I'm a fan of reading and understanding what's happened before. Now, I truly believe Mark Twain's quote of "History doesn't repeat itself, but it does rhyme."
I'm a fan of books. If you really want to get to understand the great depression, take the time to read The Hungry Years
Its a depressing book, but well worth the time.
Bearmaster's history of the LA market is a MUST READ Its funny to be re-reading the same headlines as were spewed out before.
But it wouldn't be complete without reading up on Florida 1925. That one had a long downturn too. This summary is the best concise one I've found. I start at Chapter 11, the beginning of the fall. By this article, it really feels like we're in 1926 all over again. One of the reasons I'm obsessed that this Fall is the start of a rapid slide down.
This is but a snapshot. If you are not also keeping up on Calculated risk, I must suggest that too. The two web based articles are sufficient. Before you read the hungry years, you should first read Adam Smith's Wealth of Nations. Its best to have an understanding of what is about to happen.
Much of why I emphasize this is that my reading has re-aligned my predictions towards a more reasonable time scale. This is why the current false market makes me yawn. History has shown we can have these summers and then watch out for the Fall/Winter.
Got Popcorn?
Neil
Subscribe to:
Post Comments (Atom)
8 comments:
Judging from the LA article sounds to me like DC is nearly identical to LA 1996.
1996
"Mortgage delinquencies hit an eight year high;" CHECK
"some market observers warned that the market “still has a long way to go.” CHECK (see below)
http://money.cnn.com/2008/06/09/real_estate/worst_hit_markets_will_get_worse/index.htm
"By this time, close to 40% of the homes on the market in the San Fernando Valley were foreclosures."
Hmmm - substitute San Fernando Valley with Prince William County, and substitute 40% with 70% and... CHECK
"Signaling a true turnaround, later reports described “buyers emerging in droves” even as prices were still falling."
Hmmm - PWC had 828 sales May 08 vs 489 May 07 - CHECK
"Yet realtors warned potential sellers that “this is not a time to overprice your property,”
LOL - CHECK
http://www.washingtonpost.com/wp-dyn/content/discussion/2008/05/30/DI2008053001888.html
"and forecasters were wary of a sustained recovery, noting that they had seen a few false dawns."
HMMM Neil said "This is why the current false market makes me yawn". - CHECK
Well thats everything - sounds to me like DC is pretty much exactly where LA was in 1996. So I guess the bottom is just a year away huh? To bad I only saw a 5% drop where I wanted to buy. Oh well.
Neil:
Off topic and no need to answer here.
But defectors are starting to show up at airspaceonline.com
Your presence and expertise would be appreciated.
Conrad
SMF,
I'll have to check out the blog.
The Anonymous.
The difference between 40% and 70% is amazing. Foreclosures haven't peaked. If anything, DC is closer to 1991 with aspects of 1992 (but not fully).
Of course, the question quickly becomes, will anything spark off a faster decline? I don't think anything will happen until the Fall.
I remember in 1993 how people were *screaming* that the nice areas wouldn't drop in LA. By 1996 they were down 40% in Beverly Hills, Palos Verdes, and Redondo Beach. (Most other areas dropped far less, closer to the 18% median drop.) If anything, DC is earlier in the cycle, not later.
Got Popcorn?
Neil
"If anything, DC is earlier in the cycle, not later"
OK now Im confused - less than a month ago, on Harriets blog you predicted recovery (i.e. 2 quarters of positive growth in the median DC Metropolitan Area single-family house price), as occuring in 3Q 2010 - a little more than 2 years from now. It seems to me that there would be a period of "flatness" before the increase - yet this window of flat prices is growing short unless you believe we are pretty close to bottom.
Moreover, on your own blog you said it looks like of the big markets, DC is experiencing the least pain, and could have moved to a new level. Yet if we are "earlier in the cycle" meaning we have more pain ahead, how could we have moved to a new level. Not everything you said can be correct - to paraphrase Oliver Wendell Holmes - were you wrong then or are you wrong now?
OK now I am just giving you a hard time, but you see what I am doing dont you? Every single thing that they pointed to in 1996 very well dovetails with what we are seeing in DC, and there is a respectable chance that we are closer than you think - and I think you need to be careful not to hem yourself in. If it turns out you (or really any of us) are "wrong" in our thinking, if we want to be intellectually honest, we need to be able to have the courage to go against our former beliefs (and dissapoint some readers) and say (whenever it may be) the bottom is here.
Some bloggers will not do this - some will always claim "knife catchers" or "dead cat bounce" or whatever nonsense they want because the declines were not as big as what they want or expect. Dont be that guy.
Im not saying we are there, but I am VERY seriiously considering the possibility we are close to the beginning of the bottom (which I think will be pretty long and maybe years wide). We all know there will one day, some day, be a "bottom", and each day the goes by as we long on to our computers, we are one day closer to it whether we like it or not. Something to think about.
Neil,
Thanks for the post, appreciated!
Some bloggers will not do this - some will always claim "knife catchers" or "dead cat bounce" or whatever nonsense they want because the declines were not as big as what they want or expect. Dont be that guy.
I won't be. But if anything, I'm being more bearish. I'm trying to figure out when I claimed a recovery that early. I have posted that the absolute bottom will be in 2011 to 2015. So If I typoed, oops.
I'm predicting not much will happen until the Fall (probably late Fall), and then we start seeing the greatest price drops. I have been predicting for a long time that 2009 will have the greatest price drops. So we'll find out pretty quickly if I'm right or wrong. ;)
Got Popcorn?
Neil
"I'm trying to figure out when I claimed a recovery that early. I have posted that the absolute bottom will be in 2011 to 2015. So If I typoed, oops."
See Harriets entry May 18, 2008.
"I'm predicting not much will happen until the Fall (probably late Fall), and then we start seeing the greatest price drops. I have been predicting for a long time that 2009 will have the greatest price drops. So we'll find out pretty quickly if I'm right or wrong. ;)"
I will say that you have been very consistent from day 1 that 2009 is the year for the big declines.
The Anon,
Yep. There just isn't much lined up to stop 2009 from occuring.
I personally plan to buy in 2010. But that isn't the same as bottom calling. I fully expect to see $100k of "equity" vanish before my eyes over a couple of years. (I won't buy until the burn is low enough.) I'm not impatient. If I should wait longer... I will. But I've also put a price on waiting. ;)
Again, there is a difference. I plan to buy fully knowing that prices will drop further. But... I'm only willing to risk $100k. Until I see fundamentals helping set that floor, I'll stay out of the market.
Note: I expect an undershoot (which I've blogged). There is no need to time the bottom perfectly. Its just avoiding the greatest price drops that concern me. I'm also in a nice situation. We don't *need* a home for a few years.
Yea... I could rent a la my best friend a house. I just find it tough to mow someone else's yard. Oh, so far every robbery I know of in a nice area has been by the lawn service. :(
Got Popcorn?
Neil
Post a Comment