CA renter
November 4, 2009 @
4:12 PM
Nor-LA-SD-guy [quote=Nor-LA-SD-guy]
Discerning a bubble is as difficult as preventing one. Rapidly rising prices aren’t definitive proof. Stocks in Asian emerging markets currently trade at about two times book value, about average for the past 20 years, according to UBS. From 2004 to 2008, the price-to-book-value average was about three times. “This doesn’t feel like a bubble,” said Hugh Simon, chief executive of Hamon Investment Group, which manages Asia-investment funds. “There’s too much skepticism” among investors.
To battle bubbles, policy makers are turning first to regulation. Singapore’s authorities tightened mortgage requirements, ended real-estate stimulus policies and pledged to make more land available for development. South Korea regulators tightened real-estate lending requirements in seven districts around Seoul where prices have jumped.
“Even those who say we should respond directly [and deflate bubbles] have no idea how to do it,” said Laurence Meyer, a former Fed governor. “It is easy to take a philosophical position, but hard to become operational and practical about it.”[/quote]
I call BS on this “can’t see a bubble” nonsense. If people are buying strictly because they think prices are going up, and if people are borrowing tremendous amounts of money to do so, it is a bubble.
If one monitors asset prices, fundamentals (job market population growth, shifts in wealth disparities, etc.) and credit markets (including “financial innovation”) over long periods of time, bubble are fairly easy to spot.
Once the PTB recognizes any unusual movements or trends, just tighten lending by increasing interest rates, increasing capital and margin requirements, and by heightening qualification requirements for borrowing.
If the economy has to suffer for a bit, so be it. Most likely, the short-term hit suffered by the economy in the prevention of bubbles will be much less devastating than allowing the bubbles to grow and then dealing with the aftermath.
November 2, 2009 @ 2:39 PM
All the ingredients are there
All the ingredients are there so I’m voting for 2010:
– Commercial Real Estate crash
– Shadow inventory crisis
– Option ARM resets/foreclosure crisis #2
– More from the OTC CDS fiasco
– Higher interest rates due to rising inflation
What else?
November 2, 2009 @ 2:47 PM
– unemployment will put a
– unemployment will put a major hurt on any hope for a quick recovery
November 2, 2009 @ 3:16 PM
kev374 wrote:All the
[quote=kev374]All the ingredients are there so I’m voting for 2010:
– Commercial Real Estate crash
– Shadow inventory crisis
– Option ARM resets/foreclosure crisis #2
– More from the OTC CDS fiasco
– Higher interest rates due to rising inflation
What else?[/quote]
Everything takes much longer to unfold than we think…and the prices take even longer to show up as declined….though I agree with you, I think 2011-2012 is more likely.
November 2, 2009 @ 3:34 PM
Further declines in house
Further declines in house prices here in San Diego will benefit:
1) Prudent savers who have been priced out of the market.
2) Prudent savers who wish to purchase additional properties for investment purposes.
Further declines in house prices here in San Diego will hurt:
1) The state of California which needs the property tax revenue more than ever.
2) Banks and other holders of mortgages and mortgage-backed securities.
It is certainly possible, indeed even likely that home prices will still decline. However ask yourselves who has more power, those in the first group or those in the second. I think at this point we can only expect more bailouts, more government intervention, etc…
Yep, it’s not fair.
November 2, 2009 @ 3:38 PM
kev374 wrote:All the
[quote=kev374]All the ingredients are there so I’m voting for 2010:
– Commercial Real Estate crash
– Shadow inventory crisis
– Option ARM resets/foreclosure crisis #2
– More from the OTC CDS fiasco
– Higher interest rates due to rising inflation
What else?[/quote]
The governments around the world get so contented about the “recovery” that they will remove all the stimulus plans to prop up the market and start to focus on balancing the budget.
The market will crash as soon as the government life support system is removed.
November 2, 2009 @ 3:52 PM
carlsbadworker wrote:
The
[quote=carlsbadworker]
The governments around the world get so contented about the “recovery” that they will remove all the stimulus plans to prop up the market and start to focus on balancing the budget.
The market will crash as soon as the government life support system is removed.[/quote]
You know, that may be indeed the unplanned/unwanted effect of all this talk about recovery and over-inflating any bit of non-negative economical/financial news. It will be pretty ironic.
November 2, 2009 @ 4:02 PM
ooops… I added another
ooops… I added another choice and it deleted the previous votes
those 14 votes were:
2 in not in 10 yrs or never
1 not in 5 yrs but soon after
2 in 2011-2012
9 in 2010.
Those who were voting longer times may want to consider this additional choice
No need to re-vote otherwise.
November 2, 2009 @ 4:15 PM
I voted “it will be only a
I voted “it will be only a continuous SLOW decline in prices, not a STEEP one” because the government will continue to intervene to prevent the pain.
The powers-that-be will sell-out the future and prolong the pain. We’ll see it happen in drip-drip-drip, inflation adjusted mode, especially in the upper-middle and high-end.
November 2, 2009 @ 4:24 PM
Thank you. I often switch
Thank you. I often switch back and forth betweem ‘oh, the tsunami HAS to come soon in the next couple years, look how everything is f–ked up’ and the more cynic, ‘ nah, the government will fight it to its last breath, and they still won’t win, but they will slow down the home price decline considerably.’….
[quote=briansd1]I voted “it will be only a continuous SLOW decline in prices, not a STEEP one” because the government will continue to intervene to prevent the pain.
The powers-that-be will sell-out the future and prolong the pain. We’ll see it happen in drip-drip-drip, inflation adjusted mode, especially in the upper-middle and high-end.[/quote]
November 2, 2009 @ 4:47 PM
I had to decline to Vote, not
I had to decline to Vote, not enough choices
Need a category that says Low end is done declining for the most part may move up slowly from here in some area’s, high to mid range will continue to decline slowly over the next year or so then we start the long slow march forward.
Anyway these are just my thoughts.
OK I voted other.
November 2, 2009 @ 6:00 PM
The declining dollar is not
The declining dollar is not helping the fuel the recovery, even with very low interest rates. This is a faux recovery and the next leg down is coming soon.
November 2, 2009 @ 7:36 PM
I agree with Aecetia. On a
I agree with Aecetia. On a different note, I was noticing today how many places are still being built downtown. Investors like to pencil things out before they invest, pencil in the possibility of a 20% decline in rents, then we’ll see how many investors are eager to pay cash for properties! I think that will be the nail in the coffin for this so called recovery. Supply and demand has to put pressure on rents to go down.
November 2, 2009 @ 11:06 PM
Something is wrong with the
Something is wrong with the poll, I keep trying to vote “never” and it doesn’t reflect my vote. I’ve cancelled my vote, tried again and still nothing.
I agree with NOR, different markets and different price ranges will behave differently. It’s hard to generalize all places and all price ranges when the disparity has been huge thus far, compression or convergence is not accounted for in the poll.
In case you missed it, Bugs jumped back on the radar, how can I vote to agree with him?
http://piggington.com/caseshiller039s_summer_superbounce_continued_in_august#comment-135754
November 2, 2009 @ 11:10 PM
temeculaguy wrote:Something
[quote=temeculaguy]Something is wrong with the poll, I keep trying to vote “never” and it doesn’t reflect my vote. I’ve cancelled my vote, tried again and still nothing.
I agree with NOR, different markets and different price ranges will behave differently. It’s hard to generalize all places and all price ranges when the disparity has been huge thus far, compression or convergence is not accounted for in the poll.
In case you missed it, Bugs jumped back on the radar, how can I vote to agree with him?
http://piggington.com/caseshiller039s_summer_superbounce_continued_in_august#comment-135754%5B/quote%5D
Ditto
November 3, 2009 @ 6:11 AM
Russell wrote:temeculaguy
[quote=Russell][quote=temeculaguy]Something is wrong with the poll, I keep trying to vote “never” and it doesn’t reflect my vote. I’ve cancelled my vote, tried again and still nothing.
I agree with NOR, different markets and different price ranges will behave differently. It’s hard to generalize all places and all price ranges when the disparity has been huge thus far, compression or convergence is not accounted for in the poll.
In case you missed it, Bugs jumped back on the radar, how can I vote to agree with him?
http://piggington.com/caseshiller039s_summer_superbounce_continued_in_august#comment-135754%5B/quote%5D
Ditto[/quote]
Excellent write up by Bugs,
Summery:
-The rally is bullshit
-Lot of pain coming
-Low end may be somewhat safe
-rents to fall
-CRE crash is in full effect
Everybody assuming the the .gov/banks has very much control over this is not paying attention. These things are not controlled by levers in the federal reserve, as much as they’d like to believe. The reason for the, increasingly severe, bottleneck in inventory is because they CANT process it that fast. The banks are overwhelmed and can only stay in business with, literally, fraudulent accounting practices. At this point, I would be less concerned with when they are going to release the inventory to market than I would about the viability of the whole system. Because from my view it looks like Weekend at Bernie’s and starting to stink. Simply, a slow painless decline IS NOT in the cards.
2009, in which most of the economic pain came, has not been recognized by the market. Most of the people are still sitting in their homes. The 2009 foreclosures were from 2008. Think about that. The majority of the pain from 2009, the worst year, has not been absorbed. If you think they can meter is out, nice and smooth like as to not be noticeable, you need to think again. They have bumbled around like keystone cops and have been wrong about everything so far there is no reason to think they can control it now.
From my other post:
What Bugs has overlooked is the extent of the credit contraction and subsequent economic deterioration that comes with it. We are going to be deflating (wage and employment) for at least another 18 months. He seems to be basing his analysis on local economic conditions as they are now and not deteriorating further when they have to, for the foreseeable future. CIT just went bankrupt yesterday and it extends credit to 1,000,000 small businesses, it’s said that almost 80% will have trouble finding credit now. Almost half of those businesses where retailers. That’s a lot of deflation that has to work through the system. Like another money vacuum bomb dropped into cities around the country.
Bugs:
So while they are pumping up and manipulating the markets to maintain price levels and confidence the support for those prices and fundamentals are eroding day by day. This will only go on so long.
We are about at another inflection point.
November 3, 2009 @ 7:14 AM
Arraya wrote:
-The rally is
[quote=Arraya]
-The rally is bullshit
-Lot of pain coming
-Low end may be somewhat safe
-rents to fall
-CRE crash is in full effect
[/quote]
Sorry guy’s as much I like a good financial Armageddon as much as the next guy.
Although the stock market scares the heck out of me here just yet.
With rail road Car loads showing improvement and factory orders improving,
As perilous stimulus driven recovery as this may be I got to go with it is happening, it’s real and it seems to be occurring from the bottom up.
Buffet seems to agree as well.
http://blogs.wsj.com/marketbeat/2009/11/03/warren-buffett-buying-near-the-bottom-again/?mod=yahoo_hs
November 3, 2009 @ 7:37 AM
Nor-LA-SD-guy wrote:Arraya
[quote=Nor-LA-SD-guy][quote=Arraya]
-The rally is bullshit
-Lot of pain coming
-Low end may be somewhat safe
-rents to fall
-CRE crash is in full effect
[/quote]
Sorry guy’s as much I like a good financial Armageddon as much as the next guy.
Although the stock market scares the heck out of me here just yet.
With rail road Car loads showing improvement and factory orders improving,
As perilous stimulus driven recovery as this may be I got to go with it is happening, it’s real and it seems to be occurring from the bottom up.
Buffet seems to agree as well.
http://blogs.wsj.com/marketbeat/2009/11/03/warren-buffett-buying-near-the-bottom-again/?mod=yahoo_hs%5B/quote%5D
First of all that quote was a summary of what bugs said, which I and others agreed.
Sure we call all cherry pick data all day long while ignoring a mosaic of other data and fundamental structural problems to make us feel good, but it does not do anything for gaining a clear grasp of the future.
Buffet nor anybody in officialdom has an interest in telling the truth and most likely are somewhat delusional, themselves. Besides buffet has made out quite well from government bailouts just as wall street did. He is nobody’s friend.
Look at the long string of calls during the depression regarding recovery. They had plenty of data to cherry pick back then as well. That went on for a decade, until the war.
I bet if I was inclined to research those numbers it had something to do with defense, cash for clunkers or some sort of .gov spending. Or it’s just survey data and does not mean anything.
Credit has been the lifeblood of the economy for decades and the contraction is quantifiable and going to continue for at least another 15-18 months.
November 3, 2009 @ 7:35 AM
i wish i could vote for “I
i wish i could vote for “I really have no idea”.
We were looking at a place this weekend. 500k. amazing house. huge custom built property on land, slightly unfinished. Would take some cash to finish but, truly an amazing place. It’s been on the market for YEARS. money mught be tight, becaus ethis place was way over a million at peak, but nobody has a few bucks to finish it at this price???? man. i want to buy it, but im afraid it’ll be 400k ina few months….
November 3, 2009 @ 7:47 AM
scaredycat wrote:i wish i
[quote=scaredycat]i wish i could vote for “I really have no idea”.
We were looking at a place this weekend. 500k. amazing house. huge custom built property on land, slightly unfinished. Would take some cash to finish but, truly an amazing place. It’s been on the market for YEARS. money mught be tight, becaus ethis place was way over a million at peak, but nobody has a few bucks to finish it at this price???? man. i want to buy it, but im afraid it’ll be 400k ina few months….[/quote]Offer 400K as soon as you can.
November 3, 2009 @ 11:08 AM
“The question to ask yourself
“The question to ask yourself about this recession is whether you think it’s like the relatively mild downturns of 2001-2002, and 1991-1992 and even 1980 or is it really the worst economic downturn since the Great Depression? Because if you believe the latter, then that blue line has further to fall.”
“The Great Depression was not a sudden total collapse. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929.[6] Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the northern summer of 1930.”
“In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the American economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.”
http://www.bestcashcow.com/the_economy/article/sol_nasisi/dow-jones-industrials-crash-analysis-great-depression-versus-today
November 3, 2009 @ 12:05 PM
I voted for the long, slow
I voted for the long, slow decline for three reasons, all mentioned already.
First, the macroeconomic picture is pretty bad in the 2-5 year span.
Second, different behaviors in different neighborhoods result in a smoothing of the decline. i.e. Things will still head in a downward direction but solid ‘hoods will prevent the aggregate price chart from plummetting even if some neighborhoods go south quickly.
Third, current and past govt intervention has already made future price drops necessary.
November 3, 2009 @ 12:55 PM
You could fit a whole RE
You could fit a whole RE cycle in some of those time frames -allowing some of those guesses to be bailed out by the broken clock.
November 3, 2009 @ 1:42 PM
Russell– “Offer 400K as soon
Russell– “Offer 400K as soon as you can.”
I agree.
Recently I answered an ad for a rental that was being offered at $1540/month, but the ad had been up for weeks. I offered $1400 and she immediately counteroffered $1450. After some consideration, I got cold feet and decided to stay in my $600 place; upon telling her this she immediately dropped her offer *again* to $1380.
Can’t hurt to offer what you want to spend on the place, you just never know.
November 4, 2009 @ 1:55 AM
CricketOnTheHearth
[quote=CricketOnTheHearth]Russell– “Offer 400K as soon as you can.”
I agree.
Recently I answered an ad for a rental that was being offered at $1540/month, but the ad had been up for weeks. I offered $1400 and she immediately counteroffered $1450. After some consideration, I got cold feet and decided to stay in my $600 place; upon telling her this she immediately dropped her offer *again* to $1380.
Can’t hurt to offer what you want to spend on the place, you just never know.[/quote]
I agree as well, IF you can easily afford it, and have a fairly recession-resistant job/income. Mind you, public employees still haven’t seen the bottom as far as wages/benefits go, so if their job situation is soft, so is everyone else’s.
Tell us what you decide to do, and let us know how the whole process goes. Good luck! 🙂
November 4, 2009 @ 12:48 PM
It’s 2005 all over again I
It’s 2005 all over again I guess unless you live in Temecula at least it seems (OK unless you live in the U.S.A).
Gee I guess we are creating bubbles everywhere but where they were attempting to (here in the U.S.A.)
The World Bank warned Tuesday that the sudden reappearance of billions of dollars in investment capital in East Asia is “raising concerns about asset price bubbles” in equity markets across Asia and in real estate in China, Hong Kong, Singapore and Vietnam. Also Tuesday, the International Monetary Fund cited “a risk” that surging Hong Kong asset prices are being driven by a flood of capital “divorced from fundamental forces of supply and demand.”
The symptoms of a frenzy are most evident in Asia and the Pacific, where economies are recovering most quickly. In Hong Kong, high-end real-estate prices are soaring. A luxury flat in the tony Midlevels district is expected to sell for US$55.6 million, or $9,200 a square foot, said developer Henderson Land Development Co. Elsewhere, a bidder at a city-run auction to operate food stands at February’s Lunar New Year celebration recently paid a record US$63,225 for the right to occupy a 400-square-foot stall to sell fish balls and other snacks. Prices in the auction of 180 stalls were up 33% from 2008.
Over the summer, a Singapore condominium developer raised prices 5% the day before units went on sale. After dozens of would-be buyers lined up on a steamy night, the developer — a joint venture of Hong Leong Group and Japan’s Mitsui Fudosan — held a lottery for a chance to bid on the units. Singapore home prices rose 15.8% in the third quarter, the fastest rate in 28 years.
Australian real-estate markets also have heated up. After a Melbourne property-research firm recently predicted that average home prices will double over the next 12 years, a news report in Australia’s Herald Sun said: “The staggering prediction shows the importance of buying a home as soon as you can afford it because the longer buyers delay, the more chance there is that their dream will slip out of their reach.”
The Australian dollar has jumped about 35% over the past 12 months as investors borrow in U.S. dollars to purchase Australian currency. The practice is propelling stock and bond markets faster than in the U.S. and Europe. Currency traders are betting that the Australian central bank, which raised interest rates by 0.25% on Tuesday, the second rise in two months, will continue tightening.
Asian stock prices are shooting up, in part due to low interest rates in the U.S. Investors looking for higher yields are borrowing in U.S. dollars and then pouring that money “into countries that are growing more rapidly,” said Stephen Cecchetti, chief economist at the Bank for International Settlements, the central banks’ central bank, which warned early of the last asset bubble and is beginning to do so again. “That runs the risk of creating property and equity booms in those countries.”
About $53 billion has gone into emerging-market stock funds this year, according to data collector EPFR Global. Through Monday’s trading, the broad MSCI Barra Emerging Markets Index this year was up 60.7%. Brazil was up 100%, and Indonesia had gains of 102.7%. Over the same period, the Dow Jones Industrial Average was up 11.5%.
Discerning a bubble is as difficult as preventing one. Rapidly rising prices aren’t definitive proof. Stocks in Asian emerging markets currently trade at about two times book value, about average for the past 20 years, according to UBS. From 2004 to 2008, the price-to-book-value average was about three times. “This doesn’t feel like a bubble,” said Hugh Simon, chief executive of Hamon Investment Group, which manages Asia-investment funds. “There’s too much skepticism” among investors.
To battle bubbles, policy makers are turning first to regulation. Singapore’s authorities tightened mortgage requirements, ended real-estate stimulus policies and pledged to make more land available for development. South Korea regulators tightened real-estate lending requirements in seven districts around Seoul where prices have jumped.
“Even those who say we should respond directly [and deflate bubbles] have no idea how to do it,” said Laurence Meyer, a former Fed governor. “It is easy to take a philosophical position, but hard to become operational and practical about it.”
November 4, 2009 @ 4:12 PM
Nor-LA-SD-guy
[quote=Nor-LA-SD-guy]
Discerning a bubble is as difficult as preventing one. Rapidly rising prices aren’t definitive proof. Stocks in Asian emerging markets currently trade at about two times book value, about average for the past 20 years, according to UBS. From 2004 to 2008, the price-to-book-value average was about three times. “This doesn’t feel like a bubble,” said Hugh Simon, chief executive of Hamon Investment Group, which manages Asia-investment funds. “There’s too much skepticism” among investors.
To battle bubbles, policy makers are turning first to regulation. Singapore’s authorities tightened mortgage requirements, ended real-estate stimulus policies and pledged to make more land available for development. South Korea regulators tightened real-estate lending requirements in seven districts around Seoul where prices have jumped.
“Even those who say we should respond directly [and deflate bubbles] have no idea how to do it,” said Laurence Meyer, a former Fed governor. “It is easy to take a philosophical position, but hard to become operational and practical about it.”[/quote]
I call BS on this “can’t see a bubble” nonsense. If people are buying strictly because they think prices are going up, and if people are borrowing tremendous amounts of money to do so, it is a bubble.
If one monitors asset prices, fundamentals (job market population growth, shifts in wealth disparities, etc.) and credit markets (including “financial innovation”) over long periods of time, bubble are fairly easy to spot.
Once the PTB recognizes any unusual movements or trends, just tighten lending by increasing interest rates, increasing capital and margin requirements, and by heightening qualification requirements for borrowing.
If the economy has to suffer for a bit, so be it. Most likely, the short-term hit suffered by the economy in the prevention of bubbles will be much less devastating than allowing the bubbles to grow and then dealing with the aftermath.