Tuesday, May 15, 2007

Real Estate emotions May update

Folks, this will be my last posting until a mid-June post honeymoon. :)

I like to update my "real estate" emotions about once a month. This has been tracking the investment emotion cycle.

Without further comment:

A review of investment emotions.
1. Optimism
2. Excitement
3. Thrill
4. Euphoria (market price peak) Peaked in late 2005/early 2006
5. Anxiety (I'm a long term investor, not a speculator.)
6. Denial (Reached in October of 2006 until mid-May of 2007)
****7. Fear (Reached in mid-May of 2007). *****Just entering****
8. Desperation Predicted for July/August 2007
9. Panic
10 Capitulation Could it be summer 2008?
11 Despondency (start of market price bottom)
12 Depression (end of market price bottom) Not before summer 2010
13 Hope (hey, this investment has picked up off its bottom)
14 Relief (Its almost what I paid for it...)
15 Optimism (cycle starts again)

I haven't updated a single time frame. I'm happy at the previous predictions.

Here is the last real estate emotions thread:
http://recomments.blogspot.com/2007/04/real-estate-emotions-update.html

Basically, Joe Sixpack is getting a bit worried that he's stuck with what he bought. It might be an investment... it might be an overpriced primary residence. It doesn't matter... he's worried.

The media has now bombarded him with just enough press to create a sense of doubt.

Don't mistake this for Desperation or Panic. Every coworker, when told real estate has entered fear, started to describe the later states.

Fear is marked by a willingness to discount a home a small amount.
Fear is marked by buyers hesitating a few more weeks before making an offer.

If you read the HBB, you consider Fear not even a good start. You might even consider a late stage of denial (well... it is!).

The spring buying season was mostly a flop. Some areas did ok, but people are worried the contagion will spread to snob hill.

I reiterate that anyone who reads housing bubble blogs who buys before Fall of 2008 is insane. The only question is will the bottom be in 2009, 2010, or 2011? I'll admit there is a chance of 2009... but my vote has shifted to 2010 or 2011.

Sit back, relax. Heck, even ignore the housing blogs for a bit. The weather is great. The advantage to us... is to do *nothing* but rent. :)

Now what quantifiable things changed?
1. See coworkers retire at an even faster rate (to cash out home equity)
2. Retirements are at rather young ages. (42?!? Ok... one exception)
3. The cockiest "real estate always goes up" a**holes have finally moderated their comments.
4. The complete lack of fear in "non-buyers."
5. Coworkers/friends are talking about buying... in 2009 or 2010. (Non-HBB'ers.)

With 14 distinct emotional states I admit the lines get blurred.

But sometime in the last week we left denial. I still do not expect more than Desperation in 2007. Cest la vie.

At T-minus 4 days to my wedding, I'm signing off for a month from the blogging world.

Got popcorn?
Neil

2 comments:

sandman said...

Last time, I replied and said that we had entered fear. I'll agree that sometime between my call and yours, it indeed happened.

As an anecdote, a former coworker was changing jobs (within the company) and moving out east, around the end of '05. He had a hell of a time selling his house, and I finally gave him some advice that worked. He was back in town last week, and immediately asked if I bought yet. Of course, I haven't. He came back with "WHAT??!? Prices are down so much, this is an awesome time to buy!". The look on my face was enough to make him think twice. All I said was "supply is up 20k units from when you left, and demand is down 30%". He got it :)

Have fun on your vacation, but don't be surprised if big news breaks in the meantime. Might want to stock up on the Orville Redenbacher's.

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