tag:blogger.com,1999:blog-31427364.post3064784374972279813..comments2024-03-26T03:52:23.395-07:00Comments on Housing Analysis: Real Estate: House Prices Still Highmohicanhttp://www.blogger.com/profile/06094213357140749289noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-31427364.post-24722803195879486852007-01-30T16:36:00.000-08:002007-01-30T16:36:00.000-08:00"Most of the talking heads are monkeys. They don't..."Most of the talking heads are monkeys. They don't do or say anything that would jeopardize their job security "<br /><br />As I have stated here and in my final rant at Chipmans, I think there is a problem in the RE industry which worsens the situation.<br /><br />In summary:<br /><br />1. Owners (the majority of participants)are non-investors and relatively unsophisticated for that reason. Rising prices will increase demand rather than reduce it. Emotions run high.<br /><br />2. Amateur extrapolating investors jump in and compete for with owners for limited supply.<br /><br />3. Old school cash flow investors are smart enough not to buy, but they are not selling. Buy low, never sell is their motto.<br /><br />4. Unlike stocks, most real estate analysts have a direct vested interest. There is simply a shortage of analysis which calls a spade a spade. Here is a list of the potential candidates who ought to know what is up:<br /><br />a) In the case of the industry talking heads (realtors, builders and lenders), I think it is spin at best, incompetence at worst. Most likely the former.<br /><br />b) The bank analysts are more puzzling. Gomez did call a spade a spade before he left. Pastrick sings the same tune about strong fundamentals. RBC's affordability report is laughable. <br /><br />c) Investors. To be honest, I think the more "sophisticated" types live in the stone age when it comes to understanding RE from a modern portfolio theory perspective. RE is normally a slow and steady investment vehicle, and just as you don't need to understand how a car works to drive one, you normally don't need to be a finance whiz to be a successful RE investor. However, that also means that there is a dearth of experienced people who realize that what is going on is not pretty f*cking far from normal. Instead we hear the usual blah blah blah about long term, buy and hold etc etc. These investor merrily thumb their noses at opportunity cost because the CF on their low cost base is strong.<br /><br />And that, my friends, is why most of the concern is coming from the blogging community. In fact, I anecdotally believe that many bubble blogger have a finance background. As such they are not easily fooled by the usual cliches. There are a few economists that do trumpet dire predictions. Shiller (more of a pure academic) and Stpehen Lynch of Morgan Stanley. Their points of view get minimal MSM coverage, but the talking heads get to spin whenever new numbers are published.freakohttps://www.blogger.com/profile/06236681769619303395noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-72940088040369900362007-01-30T14:31:00.000-08:002007-01-30T14:31:00.000-08:00"What irks me about most talking head media statem..."What irks me about most talking head media statements"<br /><br />Most of the talking heads are monkeys. They don't do or say anything that would jeopardize their job security and they will continue to gather a paycheque while stretching or ignoring the truth.<br /><br />They preach fundamentals all the time even if the fundamentals don't warrant the current price levels. <br /><br />Freako - so true on the 'proportial to fundamentals' comment. For example, we can't have the pool of buyers increase by 1% and the pool of supply increase by 2% for an indefinite period of time. Eventually they must meet or shift to compensate for the differential. This is a simple explanation of our current market - too much supply for too few buyers (at current prices) - the supply and buyers will eventually correct and that 'meeting' of supply and demand will likely result in a downward shift from the current price level.mohicanhttps://www.blogger.com/profile/06094213357140749289noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-28304572714236412802007-01-30T13:20:00.000-08:002007-01-30T13:20:00.000-08:00What irks me about most talking head media stateme...What irks me about most talking head media statements is the following:<br /><br />The talk as if the relationship between prices and "fundamentals" is cumulative and non-relative. As long as the conditions are right, prices will keep going up perpetually, just like a sailboat in good wind. By this logic, the rent to price gap can grow to be infinitely wide.<br /><br />In reality, prices move PROPORTIONALLY to fundamentals (or at least ought to). That means that prices ultimately will reset to what fundamentals indicate. And that can undo past excesses in a heartbeat (in the absence of worsening fundamentals).freakohttps://www.blogger.com/profile/06236681769619303395noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-53016226589595049062007-01-30T13:03:00.000-08:002007-01-30T13:03:00.000-08:00What I find amusing is that the "experts" never, e...What I find amusing is that the "experts" never, ever, predict that prices will decline over the near future, when the historical fact is that prices decline about 1/3 of the time.<br /><br />Sort of like a weatherman who never forecasts rain.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-40150705754793309392007-01-30T09:53:00.000-08:002007-01-30T09:53:00.000-08:00At this stage these quotes are so ridiculous to th...At this stage these quotes are so ridiculous to the semi-intelligent observer that they are humourous.mohicanhttps://www.blogger.com/profile/06094213357140749289noreply@blogger.com