But I don’t know whether you’d call what happened last Fall to be a short term issue. Obviously people panicked a bit, but was that short term or longer? And if there was a panic, it was mainly on the buyer side. I don’t think you saw a lot of people running out to put their house on the market because of the mortgage crisis. And on the buyer side, how much of it was emotional (”the sky is falling”) and how much of it was just based on bad information (”100% loans are no longer available)?

I think what makes it less emotional for people is most people don’t own SFR houses primarily as investments, and the ones that do are (overly?) convinced that they are a good investment.

But in any case, I also mentioned the time to sell. People don’t just see a piece of silly “news” like the one referenced above and call up their real estate agent to sell their home. Real estate is a much more rational, less emotional market. Although conversely, the fact that some areas were rising so fast did cause people to call up an agent and buy a condo that was yet to be built, that they had no intention of ever living in. So real estate can get emotional too.

I don’t agree. The business cycles may be longer. That doesn’t change the fact that the same finance and economic concepts apply to assets of all classes. Technical analysis can be performed as real estate and Case-Shiller is no different from portfolio investment historical data. As with all historical data regardless of the asset class, it is no guarantee of future investor returns. Nothing is guaranteed. Forecasts need to be evaluated with the associated risks. The time delay between mutual acceptance and close can be accounted.

This market here in Seattle reminds me very much of the market I started in in 1990 in NJ. This isn’t the first time this Country has seen the effects of “hard to finance”. Clearly double digit mortgages created a similar environment in the housing market.

It’s never all about the stats alone. It’s a combination of 18 years experience in residential real estate, and the stats, and what you see and here buyers and sellers and would be buyers and sellers doing day in and day out.

I do not think volume will drop below 15,000 residential sales in King County. Not 2008, not 2009 either. So using 15,000 total as to volume as my prediction point is really not rocket science. My
April prediction was for 16,500 or so. That gives us range of total sales (residential only: not including raw land, condos or multifamily) if between 15,000 and 16,500 for the foreseable future.

As I said in the opening of this post, to know if the market is doing better or worse than expected…you have to expect something. I expect volume to be in that range.

I am seeing buyers anticipating that the market will drop as to price, as a result of the huge change in volume of sales. So fair market value is predominantly falling on the buyer’s side.

Fair Market Value = The price at which neither the buyer or seller is exceedingly happy. Right now I think buyers are just a little bit happier than sellers by and large. Maybe not at time of offer and acceptance, but after they negotiate price and commissions and the home inspection. The real numbers are not showing as two levels of concessions are hidden factors without anecdotal info. That is why an agent on the inside can see what the stats don’t tell.

The hard part is not applying many years of experience…the hard part is removing self interest in the outcome.

Real estate we don’t typically know what happened until 30-45 days after the fact, because of the time to close (and that ignore the MLS time to publish the data–and they’re typically the fastest). If you tried to predict based off something like Case-Shiller you wouldn’t even know what the present is until 2-3 months after the fact.

Investor behavior and psychology is not completely random. Investors tend to repeat past behavior in cycles. I believe that the same economic and finance theory that applies to other assets applies to real estate. If you believe technical analysis and fundamental analysis is flawed, then how should future price movement be predicted?