Falling home prices

[eridanus]

Well, I thought we were talking about the shortcomings of the Case-Shiller Home Price Indices? Just because you don't have any support for your initial assertation is no cause for name calling. And when did you get to call the topic?

1) Oh, I thought that discussion was over. You dismissed Case-Shiller out-of-hand for your more accurate "much closer to the source" data. Enough said, right? Readers can draw their own conclusions.

Standard & Poor's - S&P/Case-Shiller® Home Price Indices

"The main variable used for index calculation is the price change between two arms-length sales of the same single-family home. Home price data are gathered after that information becomes publicly available at local recording offices across the country."

2) Name calling?

3) Because I can.

 

[cute fuzzy bunny]

Ugh. I cant take the flying swings from gross generalizations based on anecdotal data to small specifics based on questionable data.

All this fooping from the big picture to the small picture...

BTW, it was all gloom and doom in 2002 too. We were all gonna go broke, the economy was going to fly into the ground, 14 years of bear markets, cats sleeping with dogs, old people falling up stairs, godzilla, the red death. Everything.

Shoot and we just had a bunch of semi-bears saying the other day that stocks looked like a pretty good buy right now. Yet here are some predicting a stock market crash that will follow the inevitable recession that will follow the grand destruction of every persons personal finances. Because dontcha know, everyone bought and sold real estate in the last 3 years, or fully refi'd with an arm heloc and bought four hummers.

Oh. My. God.

 

[twaddle]

Speaking of fooping, aren't you the guy who was predicting that the S&P 500 was headed for 1000 back in Feb? Oh, wait. That was before you decided to dive back into stocks. Fooping makes sense now.

 

[honobob]

cats sleeping with dogs,

hummers.

Oh. My. God.

 

[cute fuzzy bunny]

Speaking of fooping, aren't you the guy who was predicting that the S&P 500 was headed for 1000 back in Feb? Oh, wait. That was before you decided to dive back into stocks. Fooping makes sense now.

Actually I own very little in the way of equities in my taxable accounts.

I still think stocks will be going down further from here, just not as a function of the housing market. Bet we come a lot closer to 1000 than 2000 in the next year or two.

I guess I did point out that some other folks think there are a lot of bargains in equities. In this fabulous thread where minutia data becomes the norm and all life as we know it is soon to end, I guess the transfer is appropriate.

Whats the definition of twaddle again?

 

[twaddle]

\I still think stocks will be going down further from here, just not as a function of the housing market. Bet we come a lot closer to 1000 than 2000 in the next year or two.

A function of what then? Please tell us how you divine the numbers, oh wise [-]ass[/-] one.

I guess the largest housing bubble in the history of our country doesn't matter. So, I'm curious what does matter.

 

[cute fuzzy bunny]

That does it. I'm too afraid to open this thread anymore!!!!

 

[honobob]

the largest housing bubble in the history of our country

Oh. My. God. Has this been confirmed?

Nevermind, I thought Twaddleville wuz in Amerika.

 

[twaddle]

Oh. My. God. Has this been confirmed?

Watch it, buddy, or I'll post some graphs.

 

[honobob]

Watch it, buddy, or I'll post some graphs.

Please, anything but the graphs!

Oh wait. We debunked the Case-Shiller.

see post 96

 

[twaddle]

OK, forget Case-Shiller. Let's look at housing as a percentage of GDP (I tried to warn you):

 

[honobob]

OK, forget Case-Shiller. Let's look at housing as a percentage of GDP (I tried to warn you):

And they're related how? Let's look at housing as a percentage of my....... (Just like the scary movies, warnings from virgins go unheeded)

 

[twaddle]

Good point. We should look for a better relationship. Like housing prices to rent.

(Stop me before I graph again!)

 

[honobob]

Good point. We should look for a better relationship. Like housing prices to rent.

(Stop me before I graph again!)

Yeah, I was gonna say you should graph off. Rent? Even commercial property dumped that old metric in favor of appreciation! GRM's GIM's are so 1999.

I'll post my huge office property appreciations tomorrow. There's some guy named Brian on NBC telling me consumer Christmess spending is off .004. BIGGEST drop in history since say about 5 years ago. May go out and buy a Wii to at least put us on the positive side. See, where others sit and moan I go out and try to make a difference.

Aloha, mein fiend.

 

[lazygood4nothinbum]

i have a graph request.

i'd like to see housing prices relative to population growth & diminishing land stock, particularly in south florida if it would not be too much of a bother. thank you.

 

[eridanus]

I'll post my huge office property appreciations tomorrow.

Haven't we already established that you're a real estate genius?

 

[twaddle]

i have a graph request.

i'd like to see housing prices relative to population growth & diminishing land stock, particularly in south florida if it would not be too much of a bother. thank you.

I aim to please. Is San Diego close enough to Florida? Well, they're both warm and bubbly.

 

[cute fuzzy bunny]

Aiyee! I looked again!

Well lets see, rent is tied to low-mid range salaries, so has no elasticity.

Home prices are a function of future earnings and future home values.

So hmm...its like comparing bonds with stocks.

I am also surprised in looking at your chart to see that home valuations appear to have risen during the great depression. So much for that whole bit about home prices dropping during the depression. Dang, I guess you have to check every 'fact' that anyone throws out. And they never drop an equal amount below the mean to offset the rise. So much for THAT theory.

In fact, it appears that during the modern era of the last 100 years or so any downturns seem to be uncorrelated with the economy and were of short duration. We had up and down turns when the economy was good and the same when the economy was bad.

What does matter? Not much. Except for people who create doom and gloom from unwhole cloth, fake facts and anecdotal data.

 

[cute fuzzy bunny]

Buy peaches!!! Sell oranges!!!

 

[twaddle]

Home prices are a function of future home prices. OK, let me write that down.

And any predicition of an economic downturn is "doom and gloom." Recessions happen. And timing them can be fun!

 

[lazygood4nothinbum]

I aim to please. Is San Diego close enough to Florida? Well, they're both warm and bubbly.

thanx. maybe that should have been a pie chart.

 

[TBPu]

Wow. Blamo. Twaddle is rockin. Facts. Nice. Busting a gut laughing at the 2 (I f'd up and bought at high) dudes.

Haw, haw, haw. OK, just kidding. I do wonder how far (in a psychology sense) some will go to lie in order to cover a mistake.

 

[FinallyRetired]

Watch it, buddy, or I'll post some graphs.

What the heck is a "standard" house by Case Schiller? Is that a house whose value is good enough to be included in their graphs? In the dot com bust, the "standard" stock had a great depression type fall, if by standard you meant a dot com. But the blue chips pretty much survived.

When one looks at graphs showing median home prices, the graphs don't look quite as scary:

 

[twaddle]

The Shiller data is good, but it looks scarier than it would if the graph origin started at zero rather than 60.

The main point was that this is our biggest housing bubble ever. We have "biggest ever" stuff happen all the time, but for some reason people get defensive when it's used to describe the housing bubble.

And here's one of those tin-foil hat wearing d00ds who like to invoke the Great Depression:

Wells Fargo CEO says housing worst since Great Depression - Sacramento Business Journal:

That doesn't mean it's the end of the world. It means something economically significant is happening. There's no point in wishing it away.

 

[cute fuzzy bunny]

Home prices are a function of future home prices. OK, let me write that down.

Let me help you with this one, since you seem to have trouble with the process.

Whats the pitch that a real estate agent uses to get a buyer to buy a home more expensive than they can afford today?

1) they'll be making more money in a few years

aaaand...

2) the home will be worth more

Since more buyers buying up means more price support, that means that buyers who buy up because the house will be worth more causes prices to rise.

The whole upsurge we just watched was due to these two functions, plus the "and the mortgage on that more expensive house wont cost you as much because we'll get you in a 40 year interest only arm, so you can afford more house, you'll be able to make the payments a lot easier in 5 years due to 5 years of raises - that'll offset any interest rate changes - and (pay attention to this part, because it happens again) when you sell, the house will be worth so much more that it wont matter that you havent created any equity, cuz you'll still make money!!!"

So yes, presumption of future home values does have an effect on current prices.

Want it another way? Home prices are reduced now vs last year because there are fewer active buyers and more buyers are waiting for future prices to be lower. So expectations of future lower prices are driving prices down right now.

Equity prices are set on expectations of future earnings. Its the same thing.

Do we need a fourth explanation or ya got it now?