Tuesday, March 25, 2008

I think there is going to be so much dust kicked up in the air this spring that no one will really know what's going on. Sometime in mid-fall, the dust will settle.

I expect a surge, because it's spring, because prices are finally starting to moderate. But we need more than a spring buying surge, we need an all-encompassing wave, a re-inflation of the bubble, which isn't going to happen because of the credit markets.

Meanwhile, all the builders are rushing to finish projects while there is even a glimmer of hope. Because of the way these developments are financed, some will be mothballed, but others will be finished because the money has already been spent.

The real estate insiders have been given their marching orders. Let no 'negative' article go unchallenged, but are doing themselves and their industry a disservice. There is already a huge rumble of dissatisfaction in areas of the country like California where this happened, and people caught the falling knives.

Besides, as I've said before, it's really the credit market that will dictate what happens. And the national media will fill the local news vacuum.

Plus there are pesky blogs like Bendbubble2; Paul-doh got over 600 remarks with his last entry, even if half of them were about blowjobs. And the Source had 2400 views of it's last Wandering Eye column about the subject. Still, the majority of people who are going to feel strongly enough to show up for the COTV show are going to be real estate people -- who's job depends on it. Me? I'm just curious and bemused and trying to get my own business positioned correctly.

The Bulletin is being so tin-eared and hamfisted about the subject, that I think it's going to backfire. Even today, they are trying to paint some rosey lips on a pretty ugly hog. Housing sales ticked up 2% last month -- from January. But it was still down 29% on the West coast from last year.

That's the dust they're throwing in your eye, hoping you won't realize that no matter how bad it gets, there are still going to be some months better than other months. This spring will, indeed, have more activity. Without a doubt.

Unfortunately, it's like a restaurant with 100 seating, getting a surge of 10 diners instead of 5. Won't be enough.

The stock market? That is a whole nother world, as far as I'm concerned. An alien world, with gibberish language and unknowable logic.

Unfortunately, just as the big real estate promotional campaigns were gearing up, Bear Stearns fell apart, and that was a pretty big blow to consumer confidence. Job losses are going to be an even bigger blow. Job losses, and downsizing, have been happening for awhile now. What we're seeing now is the Jack Lalanne delusion part where padded clothing can no longer hide the dreadful muscle loss.

So in the biggest cliche I can offer you -- pay no attention to the man behind the curtain. In reality, all he has to offer you is some lame of hot air balloon that will take off without you.

But if you truly believe, click your heels together three times.

"The Best Time to Buy in 20 Years. The Best Time to Buy in 20Years. The Best Time to Buy in 20 Years."

If it works, let me know. I've got this idea for a development.

10 comments:

Duncan McGeary said...

I love this comment by the President of Umpqua Bank;

"This is different and I think, because of that, nobody predicted the steepness of the decline of housing market and its depth. How fast and how deep it's been has been amazing, and the financial geniuses had no idea."

No just us dumbshit normal people with functioning brains.

RDC said...

Uh, moderate where?

If you are talking nation wide, then yes there are areas that have taken their correction and are starting to see volumes pick up. These are markets that were have taken hits of 30-50% already.

If you are talking about Bend you are still in the start of the correction in housing prices. Portland for example just started its rollover.

You will not see the real pricing declines until, you see consistent buying a certain price points, and enough houses dropped in price to reach those points, increasing volume, that will reestablish the normal pricing methods for housing and then you will see rapid price adjustments. (why drop your price if you don't know that it will sell at the lower price, might as well keep it high some turkey might just come along. If on the other hand you have some comfort in knowing that it will sell in a specific price range and you do need to sell you will take the hit.)

Anonymous said...

When I play poker I know the rules allow / encourage not telling the truth. I guess that the same rules apply to anyone with a vested interest in the failing real estate industry.

Duncan McGeary said...

"moderate"

I guess it's all relative. But you're probably more right than I am.

What kills me about the coverage is this constant comparing successive months instead of the same month a year before.

You could have the coldest summer in history, and it will still be warmer than the warmest winter in history.

SO to blazon the headlines with, "Gee, it's getting hotter." is just plain irresponsible and stupid.

RDC said...

Duncan,

You really need to do both, month to month, as well as year to year. However, to really look at month to month you need to do some seasonal correction to adjust for normal seasonal variation. For example if March is normally 5% more then Feb, then a 2.6% monthly increase without correction might really represent a 2.4% loss when corrected. The month to month gives you an idea if you may be starting to see a change in trend. Another way to look at it is to plot the plot the year over year differences and see if they are on an increasing or decreasing trend.

Duncan McGeary said...

"....you need to do some seasonal correction to adjust for normal seasonal variation."

I agree, but I don't see them doing that. So the average joe just see's the 2.6% increase, out of context.

Duncan McGeary said...

This is going to sound really harsh, but at the end of every fad, you're dealing with the dumbest, least clued-in people. The smart people have gotten out halfway through the arc, the conscious people start to get out on the downslide.

But there is always that last little surge of latecomers.

A market that depends on the naive and the gullible is doomed.

jessefelder said...

"There's no place like Bend. There's no place like Bend. There's no place like Bend."

Jason said...

Duncan, I thought you might get a kick out of something. My sister found this, so all credit goes to her. It's called Garfield Minus Garfield. Here's the explanation (directly from the site):

"Who would have guessed that when you remove Garfield from the Garfield comic strips, the result is an even better comic about schizophrenia, bipolar disorder, and the empty desperation of modern life? Friends, meet Jon Arbuckle. Let’s laugh and learn with him on a journey deep into the tortured mind of an isolated young everyman as he fights a losing battle against loneliness in a quiet American suburb."

There are new strips every day, ranging from weird to quietly insightful. Here's the link:

Garfield Minus Garfield

Everybody enjoy it!

Anonymous said...

A market that depends on the naive and the gullible is doomed.

*

Dunc you just defined the 'Bend Market' for all time.

It's correctly called the 'greater fool theory'.

In Bend a fool and his money truly been separated. The fleecing of the fool is over in Bend, and that will be its demise.