February 25, 2006

No trolls = bubble has burst. So what do we do now?


I kinda miss the little guys.

Banker - where are ya?

When there are no trolls, or no arguments anymore that we're all just a bunch of nay-sayers, dumb-renters and pessimists, I guess that means that indeed, the bubble has burst, and indeed, we're just sliding down the hill now.

Remember the early days of this blog, when we felt like a little clique who knew something the rest of the world didn't know, and we were making our theoretical arguments (in the face of data that showed record prices and increases, and PR from the NAR and Bob Toll) that this housing miracle was just another bubble that was gonna blow?

And like Paul Revere, we felt our cause was to warn people of what was to come, before it was too late.

Sure seems like a long long time ago now. And I kind of miss it - going against the crowd, realizing something that nobody else got, arguing with the trolls. And warning people, doing good. Now it's too late.

Now everyone knows. Now we're the majority. Now there is no secret. Now the listings have exploded and prices are coming down. And now it's too late to sell.

So what do we do now? Just report on the carnage? That's not as fun as discussing this bubble in it's historical bubble context. Not as fun as predicting what would come. Now it's just reporting.

The carnage will be fascinating to watch - like driving past a bad traffic accident. You can't help but look. But it's gonna be a bit depressing.

Thoughts? Why do you all still come every day to HousingPanic? What do you want to focus on from here on out, now that theory is fact, and this bubble has blown?

59 comments:

skytrekker said...
This comment has been removed by a blog administrator.
skytrekker said...

was looking at the market recap for yesterday-at the CNBC website- It said investers now 'believe' the housing downturn will be 'very mild' and that housing stocks where 'up'. There seems to be either ignorance, denial, or both to many birdbrain investors and others on wallstreet. With the reports I am seeing regarding inventory in AZ CA DC FL - there is a massive amount of disconnect with reality. How can their be a softlanding mild downturn with record amounts (and growing) inventory?

Anonymous said...

Just like the media, you keep it short and sweet! I have a short attention span and I can only read so much in a days time. other blogs are getting so long and boring that I dont know what their talking about anyway. your blog is entertaining to read and simple to understand.

an_dochasach said...

Unless you're a real estate agent or flipper caught out in some of the earliest declining markets, you still have no idea this is even a possibility. I'd still say 95% of the people I meet in Ireland are convinced its manic land rush will go on for 800 years.

I'd recommend moving the focus outside of Phoenix/Las Vegas/California and DC. How will the bubble play out in the plains, or in Florida and boomer retirement havens in the south. How will it play out in Beijing, Dubai, London and Dublin? How are Hong Kong, Japan, Germany and Amsterdam recovering from their mini-bubbles? Could the U.S. bubble be reinflated by Beranke's "dumping cash from a helicopter?"

(Incidently, the Nazi's attempted to use this exact same technique to destroy the british economy during WWII)

41cadillac said...

What do you Think?

Did not Alan Greenspan cause the World Wide Real Estate Bubble. His cheap money in the USA caused the USA citizens to buy, buy, from the House ATM and spend on all the world's Goods. (Wall-Mart)

So the rest of the world followed suit and easy money in Australia, France, England, and Ect cause the bubble. So here we are! doremefas

Anonymous said...

Keep the REPORTING going! Just wait until the TONS of listings come on the market in April! The carnage will be collosal!

INVEST in Real Estate Sign manufacturers! A definite BULL market!

Anonymous said...

Buy stock in the company that makes lock boxes.

Robert Coté said...

Actually if you look at TOL this week betting against we blog pundits would have been very profitable. Up 10% for the week, they reported earnings early Thursday. A look at the chart tells you the contents "leaked" Wednesday morning at 11AM. See:

http://finance.yahoo.com/q/bc?s=TOL&t=5d

Classic exausted stock behavior but like I said were there any bubble bloggers who said TOL was a great short term buy? Were there any blogospherians who didn't say dump the HBs?

Personally, I 'm not worried about short term noise and day trades but trolls aren't going to talk about 6 mos 40% declines in the price, they'll brag (lie) about how they did the opposite of what they read here and made eleventy seben bazillions this week.

Anonymous said...

I read this blog b/c I find you very entertaining and still outside the MSM.

I'll be buying my first home in the next 2-3 years too. Will it be just as fun to predict when the market correction will end?

keith said...

I think the days to short the homebuilders are over, after their 50% haircut.

I think the builders will make out ok - they'll reduce their profit margins from the crazysphere there were in, and back to normal. this means they'll have to drastically reduce prices - which you got it, screws the people they sold homes to - but they'll be fine

if I had to short a stock, it'd be the lenders and banks i'd be shorting - there is no real estate market anymore. nobody is buying homes. thus nobody is taking out new loans. and also you'll see significant defaluts coming up. it's already started.

Anonymous said...

utah/ austin/ seattle,bainbridge island, s&s homes in socal still selling homes no problem and no drop in prices. Were years away from melt down if any. The prices will be flat maybe for years in my estimate. People on all the sites keep talking about rates going up but rates still have not moved much so tell the truth. Rates will have to get to 7.5 to 8 to have a real impact. The only thing that will cause real estate to crash is if china, japan , south korea etc stop buying our bonds but this wont happen no where else to put there money.

Anonymous said...

Homes in SoCal are still selling and no price drops? This is simply not true! I live here and see most homes are being reduced, some quite drastically. As for Utah, the only homes that are being built there are track home neighborhoods that are very very poor quality and way over priced. Utah has NO major industries to support the pricing that is taking place there. Utah will be a financial mess with foreclosures coming out of their ears.

Anonymous said...

Talking of interest rates, one story that I feel is being overlooked is the inverted yield curve. If you haven't noticed mortgage companies are laying off employees wholesale. Basically an inverted yield curve makes it difficult for lending institutions to say......lend. We are going into the 2006 RE market with a garden hose streaming money verses a fire hose gushing money in the past few years. This spring RE is starting without the supply of money, the number of flippers, and all time low affordability. IMO the impact of this will rear its ugly head very soon.

Left Las Vegas said...

I agree that in Seattle there won't be much of a drop in prices, if any, but that's because there was no crazy runup in prices either.

When I moved here in 2004 I had no problem buying a house, I didn't have to overbid $100k, send flowers, perform sexual favors etc.

Out at the peak said...

I actually called to stop investing in SRPIX (short real estate) January 31st since the fund manager is a complete idiot (the fund didn't come close to its goal). With that, I discouraged shorting anything especially since P/E ratios were in line with HBs. I only suggested non-US assets.

I miss the_banker though. His average client must be down 6% guessimating by the indecies.

atlanta_renter said...

I still don't think that an acceptance of a housing bubble is widely accepted across the U.S. I personally know people in Atlanta who have purchased homes in the past two months and a few who are looking to purchase this spring. The foreclosures in Atlanta has doubled and inventory is growing. I still see inflated asking home prices. In a few cases the prices have come down but overall haven't dropped significantly. I think investors and flippers have moved to Atlanta and other cities like Houston and are artificially propping up prices. I'm waiting to buy at least until early 2007. I'd like to see more stories about where the investors and flippers have moved.

Anonymous said...

your wrong on utah and the homes being built. Quality as good as any place. plenty of jobs. The only differnce in utah people dont live above their means like cali. utah has huge population growth from about 12 to 20 from large family no need for immigration legal or otherwise. least expensive place to live in the west. Taxes, water , gas ,better schools,hospitals without tons of illegals, great outdoor activities. Only thing holding back utah is the negative people draw from the state being mormon. Which is not in your face like people outside think.

onlygoesup said...

anon:
you are dreaming about Utahns living within their means. Utah has one of the highest rates of bankruptcies in the whole country!!
This is not beacause of a frugal lifestyle.
You think that the quality of homes in Utah is good as any? Wow, I am shocked!! Holmes Homes are junk!! Ivory homes are junk (unless you spend $500k+ on a track home)All the builders in Utah are out for the quick buck and they are getting it. As for the employment, sure there is plenty of jobs if you are into the multi level thing. Dont get me wrong, I love Utah (lived there for 25 years and will probably move back next year). Utah does not have the economy to support what is happening with the prices in real estate.

Anonymous said...

In regards to "what do we do now?".

Following the rent vs buy equation for the average prospective buyer until buying becomes a wise investment.

foobeca said...

Utah's RE is overvalued, but not a bubble either. St George and Park City are definately bubbles though.

Utahans definately don't live within their means. My explaination for UT having the highest BK rate is tithing. Most Mormons pay 10% of their gross or net income to the church. If you're paying 10% of your gross, you're really paying about 15% of your net income to the Church.

Lenders can't ask you if (A) you're Mormon and (B) if you pay 10% tithing. Therefore, Mormons in UT "qualify" to borrow more money than their after tax/tithing incomes allow.

onlygoesup said...

I am a mormon and what you are saying is very very true!!

Anonymous said...

Last year on HGTV I saw a beautiful small desert community in Utah with homes scattered far apart and made of adobe or something similar to blend into the scenery. It was a new community.

Does anybody have an idea of what place this was? It know it was not Kayenta, but that's about it.

Anonymous said...

Ivory homes are junk homes, must be kidding. its the same home being built in socal by other national builders for a 1/4 of the cost.

onlygoesup said...

1/4 the cost? Yea if you are planning to live in Magna or Tooele or Grantsville. These places are horrible!! Ivory builds a very par/sub-par home. If you put in all of the upgrades, you can come away with a decent home. If you want to live in a good area like Highland, Lehi, Draper.....you are going to easily be paying $500k+ for a nothing special track home, easily. These are not prices that can be sustained in the SLC valley.
Love Utah, but the mentality of get rich with out the work, drives me nuts!!! I have seen it so many times!!! It always ends bad and it will this time also.

cindy said...

Funny coincidence that this article on trolls and bubbles showed up just after 2 posts by the guy saying Seattle RE wasn't heading for a meltdown (in above 2 articles comments section).

Okay folks, we're a little lame here in Seattle, just a bit brain dead. Just now coming around to what the rest of the US has known for months.

RE still "only goes up!!!" for many Seattleites. And don't try to confuse us with facts (price reductions, LONG DOM's)- they mean nothing to us. We look right past them.

Washington Mutual (that's WA. as in WA. STATE not DC for pete's sake!!) is laying off thousands of people from it's mortgage depts. but RE is healthy!

And then we've got Lawrence Yun cheering us on with predictions of 40% rise in RE values over the next year or two!

Even our Seattle Bubble Blog is still arguing about whether there IS a bubble or not!!

Property values will be off 40% before people even begin to talk about the burst. Like I said, we're just a little slow up here.

Oh well... what are you gonna do...? I guess it'll just all play out without anybody mentioning it.

Twenty years from now people will say:
"Hey rember in '06/'07 when property dropped by 60%? Wasn't that wierd?"

Til then we'll just ignore reality.

cindy said...

Yup. there he is again on this blog: Anon 10:16. Missed him the first time thru. Must own property he's trying to unload in SoCal, Seattle, Austin & Utah.

Oh man it's gonna be a hard uphill climb for these guys.

cindy said...

left las vegas:

I beg to differ! Seattle went thru outrageous price increases.

Houses that sold for 180K in 1997 could go on the market for 1.2 Mil in 2004 -and did!

Glad you found a house you liked but this is a good example of why it's dangerous to buy in an area until you've been around a while.

By 2004 everything you saw had at least doubled, and more often tripled or quadrupled in price. (unless you're out in the burbs- don't know about that).

Anonymous said...

I agree with the Banker on this one.
I gave up on this blog when Keith started shamelessly exploiting the cartoon hysteria.

As for what to do now, why not start a geopolitics blog ? As someone so concerned about "free speech", I'm surprised you did not bring up the London Mayor affair. For those of you not aware of this, London's mayor has been suspended from his job for 4 weeks for a dump comment he made to a Jewish journalist. Why aren't you in uproar then Keith ? Is there a different rule for Jews.

Bayh_Allen_2008 said...

Cindy - you are wrong

Seattle-area home appreciation fell significantly behind other West Coast cities over the past five years, with the local recession (due to high-tech job losses) the reason. It began in January 2001, and over the next few years, almost 130,000 jobs were lost.

Seattle home prices still rose, but they rose much more slowly than elsewhere along the West Coast. While the Seattle area saw home prices climb 7% yearly from late 2000 through late 2005, prices jumped 25%-40% a year or more in Las Vegas, Los Angeles, San Diego and Phoenix.

That made Seattle's housing market "a significant underperformer". Now, the Seattle area has rebounded, so much so that job growth is running more than twice the national average and far ahead of California's metro areas. Moreover, many of the new jobs pay well — a reflection of Seattle's highly educated work force. This is key, because job creation drives up housing demand, which drives up prices. Indeed, the recession acted as something of a stopper, bottling up demand. Now that stopper is off, and prices are primed to climb. Any time there's job creation, historically prices don't go down.

Seattle housing is slowly going up and is becoming scarce.....look at the data:

http://www.benengebreth.org/housingtracker/
location/Washington/Seattle/

Cindy - I am afraid if you don't have a home in Seattle by now, you are never going to have one.

Dogcrap Green said...

Someone call the police!!!

Kieth has robbed me blind!!!


Kieth

"I think the days to short the homebuilders are over, after their 50% haircut.

I think the builders will make out ok - they'll reduce their profit margins from the crazysphere there were in, and back to normal. this means they'll have to drastically reduce prices - which you got it, screws the people they sold homes to - but they'll be fine

if I had to short a stock, it'd be the lenders and banks i'd be shorting - there is no real estate market anymore. nobody is buying homes. thus nobody is taking out new loans. and also you'll see significant defaluts coming up. it's already started. "

Saturday, February 25, 2006 10:12:21 AM

veritas_faust said...

I still come to this blog for the photos.

Anonymous said...

I think seattle prices could be high but with people selling in cali and taking the equity to place like seattle, utah, austin which are nice places and still affordable. cali equity holder did this in ariz, nv already running up prices so it not just about the locals seattle having good jobs or money. I purchased a house in cali 99 sold in 03 cleared 300,000, bought land in socal in 00, started building in late 03,sold newly built house in late 04 ended with appr total of 450,000 cash. Many cali people have sold houses and have lots of cash. Here are 2 real stories why great jobs are not needed for the cali people moving to bainbridge wa or utah. first my brother inlaw sold in cali made 350,000 cash bought on bainbridge island and has only 100,000 mort about 1/4 of what he had in socal , my best friend moved to salt lake city(draper)sold house in LA he purchased for 200,000 sold for 650,000 cleared around 400,000 paid cash in utah 350,000. no house payment+ 50,000 to purchase a rental condo. No great job needed get it. Although he has found the same there as in LA. It not about the locals and what they can afford the people who made huge profits in cali are coming and have been coming in the thousands. I guess you hav e to ask yourself when will cali money stop coming?

Anonymous said...

The last time there were any real estate bubbles in Texas were in 1985 before the oil bust and in 2000 before the dot.com bust. Prices in most areas have not recovered to 2000 levels, and in some extreme cases have not even recovered to 1985 levels. You can still buy those nice homes with granite countertops in Texas for $100 per square foot if you shop wisely.

Grinch34 said...

anon, when California crashes, no money will be available for anywhere else on the West coast.

cindy said...

Anon 11:26

Yes. you are right. A lot of people up here are waiting for the CA market to crash because they basically, well, blame this whole thing on Californians.

I won't go that far. Saw plenty of born and bred Seattleite Microsoftees bidding the prices up when they cashed out stocks big time during the tech bubble at the end of the 90's which was when this whole mess started.

That said, I am one of those who is waiting for CA RE to crash so Californians can afford to buy in CA again because at this point it would help our situation here.

But it was not "The Californians" who started this mess.

Although they just may help us END it!!

Bayh_Allen_2008 said...

Keith - why did you delete my post? All I said was that all opinions should be heard, both pro and anti-bubble. I noticed you deleted the banker's post too......that is BS dude.

Anonymous said...

This guy Keith is a freak.
Do not waste your time here on this blog.

All views should be heard.

watchingPNW said...

re. bay_allen

hmmm...sounds like we have a Lawrence Yun protege/devotee on the blog.

So let me get this straight- you've got a ton of Seattle properties that you haven't quite unloaded yet , right?

Good luck with that!

Anonymous said...

Hint #11 for . You Can Sell Pride Of Ownership. Cleanliness counts. Potpourrie works. So does a nice-smelling stew simmering on the stove. Happy buyers often tell us: "I liked the smell of the home." And you'd be surprised how many people walked away from a "perfect" home because "the owners were smokers."

Anonymous said...

Blackstone, a public company, has a well-deserved reputation as a savvy real estate group. Will their investment blow up in their face?

Anonymous said...

The No. 1 sellers' complaint on the is the "showing" process ... the line of people trudging through their home, inspecting their lives, in search of who knows what .

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Anonymous said...

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Anonymous said...

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Anonymous said...

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Anonymous said...

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