Saturday, March 22, 2008

End of Moratorium, obviously. But I'm going to try not to be so Armageddonish.

I'm more and more seeing this housing bust on two different planes, connected by an unbreakable thread.

On one plane, there is the glut of houses I first noticed, and what I first focused on a few years ago. An obvious bubble. Alongside the glut are the ridiculously high prices, especially on the westside. And a third element of glut, which as a retailer I always include, is the huge amount of commercial square footage that is going to hit the market over the next year.

The housing inventory and prices could -- conceivably -- be influenced -- marginally -- by positive media coverage. Though I doubt it.

(It would be an interesting survey to find out how many real estate agents bought the book "The Secret." Those of them that read, that is.)

The second plane is the credit market. When I started blogging, I knew nothing about this. I was surprised when I qualified for as nice a house as I got for my income, but didn't look a gift horse in the mouth. I was confident I could make the fixed 30 year mortgage rate, but was kind of bemused that the lender was so confident.

Anyway, this part of the market isn't going to be swayed by the 'media' in any fashion, and ultimately, I believe, is going to be the hurdle that no amount of "Best Time to Buy in Twenty Years" campaigns can overcome.

The 'positive' vibe people are so self-deluded that its become sad.
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2 comments:

Anonymous said...

One of my frustrations is the accusation that people like me who consider themselves realists and pragmatics who are 'fact oriented' instead of 'belief oriented' is that we get painted with the brush as being negative when that is simply not true. I'm very positive and optimistic in areas that have the facts that lead me to that conclusion. But I resist putting on a happy news face when confronted by contrary facts just to put believers at ease.

A while back I sat through the entire "The Secret" movie at a free public showing at the invitation of friends of mine who now, after having experienced a bit of personal RE losses, aren't quite such believers in "the secret". After the movie I looked around at the audience and actually felt sorry for those who bought into the message of this slickly produced film. To believe that one can get anything they want by simply believing that they can is sad, very sad. The movie never mentioned anything like work or education or experience but simply implied that belief was all you needed to become weathly beyond your dreams. Dream on believers. Go ahead, you might get lucky. Me? I'll try to make my 'luck'.

March 22, 2008 at 1:02:00 PM PDT
Duncan McGeary said...

Yeah, I always think, if anything, I'm way too optimistic, which is why I try to impose the discipline of rationality, positive or negative.

The other thing about the Secret.

The desire to buy houses may be there, but the credit isn't.

Just like the desire to fly may be there, but the wings aren't.

Just like the desire to breath under water may be there, but the gills aren't.

The Spirit is willing, but the Flesh is weak.

One of things I've been forced to understand in my business, is that these things happen in cycles. You don't create the cycle, you don't bust the cycle. You're along for the ride.

Nothing goes up forever, and usually -- if you don't hit bottom (there is no top, but there is a bottom) -- nothing goes down forever.

The trick is to recognize at what part of the cycle you are at. The trick is to realize when growth is unsustainable, and to start moderating your bets.

I've found it nearly impossible to stand pat. Either I'm growing, or I'm sliding.

If I'm growing, I can take a bit more risk to keep the cycle going.

If I'm sliding, it behooves me to take on less risk, to start protecting myself.

Inside the business is a bottomline. You can protect that bottomline while growing or declining. Or you can risk it all.

What you can't do is try to go against the cycle yourself. That's suicide.

March 22, 2008 at 2:43:00 PM PDT

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