The S&P/Case Shiller® composite index for the month of April was released today.
"'In a welcome shift from recent months, this month is better than last - April’s numbers beat March,' says David M. Blitzer, Chairman of the Index Committee at S&P Indices. 'However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season. It is much too early to tell if this is a turning point or simply due to some warmer weather.
'...In the monthly details, we saw home prices increase in April over March. The 10-City was up 0.8% and the 20-City rose 0.7%. Only seven cities experienced lower prices compared to 18 in March. However, the seasonally adjusted figures saw less dramatic improvement. The annual rate of change for the 10-City remained the same at -3.1%; whereas the 20-City fell further from -3.8% reported for March to -4.0% for April. For a real recovery we would need to see several months of increasing home prices, large enough to shift the annual momentum to the positive side. In short, better news, but still a lot of questions and a long way to go.'"
32 comments:
"Corey said...
Agree. I attributed alot of the gains in 09 and 10 to the tax credit. This bounce and overall resilience of DC is far greater than I have imagined."
You arent the only one. There are certain posters here who shall go nameless that believe all gains here in DC since the march 09 bottom were attributable to the tax credit. They spent much of 09 labeling buyers of the day as "idiots", when in fact, given the market is 10% higher now, the irony is they, may have been in fact the "idiots" themselves. But I digress...
You asked about my mid term predictions. I must admit, I havent yet looked much at them given I am waiting on a much earlier prediction to finish.
Specifically, 16 months ago, I said DC case shiller will move in a range of 170-190 for the next 18 months. We are at 186.76 now. I expect this number to be revised (slightly) down next month, but the next 2 months will be higher still, quite possibly breaking the upper barrier of my 170-190 range. In any event, I want to let those last 2 months of my original prediction play out before I make a new one.
While this is not my official prediction, if pressed to make one now, I would say DC would now trade in a range between 180-200 for the next 18 month period. However, that assumes that as HB notes in the post before this, the austerity measures coming out of capital hill are slight and affect DC in the out years beyond the mid term.
Like him, I believe that if the cuts are severe, we will certainly see prices headed down on a YOY basis. Personally, I think no matter the size of the cuts, absent a black swan event, the March 09 bottom of 165 is was and will remain the bottom. However, severe cuts may put levels of 170-175 back into play.
In any event, while 180-200 is my unofficial prediction for the next 18 month period, I shall refrain from making any official prediction until my current one expires in 2 months time.
"Contrarian said...
So, then I guess the deflationary collapse I have said is coming would be your black swan event. Therefore, you are not disagreeing with me.
6/29/11 12:15 PM"
In a sense, yes I do agree with you. You are very right when you say its a matter of not "if" but "when" the deflationary collapse happens. Where you and I disagree, highly, is the timing.
I can say with 99% certainty that a deflationary collapse shall happen sometime between now, and the year, 2711. After all, many said the Roman empire was finished after Emperor Diocletian started kicking the can down the road in A.D. -- and 1,152 years later, in A.D. 1453, they were proven "right". I personally refuse to live my life in fear of something people have predicted for the last 70 years, and likely will continue for the next 700. You however, continue to live your life believing it is "imminent".
And herein lies your problem Contrarian. While I suspect your true timing of this call was much earlier than you would like to publicly admit, you have gone on record as preparing for "imminent deflation" in 2005. At the time, CPI was at 190. At that moment, you went "on the clock" so to speak and history will judge your call of "imminent deflation" based on that 190 starting point.
As of today, CPI is over 225. Thus, even if inflation stopped dead in its tracks today, it would need to drop a full 18% just to get you back to your original 190 point where you said deflation was "imminent".
You probably dont even realize it, but because your timing was so bad, and we are so much higher than your 190 starting point, you are pretty much dead in the water. Thus, even if we today (at CPI 225) see a deflationary spiral as deep as the great depression, we would only get back to 1999 CPI levels.
In housing terms, while 1999 levels would indeed be a steep drop, it still puts us nowhere near your "best case" nominal pricing, which is somewhere around 1987 levels. Strictly speaking, if you really want to consider yourself "right" on housing terms, we really need to see 1969-1970 nominal pricing.
As much as I enjoy mocking you, I also really, really, pity you as your "deflation is imminent" thesis will be your downfall. As the economy continues to "muddle through", for the next decade, I can see inflation continue to creep forward at its current rate.
At that point, CPI would be around 300. Thus, even if we then get the "great depression II" deflationary spiral, that will put CPI at 260, and you will be crowing "SEE I TOLD YOU SO!!!"
Yet...Step back and think about that for a moment...You would have sold everything at CPI 190 only to declare an "I told you so victory" at 260 in the year 2021. Brilliant plan there Contrarian. Simply brilliant.
Even if that calamity happens well past 2021, it would likely take you (minimum) another decade or so get us back to the 1987 nominal pricing you predict. By then, all of us will have pretty much paid off our houses in full. Even you had you simply ignored prechter and others warning of "imminent deflation" and sold your house back in 2005.
Instead, even if everything goes swimmingly well for you, you will then be paying your 26th year of rent. More than likely though the "muddle through to up" trend of the past 200 years will reassert itself, and you will die, in your rental, with your horde of 2005 dollars, eeking out a minimal existence all the while muttering to yourself, fetal position, rocking back and forth "deflation is imminent" "deflation is imminent" "deflation is imminent".
BTW, in all likelyhood, you will now run away, only to reappear a few months later and re-argue this point as father time continues to work his magic on yours and my existence on this planet.
Dont think my thought about 26+ years on the sidelines can happen to you? Think of this. Thus far you have spent 6 years, roughly 1/7 of your productive lifespan on the sidelines. During that time, some of your preparations have gone WOOOOSH, right down the toilet, putting you in far worse shape had you simply not planned at all. Yet you remain, resolute, convinced that something that happens maybe once in 10 human lifetimes will happen during your watch. How arrogant of a thought is that?
Put it this way, your idol Prechter went "on the clock" with his "deflation is imminent" thesis 24 years ago in 1987. He has been on the sidelines since. He is 62 years old now. We are up so much over 1987 values that he is virtually guaranteed to die on the wrong side of the "deflation is imminent" trade.
Prechter is one of the leading authorities on the "deflation is imminent" thesis that guides your life. He has been wrong for 24 years with no end in sight. given his track record, and the fact that (according to you) he "understands" the forces at work much better than you do, what makes you think you can time this thing any better than he can?
"Contrarian said...
Between now and 2016 - 2020 at the outset - you buffoon.
We got a taste of deflation in the 2007-2008 collapse. It will continue when the next collapse begins over the next year."
Again, I have to ask, how can you be arrogantly certain with the timing? What are you doing differently in your predictions that you did not in the past when oh so many of your predictions went belly up?
Remember when in Sept 2009, you suggested I was "naive" for believing the DJIA would be above the 3/09 lows "in a years time" (i.e. Sept 2010)?
You were cocksure, brash, and arrogantly confident with that "by Sept 2010" call, and yet you were wrong.
And not just a little bit wrong mind you. You were spectacularly wrong - several orders of magnitude wrong. You were projecting a drop of 30% in a timeperiod, when in fact we saw a 10% gain!
Think about that for a second...had anyone followed your advice and shorted the market until Sep 2010, they would almost certianly be bankrupt. Had they held on until now, they would be even 10% worse off still!!!
So again, I have to ask, what (if anything) will make this call:
"Between now and 2016 - 2020 at the outset - you buffoon."
Or this one:
"We got a taste of deflation in the 2007-2008 collapse. It will continue when the next collapse begins over the next year."
Different from all your prior calls? What have you done to improve your accuracy since then? From the outside, you look like the same, borderline delusional, "often wrong - yet never in doubt", moron you have looked like for most of your time on this blog. Why is this call going to turn out much different than so many of your calls from the past???
Here Contrarian, lets put you on the record for this one...
++++++++++++++++++++++++++++++++++
"Contrarian said...We got a taste of deflation in the 2007-2008 collapse. It will continue when the next collapse begins over the next year."
+++++++++++++++++++++++++++++++++
For starters, I realize this may have been an angry, reactionary, off the cuff answer to my challenge. According to you the "next collapse begins over the next year"??? Are you sure about this? Do you want to think about this some more and amend this before we proceed or can we hold you to this one?
Also, knowing you, this entire exchange shall be deleted in a months time, and if I ask about it later, you shall lie and never say it happened. If you want to delete everything and walk away now, I will not hold you to any of this. Still, if your posts are not deleted by 10AM on 6/30/2011, I will note the same, and this will serve as your confirmation that you stand by everything you said here.
Assuming you stand firm in your statement:
++++++++++++++++++++++++++++++
"We got a taste of deflation in the 2007-2008 collapse. It will continue when the next collapse begins over the next year."
++++++++++++++++++++++++++++++
Lets define what you mean. At its worst, between the 2007-2008 "taste" of deflation, CPI fell from 219.964 to 210.228 - a full 4.4%. If this was a mere "taste" please describe what sort of numbers (either CPI or deflation rate) we will see by 6/29/2012?
Secondly, (and similarly) as of today, CPI for May 2011 is at 219.964. Given that "the next collapse begins over the next year" can we assume that CPI will be at least lower than 219.964, when the May 2012 print comes out?If no, where will CPI be when the "next collapse" begins???
So now is your time Contrarian. Yes you have been embarassed, badly in the past by some of your calls but this time, THIS TIME, this is your chance to get one right.
Consider this year zero. Your chance to rebuild your reputation begins now. Your chance to save us "sheeple" from the devastating deflation you know is coming our way, is right now! Sieze the day my friend!!!
So whats it gonna be Contrarian? You going to stand up to the challenge, throw caution to the wind, and give us some verifyable CPI numbers? You going to delete your posts prior to 10AM tomorrow, and pretend this exchage never happened? You going to run away, or give me a tangential, nondescript, insulting, ducking of the question that gives us neither time nor price?
Whats it gonna be? Ball is in your court my friend?
Anonymous,
the only thing I worry about is that the boy who cried wolf, eventually, wasn't lying...
:)
My $0.02
"mytwocents said...
Anonymous,
the only thing I worry about is that the boy who cried wolf, eventually, wasn't lying...
:)
My $0.02"
True. And to be fair to Contrarian, one of the first times I openly questioned him was when he said fannie and freddie were on the verge of disappearing.
This was summer 2008. And while fannie/freddie did not "disappear/cease to exist" as he claimed, the fact that they were then nationalized made me look pretty stupid.
At the time I was pretty much a newbie here, and I remember thinking "wow, even though this guy makes extreme predictions he is like 1 for 3 in getting them right." Its one thing to make safe predictions like the dow will drop to 9,000 when its at 9,500 and get say half your calls right. Still, in the extreme prediction game, a 33.33% batting average is pretty spectacular, and had he kept it up, Contrarian would be a force to be reckoned with.
Of course, as we all know by now, this was pretty much the high water mark for Contrarian. Since then he has gone about 0-50 in the prediction department. The worst for him was probably the "hal turner is credible" debacle, followed by the deletion of everything he has ever said.
Thus, at that point I felt safe putting Contrarian in the "stopped clock is right twice a day" category. If we had a 10 year record of his extreme calls, my guess is he went 0-500 between 1998 and 2008. Thus, I dont think he is due for getting another extreme prediction right until the clock rolls back around to his minute frozen in time -- likely around the year 2018-2021.
As such, I feel confident enough this most recent "(deflationary) collapse begins over the next year" call as being one of the 549 wrong ones, not the 1 right one. Still, can you imagine what an opportunity this is for Contrarian?
For the past (now 3) years, I have been pretty safe in calling him out in just about everything he says. I know he desparately wants to "ding" me -- find something, anything where I went on the record and was wrong. And not just everyday wrong...outspoken, arrogantly wrong, like I would be if this most recent prediction of his came true. If right, he would get alot of mileage out of this, and frankly, I wouldnt blame him.
So thats why I am very curious to see what he does next. If he deletes everything he said here before 10AM tomorrow, while I will probably give him a bit of a hard time -- its no biggie. People often say things in haste and may think better of them once they have a chance to really think about it.
Alternatively, if he does not delete them before 10AM, I will treat this call of his as his "official record" and will judge him accordingly. He gave us a time (i.e. "over the next year") and we have a price (i.e. CPI is now at 225) to see how he does.
Finally, suppose this most recent call is one where he really really thinks it will come true. If so, he can elaborate on what sort of collapse he sees -- how severe will the deflation be??? How low will CPI go??? This is his chance to prove to us "sheeple" that he is not the fool we think he is, while simultaneously getting some fabulous capital he can use against me in the weeks and months ahead.
mtc,
I'm thinking it's more like chicken little...running around screaming that the sky is falling.
Thanks for the concern Henny, er, contrarian. I believe I already told you my plan B. Meanwhile I don't plan on living in a cave.
Did you search the fable of Chicken Little? It doesn't end well for the little guy. Eaten by a wolf?
btw, I thought you just guaranteed this whole debacle would begin within one year. What's the deal with 2020? I may be dead and buried by then.
Contrarian,
Where did you tell us that there would be a counter-trend? It does not sound like what you were saying in early 2009. Of course, you don't have "predictions" - only certainty.
Are all your wrong calls due to "counter-trends"? Will this trend (of blaming counter-trends) continue? To 2020?
contrarian,
One final thing before we say good night. Do you recall the study of rental prices during the Great Depression? They rose steadily throughout the 30's and peaked in 1940. The lack of new construction during the 30's resulted in a housing shortage lasting into the 50's.
I just didn't want you to lie awake worried about my financial health.
p.s. just because I love real estate doesn't mean that is all I have, silly. Sleep tight.
Contrarian -- Kiyosaki? Really? You almost certainly dont realize it, but you have just comitted "Hal Turner is credible, part II". As it was with Mr. Turner you have once again failed to research the track record of your source -- in this case Mr. Kiyosaki.
Did you ever read Mr. Kiyosaki's books? Did you ever hear his advice -- mostly dispensed during the go go days of 2000-2005 -- when he advocated the use of LEVERAGE to "get rich quickly".
Around 2005/2006 my well meaning, but financially naive grandmother sent me one of Mr. Kiyosaki's "rich dad" videos. I will never forget the parable about the guy ("Steve" I think) with the fully paid off house, worth 100K.
After 5 minutes explaining why you are stupid for having "dead money" in a fully paid off house, Mr. Kiyosaki's advice (and I shit you not on this) was to LEVERAGE YOUR ENTIRE HOUSE AND USE THE PROCEEDS TO BUY MULTIPLE RENTAL PROPERTIES TO INCREASE YOUR FUCKING CASH FLOW!!!
At that point, I realized this guy is a risktaking fool. He was advising investing in a real estatate ponzi scheme which (if the market turns - as it did a year later) will lead to financial ruin.
By the way, the most damning indictment against your new source of doom, Mr. Kiyosaki is when you note:
"Mr. Kyosaki is best known for authoring the “Rich Dad, Poor Dad” series and has sold over 26 million books."
Think about that number, 26 million fucking books for christs sake! Did you ever wonder what sort of wildly popular, sheeple loving advice he would dispense to sell that many books???
Contrarian - dont you see??? Dont you realize what you have done??? While Mr. Kiyosaki was not as culpable as David Lehereah and his cronies at the NAR, YOU ARE NOW CITING ONE OF THE PRIMARY CAUSES OF THE ENTIRE REAL ESTATE, PONZI SCHEME, LEVERAGE AND RENT OUT PROPERTIES, GET RICH QUICK GURUS OF THE ENTIRE HOUSING BUBBLE!!!
By the way, I always wondered what happened to Mr. Kiyosaki after the bubble burst. I figured he was probably indicted along with David Crisp, Casey Serin, Angelo Mozillo, and other notorious flippers/gurus of the real estate boom. Well now I know the answer...
Based on that video you sent me, it looks like Kiyosaki has reinvented himself as a gun toting, food hoarding, bunker building, catastrophe on the horizon, glug glug glug doom is imminent prophet that is so much en vogue these days.
So basically what we have here in Mr. Kiyosaki is a all and out financial opprotunist. He didnt bilk the sheeple out of enough of their hard earned cash during the bubble days...oh no... He has now decided to double dip and bilk them again by selling them books, tapes, and seminars about how to prepare for some unknown "catastrophe" just over the horizon.
By the way Contrarian -- want to know the best part about all of this? The best part of you citing Kiyosaki as your "credible" source for doom?
You fell for it!!! Like all the clueless sheeple, you love to chastize, you fell for his "Listen to me, I am a guru of doom" message, just like all the rest of the sheeple did when he was a "listen to me, I am a guru of quick riches" message of yesteryear.
Sorry for all the cursing and how emphatic I am about all this. Reality is, I am in shock. I simply cannot believe your new source of doom is one of the (secondary) characters/architects of the entire real estate bubble. You have just embarassed yourself in ways you can not begin to imagine. You have given me the most precious gift possible...
Oh yeah, Contrarian, now that I have taken a few minutes to stop laughing, I want to note whats going on with my earlier questions to you about your "(deflationary) collapse begins over the next year" prediction...
Your choices were:
(A) delete the prediction before 10AM tomorrow and I will pretend it never happened
(B) run away, or give me a tangential, nondescript, insulting, ducking of the question that gives us neither time nor price answer, or
(C) stand strong and elaborate on the terms of the time and price for your "(deflationary) collapse begins over the next year" prediction.
Its now 11:25 pm and I am off to bed. Yet for the record, let it be known that as of this time, your choice thusfar has been (B) -- a tangential response involving the advice Glen Beck and Robert Kiyosaki.
You know the terms of my question, and thus far your answer seems to be stand by what you said earlier, but refuse to elaborate on terms of time or price. Thats fair, if thats what you want to do. Just understand if this is one of the 549 times out of 550 that you are wrong, prepare to be crucified over the next year as I call you out on how completely and utterly wrong you were.
The clock is ticking Contrarian. 11 hours to go. You still have time to change your mind.
Tick...tick...tick...
Anon,
Don't misinterpret me. I think you handily school contrarian. I enjoy it even. You're memory, or ability to track key posts, is quite impressive.
My $0.02
I guess i'm going to ask my questions again of Contrarian, Anon and VA_I
When in investing in a rental property, what yield on price should one look for?
What cap rate? and
What DSCR?
To make it easier, what Vacancy rate should you assume, and amortized maintainence?
to make it easier, i think a yield of 6-9% is a good window, and at least 3% over Treasury, and
2.5% maintanance and a 5% vacancy rate.
Pat,
Considering how conservative you are, I would expect that you'd want to assume a vacancy rate of 1 month per year to turn the property over between tenants. 1 month is much closer to 10% vacancy than 5%. For once, I think one of your cost estimates is too low...
My $0.02
For the record, its 10AM and Contrarian's posts are still here.
OK Contrarian, as you clearly knew the stakes, the fact that you did not remove the following post
++++++++++++++++++++++++++++++++
contrarian said...
The Anonymous said...
In a sense, yes I do agree with you. You are very right when you say its a matter of not "if" but "when" the deflationary collapse happens. Where you and I disagree, highly, is the timing.
I can say with 99% certainty that a deflationary collapse shall happen sometime between now, and the year, 2711.
Between now and 2016 - 2020 at the outset - you buffoon.
We got a taste of deflation in the 2007-2008 collapse. It will continue when the next collapse begins over the next year.
6/29/11 2:59 PM"
+++++++++++++++++++++++++++++++++
Tells me everything I need to know.
Also, for the record, CPI for May 2011 is at 219.964. You told us that when CPI fell from 219.964 to 210.228 - a full 4.4%, this was just "a taste" of deflation. Further, we shall judge your statement that "the next (deflationary)collapse begins over the next year" by seeing where CPI is at this point next year.
So Contrarian, given that you did not delete your remarks, did you just prove yourself prescient, or did you just dig your own grave? The next year will be alot of fun to watch!!!
Iuse5% as a vacancy because right now the dc vacancy rate is 3.4 percent
For the silent majority of you who probably dont like my constant harassment of Contrarian, I apologize. This post will hopefully minimize that by turning it more into an only once a month thing.
Also, for the minority of you who enjoy watching him squirm, prepare to be entertained!
As you all know, there is probably no one who abhors being held accountable for what they said more than Contrarian. Time was, it was enough for him to delete all his posts and pretend he didnt say XYZ will happen by 123. However, once I began saving his posts, he adopted a new tactic. Initially, when the timeperiod he predicted for XYZ to is far away, he is content to let (my saved post of) his prediction stand. However as the time draws near and XYZ is looking to be yet another spectacular failure, instead of admitting he is wrong, he says I "made it up" or "am lying" about what he said, etc. etc.
Just look a few comments back where he again goes back to the statements he made in March 09, the bottom of the Dow. At the time, he was chastizing MM for holding on to his stocks (calling him a member of Assets Deflate Daily Anonymous). When I call him out on it, he says things like "Anon has a pattern of repeating falsehoods over and over again, hoping they stick".
Well Contrarian my friend, your defensive tactic "I didnt say that/you made that up Anon" stops now.
Going forward, I am going to highlight every month a few near term predicitons of Contrarian. Right now, they all have a chance (very very slim chance) of happening. Thus, he will not yet repudiate them or pretend I am making them up. Instead, he will assasinate my character or attribute other falsehoods to me.
Yet watch carefully what will happen. As the months progress, and as we get closer and closer to yet another prediction of his go belly up, he will be faced with a choice. He will either (a) have to admit he was wrong (b) run away and not address the failed prediction or (c) accuse me of "lying", "making it up" etc. Again, his usual choice is (c) but it will be interesting to see if he still does it while KNOWING FULL WELL WE ALL KNOW THIS IS WHAT HE IS DOING!!!
With each prediction, it will be very interesting to see how long he can hold out before he resorts to the "anon, you made it up" tactic. Right now, I think this is the still likely to be the route he will go, but we will all have to wait and watch to find out.
To follow up on that last post, ladies and gentlemen I give you the first monthly installment of:
CONTRARIAN'S PREDICTIONS PROGRESS REPORT (JUNE 2011)
Prediction #1
http://novabubblefallout.blogspot.com/2010/06/northern-virginia-weekend-bits-bucket_12.html
Contrarian's prediction (now deleted) was made on 6/13/2010 at 2:29 a.m. That prediction was recorded 6 hours later on 6/13/2010 at 8:49 a.m. when I noted:
Upthread, our resident permadoomer Contrarian said:
"Three years from now, house prices will be at least 50% below today's prices."
For the record, at the time of his statement, DC Case Shiller was at 175.43 (March 2010). For his "at least 50% below todays prices" to come true, DC Case Shiller will be at 87.71 or below (March 2013). As of this moment, DC Case Shiller is at 186.67 (Apr 2011).
Contrarian has yet to say I "lied/post bs/made things up/etc" regarding this prediction, but watch carefully folks -- its comin!!! This prediction only has 23 months til it fails, and its only a matter of time before Contrarian realizes this prediction will fail and will call me a (liar, etc) about it. My best guess is the "Anon, you bufoon, I never said that, you post bs" repudiation from Contrarian will come some time this winter.
Prediction #2
Contrarian's prediction (not yet deleted) was made in this thread on 6/29/2011 at 2:59 p.m. That prediction was also recorded less than 2 hours later on 6/29/2011 at 4:39 p.m. when I noted:
Here Contrarian, lets put you on the record for this one...
++++++++++++
"Contrarian said...We got a taste of deflation in the 2007-2008 collapse. It will continue when the next collapse begins over the next year."
For the record, at the time of his statement, CPI was at 225.964 (May 2011). For his prediction to come true, we will see where CPI is in May 2012. Today is only one day after his statement so CPI is still at 225.964 (May 2011).
This one is still very fresh. Contrarian hasnt even deleted his post yet. Still its coming folks. Look carefully for the repudiation "Anon, you dont make any sense", "Anon, this is BS" etc. etc. This one may take 12 months, but its coming folks -- watch carefully and wait for it wait for it...
So when will the repudiation "Anon, you post jibberish," etc come? 10 minutes from now? 10 months from now? Who knows! Rest assured though, it will happen. See you next month for the CONTRARIAN'S PREDICTIONS PROGRESS REPORT (July 2011) to find out!!!
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