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Tuesday, August 30, 2011
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29 comments:
New Case Shiller numbers came out, and thanks to prior revisions, prices are down on a YOY basis.
While that is an important revelation in and of itself, I want to get something out of the way here, and send a message to Kevin.
Kev -- for the record. You were pointing out how the CS revisions were continuously being lowered and (if continued) may prove that prices are lower on a YOY basis.
You were right.
More than that, I was wrong. And not only was I wrong, but I ridiculed you for even suggesting this was somehow an important trend. Well it was, and I was a fool for not seeing it, or even attempting to see it.
I want this post to serve as total vindication for you. I want you to savor this moment of redemption. There is no reason for me to spin or deflect or otherwise try to explain away what happened. The fact of the matter is very simple. You were right and I was wrong.
I have also started to question what the hell CS is doing to the DC numbers. It really is absurd that this is now at least the 4th or 5th month were they have massively reduced the previous months estimates. They reduced last months number by ~2.9%. This is a huge reduction, and I really don't understand how they can be so far off...
Although selfishly I am pretty happy to see housing prices falling, because I am still hopeful my new house doesn't appraise and I can convince them to lower the price.
Anon
Good for you to fess up.
Now, In your opinion what does this mean?
I've been arguing that slowing sales volume with a rising price argued for a local peak or at least a flattening.
if in fact we are seeing a downtrend and slowing volume, is that a harbinger for despair sellers?
the post today has a pretty ugly story about a spanish house painter/handyman over the last 3 years.
Pat-
Although YoY we are slightly down, I still stand by my original belief that housing prices have & will continue to be relatively flat. Housing prices are currently where they were in late 2008. In early 09 they fell a little more than recovered pretty quickly and for most of 2010 they were roughly at this level.
I know for some people a 5% up vs. down movement makes a big difference, but in the grand scheme of things that is pretty flat. So with this said inflation/wage growth is continuing to slowly eat at real prices bringing housing affordability closer to its trend. I still expect housing prices to remain in a similar range for several more years.
"pat said...
Anon
Good for you to fess up."
Glad you saw that. Notice what happened here? I said I was wrong, and did not spontaneously burst into flame -- contrary to many of our posters who will do anything to avoid saying that.
Speaking of which, do you want to revise your position about "dont ever ever get into a bidding war"?
Pat said...Now, In your opinion what does this mean?
That I dont know. I will say however my 170-190 prediction of 17 months ago is still looking picture perfect. Perhaps I will extend it. We'll see.
Contrarian said...What makes you think anyone cares about your 'vindication', then or now?
Read it again Contrarian -- the vindication was Kevin's not mine. And in any event I know you care -- you care a great deal, perhaps more than anyone here.
As proof of which, watch the lengths you go not to allow me any vindication by answering this question --
Contrarian, is Hal Turner credible, yes or no?
contrarian-
We all know there is deflation in electronics. There has always been deflation in this area. This is made up for by areas like health care and education that always have inflation. The question is when you combine everything what is the end result. The end result for the last two years is mild inflation and core inflation
"contrarian said...
Who is Hal Turner?"
Hal Turner is a guy who you once said "had a copy of the bank stress tests".
Subsequent investigations revealed that Hal Turner is a janitor -- says the govt is secretly shipping Amero coins to china as a replacement for the US dollar -- and says he has proof the govt created swine flu to eradicate the US population. Oh, and he has proof the CIA killed Ariel Sharon.
Based on what you know about Hal Turner, would you say this man is credible, yes or no?
Contrarian-
Yes that was deflationary, but has largely worked its way through the system. That's like me saying you don't see a 700% increase in oil prices since 1999 as inflationary.
The housing bust largely explains why core inflation has been running at ~1% rather than the more normal ~2% range. Housing prices have now been relatively flat nationally for almost three years. There is no reason that deflation would take years to manifest itself after the housing crash.
Saving in lieu of eventual deletion. Pure comedy gold here. For anyone interested, I recommend saving these for a year or two after which time you go back to them and just laugh and laugh and laugh!!!
"contrarian said...
Except the housing crash is only part way completed. Many people are still living in houses in which they have not made payments in two or more years. When the banks finally foreclose on those who have not made payments (or are way behind) houses will flood the market. Other homes are simply sitting there, off the books, still empty.
The entire banking system is insolvent. The only reason the banks are still above water is due to fuzzy accounting. It is a matter of time until those chickens come home to roost.
In the 1980's the banking system was insolvent for OK, TX & LA, and the housing markets in those states fell 30-50%.
This deflationary depression will continue until, at least, 2018. By then (or shortly thereafter), the banking system will have collapsed, housing will implode (even inside the beltway), Freddie and Fannie will have shut their doors. A few government agencies will go by the wayside. Salaries will be, on average, much lower. Credit will be available mostly for those who do not need credit.
8/31/11 5:18 PM"
Nothing more to add here -- other than glug, glug, glug, glug, glug.....
Here's one of them -- the comments are his, the emphasis (in bold) is mine. Watch carefully as Contrarian will soon appear and say I "made this up"
"Contrarian said...This "shadow inventory" will soon come back onto the market, lowering the value of other homes, and ultimately the value of banks holding the mortgages.
When the next tsunami of foreclosures begins (in the next few months, along with a collapse in the stock market), it would not surprise me to see bank holidays (closures) lasting for long periods of time. 4/1/10 3:42 PM"
http://novabubblefallout.blogspot.com/2010/04/northern-virginia-bits-bucket-412010.html
"Soon" come on to the market??? A foreclosure tsunami in the next "few months"???
BWAHAHAHAHAHAHAHAHAHAHAHA!!!!!!
"Contrarian said...
I hear a bugler playing Taps over the U.S. economy."
Heh -- speaking of laughing, it looks like you are reciting cliches now. Take a look at this statement (which, watch for it people, Contrarian will now say he didnt say this) from a year and a half ago:
***********************************
"Contrarian said...Then, there are the BEARS, like myself, who think the second phase of the price declines are just beginning.
Denial vs. reality. We are in a depression, not a recession.
We had a whiff of deflation in 2008-09. The 1000 point drop in the Dow last week was the kick-off for deflation to accelerate for several more years.
From here forward:
Stock markets: collapse
Credit (required for most large purchases): implodes
Housing: collapse
Banking system: collapse
Freddie/Fannie: whazzat?
Unemployment: worse than the 1930's
Without credit, most people will not be able to purchase homes or cars. Housing prices - even here in the D.C. area - will crash.
In memory of the U.S. economy, as we have always know it, and which it is no more, a bugler plays Taps 5/10/10 11:55 PM"
http://novabubblefallout.blogspot.com/2010/05/northern-virginia-bits-bucket-5102010.html
**********************************
I only wish I had records going back earlier as I am certain you were spouting off your deflationist garbage 10 years ago or more. I really hope this blog continues for another 10 years so I can check in occasionally, and watch you sit there on the sidelines, watching your life go by, laughing at you all the way.
"contrarian said...
Anon,
Are you suggesting things have gotten better since then? They certainly haven't stayed the same. So choose one, better or worse today than in 2010?
9/1/11 3:40 PM"
On the whole? Better -- slightly. In fact, its obvious by going through your list o doom you posted at the time:
1. "Contrarian said...Stock markets: collapse." at the time of the flash crash, DJIA hit 9,800. Today its over 11,500. So did it "collapse"? Hell no.
2. "Contrarian said....Credit (required for most large purchases): implodes." credit is harder to objectively measure -- I dont know of an index and then we just get into anecdotes or stories which are worthless. I'll grant you its either stable, or down, but did it "implode"? Hell no.
3. "Contrarian said...Housing: collapse." At the time you said that, CS 20 was at 143. Today its at 141. Is it down? Yes, ever so slightly? Did it collapse? Hell no. Oh and for the record CS in DC was at 175 at the time. Today its at 183.
4. "Contrarian said...Banking system: collapse." 1 year ago this week, we had 118 bank failures and counting. Thus far in 2011, we have had 57. This is a massive improvement over last year. Did it "collapse"? Hell no
5. "Contrarian said...Freddie/Fannie: whazzat?" There still here. Nuff said.
6. "Contrarian said...Unemployment: worse than the 1930's"
when you wrote this, U3 was at9.6% and U6 was near 17%. Today its down to near 16%. Another "fail" for you. Oh and in the 1930s, it was at 25%(U3) and 37%(U6).
So on your 6 points noted, things are clearly better in 3(the Dow, banking system & employment), worse in 1 (Housing, just barely) and a push in 2 (credit and Fannie/Freddie).
Please note, im not saying things are rosy. Far from it. Still, we are nowhere near your masturbatory fantasies of collapse. So just like that another year and a half of your life has gone WOOOOSH, right down the toilet, with things no closer to the deflationary collapse now than they were back then.
One edit. U3 at the time was 9.6 -- today its 9.1 (i.e. Down). This was already a failed prediction for you, but I wanted to make that clear.
Oh, now it's the Dow/Gold ratio that's important. Thank you! I never get updates about the goal posts moving...
My $0.02
Contrarian-
I don't really understand why people care about gold prices, but even if they are important doesn't the fact that gold has skyrocketed imply people are expecting inflation.
Personally I think the price has little to do with inflation/deflation, but instead I think it is just that people see that there is a negative real interest rate and they are so afraid to lose the value of their money by investing in treasuries with low yields they decide to buy gold thinking there is no risk. While it is very possible that gold could go up, it is also very possible it could go down so I just don't understand how people think it is a safe haven.
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