You're probably as sick of the housing news as I am. One of the things I learned about bubble crashes is -- just when you think they are at an end, they drop again. And then again.
It's only when you've given up expecting it to change that it does. When you don't care anymore.
Anyway, the Bulletin had two mutually contradictory articles about housing that can be explained, I think, by timing.
The announcement that "Foreclosures Surge 287%" is the beginning of a new trend. (Or a continuation of an old trend...)
The news that housing prices went up for one month, is the end of the last trend -- as well as being what looks to me a temporary blip upward. My interpretation is that it just happened that the houses that sold in April happened to be higher priced.
But a few more months of heavy foreclosures can't do anything but drive prices down again, you would think.
Nevertheless, this is what you hear from the Bratton Report: "We do appear to bumping along the bottom of the market." ...."As you can see, we appear to be in a bottoming process and the large declines that occurred in 2008 and 2009 are leveling out."
"I believe this a great time to buy a house...."
So when does an organization's credibility become low enough not to be quoted anymore?
It's easy. I'll subject myself to the same criteria. Check out what they've said and I've said in the past and see how accurate we've been. Go ahead, all my posts are still there.
I'd be willing to bet that the Bratton Report has called a bottom and used the words "great time to buy a house" oh, I don't know, a dozen times?
Shall we compare notes in 3 or 4 months? It's not just about being bullish or a bear--it's about being somewhere in the realm of reality.
At least the Bulletin also quotes Tim Duy, director of the Oregon Economic Forum:
"Duy anticipates home price could take anoher dip in May and June." "Duy said it is likely to put downward pressure on housing prices."
What HE said.
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About Me
- Duncan McGeary
- I'm Duncan McGeary, owner and/or operator for the last 39 years of Pegasus Books in Downtown Bend, Oregon. These days I'm writing books as well as selling them. I'm the comic book guy. But even more so, I'm a book book guy. Books of all kinds. Big books and little books, children's and adult, fiction and non-fiction, hardback and paperback and trade paperback and graphic novels. Books with more words than pictures and books with more pictures than words. They are all part of the book world to me, and I love being surrounded by them every day.
7 comments:
These guys are pretty relentless in their rewriting of history. They are outlasting those who predicted accurately.
The bubble bloggers all packed up and left, thinking their job done, but the bullshit still needs to be called out.
Over on the Bend Economy Bulletin Board, there is actually a guy who is saying the market is down because we're all so "negative." That guy would have been laughed off a few years ago.
But they pop right back up.
It matters.
I had a young woman come into my store, and say her husband and her are thinking of moving to Bend.
Since she was nice and had just bought 4 books, this is the kind of Bendite we need!
"I work out of the house," she said. "So I could earn income until my husband gets going."
"Oh, what does he do?"
"He's in construction."
"Oh. Um. Be careful. Look around."
"Yeah....we've started to hear that."
It matters. People get hurt by misinformation.
I don't insist I'm right, but I insist that people should be told to investigate before jumping and not just buy into hype.
Hard to believe there is still hype but it's a hardy weed.
"It matters. People get hurt by misinformation."
Yes, they do. If people in Bend hadn't believed in the Doctrine of Bend Exceptionalism(TM), the developers, builders and city hall might not have been so eager to rush through every crap housing development and we wouldn't have the horrendous glut we do now.
Bullshit is toxic. That's one reason I keep doing my Bend Sux blog -- to provide an antidote to the bullshit that, as you say, is still being churned out in abundance.
If you look at my old posts over there I made the following points.
1. A normal cycle takes 6-7 years from peak to trough why should this one be any faster. Actually it should last longer.
2. The last peak loans was made in 2007. The interest only, the negative ammort., the low kicker interest rates, etc tended to have five year resets that means that will still have loans reseting into 2012 why would you expect the market to have turned around yet.
3. If you go back before the bubble (I used the change in tax law to exempt $250k in profit for primary residence 1997 as the start date) and trended out growth. The price level that the market should be at now around the 2001/2002 level. We have just about reached that level and over shoot would be expected.
Now for some new observations.
There is a large chuck of prime loans that rest in 2013 and 2014 that will continue to provide an overhang.
The banks have been very slow in foreclosing and in listing inventory. The overhang is building. It will not go away easily. The delay means that the quality of houses on the market is actually declining. THey have been vacant longer. The previous owners have stayed longer while not maintaining the property. Communities are getting filled with rentals which negatively impacts sales compared with owner occupied.
This is not going to end quickly.
A market must adjust and work through all of the issues. What the government did has burned through a lot of money and has basically slowed down working through the issues. The focus on trying to keep people in homes they cannot afford has kicked the can down the road. The money has been spent. They still cannot afford their homes and often since they have not moved they have stayed in the areas where jobs are not. This has negatively impacted a behavior that is normal during recessions. That people move from where there are not any jobs to where there are some. Instead of helping people do that you are instead seeing prgrams that encourage people to stay in place and are really making sure that they really go broke and cannot afford to relocate.
2013/2014 is about the earliest I would see true stability. Once that is hit price growth will be more in line with historic norm of inflation rate + 1%.
Bends success in particular was largely dependent upon the California real estate market. You can pretty accurately predict how the Bend housing market will do by plotting CA and then expect that Bend will lag what CA does by about 12 months. It has a very good degree of correlation thorugh the entire bubble run up and collapse.
CA home sales provided the cash which drove the Bend real estate market.
Right now I am trying to decide if Maui will follow the national market or split off and turn upward first. So far it has been pretty much been following the national pattern.
Duncan,
The US has not dealt with the core financial issues. All that has occured since 2007 has been to dump a lot of money into the economy in an attempt to reinflate it. A fair amount of the good news over the past couple of years has been the result of this reinflation and has resulted in can be considered to be new bubbles replacing the old bubble.
The intent has been to kick the can down the road and hope that by doing so things would improve.
As this influx is removed (think QE and QE2 stopped, and other programs run out of money) the US economy will experience substantial slowing and a potential down turn. The issues must be worked through, that will take time.
There are a hundred reasons why the real estate market will continue to tank.
All of the same reasons that existed before the boom still exist, except that prices have already fallen quite a bit.
And there's no reason why prices would go up or even level out, except the now-debunked reasons like "recreational opportunities" and "resort-like quality of life" and "retirement destination" - PLUS now there's huge unemployment and heightened lending standards that didn't exist before the bust.
Thank goodness for Tim Duy.
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