I *really* wanted to see a transition to desperation. We seem so close to that emotional switch. However, all I've seen is an increase in fear. Fear to a fever pitch, but we aren't yet in desperation. This series will also continue with the Kubler-Ross grief cycle. From what I can see, we're getting a pile up in the anger category. There is quite a bit of venom out there against anyone who isn't REIC or a FB.
To the Kübler-Ross grief cycle and what fraction of the population seems to be in each emotion.
Stability: 50% (Old homeowners and bubble bloggers)
Immobilization: 25% (Prices dropping? Can't be.)
Denial: 5% (No! Real estate only goes up!)
Anger: 8% (This one must be discussed)
Bargaining: 3% (Ok, we can cut the price and lead the market)
Depression: 3% (We're going to lose our home. Just let them take it...)
Testing: 4%
Acceptance: 2% (Walk away, we're toast)
We're progressing up the stages, but mostly a bottleneck at Anger.
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). *****Current state****
8. Desperation Predicted to start in November/December 2007
9. Panic: Early mid 2008 looks to be the start. Exactly when? Depends on the credit markets.
10 Capitulation:
Looking like the winter of 2008/2009 11 Despondency (start of market price bottom) Not before superbowl 2009. Possibly as late as 2010. Much more uncertainty here.
12 Depression (end of market price bottom) Not over before summer 2011, probably later.
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)
So for this month we have more anger and a stronger presence in fear. But desperation isn't far away. But if there is one thing I've learned while doing this series, real estate emotions move slower than you would think; all of my corrections have been to the right. Oh well. We're progressing.
As this winter progresses, I'll get a much better understanding of how will slide into capitulation next winter. Whatever you do, do not buy until we've been in capitulation for a while. This is a world wide event.
update 9:45pm:
This other blog puts us at somewhere between denial and fear:
http://drhousingbubble.blogspot.com/
I think the "anger in the air" puts us at a later state. However, when it doubt, delay purchase decisions during the downturn. There is a reason we have a market. Some think its time to sell, others think it is time to buy. There is no one correct answer. In fact, socioeconomic and geographical differences shift what state each region is in. For example, Seattle and Oregon are back in denial while Florida is up front in desperation. But there is no doubt that we're on the downswing globally. This isn't your father's housing downturn.
As to myself, I believe the risk of depression is constantly growing. (Man did I hate typing that.) Delaying the pain is only causing the seed corn to be expended prior to the planting. I cannot wait for the next rate cut and dive in the dollar.
Got popcorn?
Neil
