If you have about 45 minutes one day, I'd recommend playing this full video. Very wonkish. But for you econ wonks out there, heaven. I know some of you will love this. Here's the highlights:
Speaks to the flat yield curve, indications of what the bubble bursting is doing to the economy, the consumer and government spending binge, the savings rate evaporation, the out of control trade deficit. Calls the "tax cuts" more accurately "tax deferrals" - genius. Flames the NAR and their "economists".
Predicts that all those realtors and mortgage brokers "are going to lose their jobs". Talks about how the three biggest drivers of the California economy are going to go away.
Calls what's happening now "the beginning of the end - the peak and we're going to start coming down the back side." Recommends that we not think "bubble - pop" but instead more of a pop on the liquidity side - people don't buy, sales dry up, thus prices decline slowly, or go flat for a long, long time, where a home worth $400,000 today will be sold for $400,000 in 2012. So, adjusted for inflation, a significant decline. Bottom line: Rent.
Discusses the lack of affordable housing issue, the idea of "free money" and the fact that people don't think about the fundamentals. Talks about the challenges of forecasting an irrational market, and that Economists get the direction right and the timing wrong.
Asks "is Orange County different?" and answers "Yes, they are - they're gonna get hammered when this thing ends".
And damn, that Chris Thornberg would make a good President. Smart guy, funny too. And Google Video sure is cool. Heaven to be able to watch a preso like this from my kitchen in London.
May 25, 2006
Wonk Alert: UCLA Anderson housing bubble roundtable video
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13 comments:
Ya think he is reading these blogs?
definitely.
God,this guy is really good! Love the part about free money!
Chris is a friend of mine. He really does a great job with his lectures.
Plus, he is actually very conservative with his prognostications. No doom sayer, no hennypenny.
for the "friend of chris" - I'd like to do an interview of him for housingpanic - if he's interested, have him send me an email
cheers
anon - thanks for the email I sent him a note (I also took down your post with the email address in case he doesn't want it out there)
cheers
Keith .. that's an excellent video .. thanx for posting it here !
I'm looking forward to the interview.
Free money !!!
My name is spelled with an 'e' folks, not a 'u'. :) But thanks for the kind comments. And for the record, it really isn't doomsday, the non-housing part of the economy is picking up steam and that can help offset the umph that will be taken out of the economy as housing continues to cool. Prices will not fall much if at all, but the real estate industry itself is in for a tough few years.
I think his report is sound in fundamentals. However, I feel he contradicted himself by saying that a collapse of prices is historically connected to job loss while at the same time he notes that much of the economy is being supported by real estate based jobs such as lending, sales, building, and filling homes. Additionally many other consumer trends are directly connected to “easy money” such as cars, entertainment, elective surgery, clothing, luxury goods, education, etc. I feel the round table is taking a more political approach to the issue in their use of double speak.
I also disagree that we are in uncharted territory and there is no historical comparison that can be made.
Very informative speech.
If a slide in housing prices is historically connected to job losses, and the California economy is currently being propped up primarily by real estate jobs, doesn't it follow that losses in that sector will lead to an actual decline in RE prices? Am I missing something here?
Well, there are jobs and then there are JOBS.
Some jobs are more productive than others. The income derived and its multiplier can be all there is to some jobs. But some JOBS create much more than just income and its direct effects.
Ask yourself the question, are RE jobs JOBS?
Yow! Say jobs enough times and it ceases to be a sensical word.
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Good luck!
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