It’s been 4 years – let’s reminisce for a moment, shall we?
I remember. I also remember incurring the wrath of the bubble blogger set with a slightly too subtle dig at the no bubble stance. For the record I said that saying there is no bubble was a “crazy statement.”
But my predictions (which I’m having trouble finding) were imperfect. I predicted a 10-25% decline in home values at the worst and thought the likely bursting of the bubble (which I fully acknowledged!) would actually be a persistent leak – that we would have flat prices for 10-15 years while inflation ate away values.
I thought the government would be so averse to home prices dropping that they would do everything to keep them stable – even at the expense of the economy. Apparently I underestimated the size of the problem. Or I overestimated the powers of the government. By a lot.
And we aren’t out of it yet. This crazy prediction is already true for parts of California (from this post):
>How much do you expect the $400,000 to $500,000 market to drop?
If we have a “soft landing
I can’t resist pointing out that perhaps your troubles predicting the scale of the bubble collapse have to do with some issues you seem to have with basic math…
Example: From October 9, 2006 to today = 2.45 years = 4 years? Hmm…
I kid, I kid.
The reason this disorderly liquidation is even less predictable than “normal” housing price movements is that this isn’t just housing. You’ve got the unwinding of a whole lot of consumer debt, the worst recession (unemployment and GDP decline) since the 1930s, and the worst international financial crisis since the 1930s. Keep an eye on Eastern Europe. All these things feed each other, with housing a key link in the chain, and how far the collapse goes is as much a political question as anything else — how long it takes governments to mount an adequate and halfway coordinated response. Efforts to predict housing prices in terms of housing-specific measures, including Tim’s excellent work, are entertaining exercises but still do not encompass the larger picture.
the tim – 4 years since Rain City Guide started, not since I posted that. Click the link!
The Tim – check the (now fixed) link! My bad!
Try as we may, some things are just not predictable. My “When the Birds Start to Sing” theory (posted previously) is as good (and just as bad) as any of the others. J-
I forgot what an amusing read that “There will never be a real estate bubble” post was. A few people in that thread made some terrible, terrible calls.
Wow. Synthetik had some pretty accurate predicitons back in 2006.
I disagree…Somethings ARE very predictable. People will NOT stay in their upside down homes and the FEDS actions are kin to a bandaide on a gaping wound. It will continue to delay the inevitable in our mobile society.
People are NOT stupid and they will not continue to pay on upside down assets even at 4%, 3%, 2% and 0% rates. Property taxes will continue to escalate and the mantra of homeownership has been severely harmed.
Don’t fool yourself. The future IS quite easily predictable.
I disagree…Somethings ARE very predictable. People will NOT stay in their upside down homes and the FEDS actions are kin to a bandaide on a gaping wound. It will continue to delay the inevitable in our mobile society.
People are NOT stupid and they will not continue to pay on upside down assets even at 4%, 3%, 2% and 0% rates. Property taxes will continue to escalate and the mantra of homeownership has been severely harmed.
Don’t fool yourself. The future IS quite easily predictable.
Galen, you are the man. I should have but never predicted the bubble. I did think homes were over priced it seemed like a never ending amount of buyers. Sometimes I used to wonder if I could ever own a average house.
This bubble bursting has taught me a valuable lesson. You live and learn. Hopefully I’ll see this coming the next time around.
Galen, you are the man. I should have but never predicted the bubble. I did think homes were over priced it seemed like a never ending amount of buyers. Sometimes I used to wonder if I could ever own a average house.
This bubble bursting has taught me a valuable lesson. You live and learn. Hopefully I’ll see this coming the next time around.
Ray, many people are creatures of habit. It’s one reason some people stay married (or in really bad relationships) much longer than they should. It’s one reason why people smoke. Other people are moral beings and believe they should honor a contract. By the same logic, the first time a soldier in Iraq gets shot at, he should just flee. After all, this isn’t what he signed up for. He just wanted free college tuition and bonuses, not roadside bombs and rocket attacks.
You’re right though. It’s stupid for people to have assets that lose value. That’s why people don’t buy new cars – ever. Because they immediately lose value once they drive the car off the lot. People will not continue to pay on upside down assets even at 4%, 3%, 2% and 0% rates….except for those that do.
Incidently, I own a 39 year old car. My wife owns a 1 year old car, bought brand new. Why? Why do you think?
By your logic, I am both stupid and super smart.
Ray, many people are creatures of habit. It’s one reason some people stay married (or in really bad relationships) much longer than they should. It’s one reason why people smoke. Other people are moral beings and believe they should honor a contract. By the same logic, the first time a soldier in Iraq gets shot at, he should just flee. After all, this isn’t what he signed up for. He just wanted free college tuition and bonuses, not roadside bombs and rocket attacks.
You’re right though. It’s stupid for people to have assets that lose value. That’s why people don’t buy new cars – ever. Because they immediately lose value once they drive the car off the lot. People will not continue to pay on upside down assets even at 4%, 3%, 2% and 0% rates….except for those that do.
Incidently, I own a 39 year old car. My wife owns a 1 year old car, bought brand new. Why? Why do you think?
By your logic, I am both stupid and super smart.
You know 70ford thats a typical response that is not well thought out. I’m talking on a macro level. Need I have to explain that? There are always exceptions. In fact 85% of the US homeowners will pay the Mtg on-time over the next 10 years.
However, have you heard what Toyota and Honda just announced? I suspect you didn’t. Did you listen to the CEO of AXP, C, BAC, USB, KEY, should I go on? Consumers are NOT paying their bills in record numbers.
People smoke because its their decision?…well yes….where is the line drawn to paying an upside down Mtg. Are you saying these are both stupid decisions? Soldier in Iraq comparison under fire to a DEED promising to pay?
Are you kidding? God I hope So. This video should help you try and understand what is truly going on. Listen to Davidowitz (one of the most respected retail analyst on the street)
http://www.cnbc.com/id/15840232?video=1037869511&play=1
You know 70ford thats a typical response that is not well thought out. I’m talking on a macro level. Need I have to explain that? There are always exceptions. In fact 85% of the US homeowners will pay the Mtg on-time over the next 10 years.
However, have you heard what Toyota and Honda just announced? I suspect you didn’t. Did you listen to the CEO of AXP, C, BAC, USB, KEY, should I go on? Consumers are NOT paying their bills in record numbers.
People smoke because its their decision?…well yes….where is the line drawn to paying an upside down Mtg. Are you saying these are both stupid decisions? Soldier in Iraq comparison under fire to a DEED promising to pay?
Are you kidding? God I hope So. This video should help you try and understand what is truly going on. Listen to Davidowitz (one of the most respected retail analyst on the street)
http://www.cnbc.com/id/15840232?video=1037869511&play=1
You know 70ford thats a typical response that is not well thought out.
Your response was even more typical. It was typical to the nth power + 1. I am rubber, you are glue.
I’m talking on a macro level.
On a macro level, what you said was wrong. At least you admitted you were wrong. That’s a good start to the healing process. If you honestly could predict the future, you wouldn’t be typing on a blog – you’d be bathing in gold. I’d be bathing in gold. Yummy, yummy gold.
Need I have to explain that?
I know what macro means. The internetz teaches me good stuffs.
There are always exceptions.
Then be try to be more careful when you make blanket statements, mmmmk?
In fact 85% of the US homeowners will pay the Mtg on-time over the next 10 years.
Do you know which ones? Because if you did, you could make billions.
However, have you heard what Toyota and Honda just announced? I suspect you didn’t.
I suspect you have no idea what I’ve seen and heard, but hey, nice…blanket…statement. I suspect your favorite color is blue. How do I know that? Good question.
Did you listen to the CEO of AXP, C, BAC, USB, KEY, should I go on?
Yes, go on please.
The Consumers are NOT paying their bills in record numbers.
No. Really? No. Say it ain’t so. This is news to me. I wonder if the economy might take a hit as a result of that. Nah. Couldn’t happen.
People smoke because its their decision?…well yes….where is the line drawn to paying an upside down Mtg.
The line is drawn on a micro and macro scale.
Are you saying these are both stupid decisions?
Depends on the situation.
Soldier in Iraq comparison under fire to a DEED promising to pay?
Are you saying they are not contracts?
Are you kidding?
Are you?
God I hope So.
Why? Because you can’t handle the truth? That you make blanket statements, expecting everyone to agree, and with a mere modicum of thought and a smidgeon of analysis, your statements are shown to be inaccurate?
This video should help you try and understand what is truly going on.
I’ll watch it. In the meantime, might I suggest you read a few financial websites, such as Bloomberg, Marketwatch, and perhaps read a couple of Seattle real estate blogs/sites as well. This should help you get the big picture of things. Knowledge…is power.
You know 70ford thats a typical response that is not well thought out.
Your response was even more typical. It was typical to the nth power + 1. I am rubber, you are glue.
I’m talking on a macro level.
On a macro level, what you said was wrong. At least you admitted you were wrong. That’s a good start to the healing process. If you honestly could predict the future, you wouldn’t be typing on a blog – you’d be bathing in gold. I’d be bathing in gold. Yummy, yummy gold.
Need I have to explain that?
I know what macro means. The internetz teaches me good stuffs.
There are always exceptions.
Then be try to be more careful when you make blanket statements, mmmmk?
In fact 85% of the US homeowners will pay the Mtg on-time over the next 10 years.
Do you know which ones? Because if you did, you could make billions.
However, have you heard what Toyota and Honda just announced? I suspect you didn’t.
I suspect you have no idea what I’ve seen and heard, but hey, nice…blanket…statement. I suspect your favorite color is blue. How do I know that? Good question.
Did you listen to the CEO of AXP, C, BAC, USB, KEY, should I go on?
Yes, go on please.
The Consumers are NOT paying their bills in record numbers.
No. Really? No. Say it ain’t so. This is news to me. I wonder if the economy might take a hit as a result of that. Nah. Couldn’t happen.
People smoke because its their decision?…well yes….where is the line drawn to paying an upside down Mtg.
The line is drawn on a micro and macro scale.
Are you saying these are both stupid decisions?
Depends on the situation.
Soldier in Iraq comparison under fire to a DEED promising to pay?
Are you saying they are not contracts?
Are you kidding?
Are you?
God I hope So.
Why? Because you can’t handle the truth? That you make blanket statements, expecting everyone to agree, and with a mere modicum of thought and a smidgeon of analysis, your statements are shown to be inaccurate?
This video should help you try and understand what is truly going on.
I’ll watch it. In the meantime, might I suggest you read a few financial websites, such as Bloomberg, Marketwatch, and perhaps read a couple of Seattle real estate blogs/sites as well. This should help you get the big picture of things. Knowledge…is power.
70ford…all I can say to that response is, you are correct!!…..100%…..Knowledge IS Power. Stick around….You just may learn something.
http://crisisofcredit.com/
Here is a start. I sincerely hope you have seen it already. I suspect not.
70ford…all I can say to that response is, you are correct!!…..100%…..Knowledge IS Power. Stick around….You just may learn something.
http://crisisofcredit.com/
Here is a start. I sincerely hope you have seen it already. I suspect not.