August 04, 2006

b.u.b.b.l.e. That's how you spell bubble. And here's what one looks like


That's a lot of inventory. Now guess what happens to prices to clear that inventory. You got it.

Posted by blogger at 8/04/2006

15 comments:

Anonymous said...

Real Estate prices lag the market by 6-9 months. Inventories of SFHs and Condos have virtually doubled and tripled on the coasts and in other bubble markets. Obviously, prices are coming down - and the longer this standoff between buyers and sellers continues, the bigger the drop will ultimalely be. Comps for some previously hot markets will literally be determined by foreclosures, short sales and auctions. Conservatively, I expect 30-40% price drops in NY suburbs, an area I am most familar with. Valuations in Long Island, NY are insanely out of the realm of market reality and fundamentals; LI is the rip off capital of overpriced overbought suburbia. Today's $1 million 4,000 sg. ft. house on 1/2 acre will be $600,000 in late 2007, mark my words.

August 04, 2006 2:24 PM
Anonymous said...

doesn't it seem like it's getting really ugly really quick, like the entire industry just went over a cliff?

soooooooooooooooo reminds me of telecom and dot-bomb in 2001

August 04, 2006 2:49 PM
Anonymous said...

The last 2 charts look like the nasdaq. They will crater like it did too.

August 04, 2006 3:18 PM
Dragasoni said...

Prices are going to fall 40-50% in bubble markets. It's going to take until 2008 to happen, but it WILL happen.

-Dragasoni-

August 04, 2006 4:04 PM
Anonymous said...

how do you spell "correction" ? and that chart is scary. totally agree that is looks like nasdaq. look out below!

August 04, 2006 5:02 PM
Anonymous said...

Job market slows - unemployment starting up. . .

Today's headline - gee, must be all those RE agents, title co. employees and mortgage brokers. . .then construction, then retail. . .hmmmm not looking good. . .here in San Diego, I look for all those Navy employees who earn 40K to buy all those nice 500K one bedroom condos. . .NOT!!

August 04, 2006 5:09 PM
Anonymous said...

My neighbor was laid off from her job at a high-tech company that is moving its plant to China. The other day she happily announced that she found a new job, at a mortgage broker!

I just smiled and congratulated her. Poor bastard...

August 04, 2006 5:27 PM
Anonymous said...

A 50% haircut would put that curve back at $70 which is the top of the band. 50% comes, 50% goes.

August 04, 2006 9:01 PM
Anonymous said...

Some people think the Dow is fairly priced at 7500 based on composite earnings. This 11000 stuff is way overboard. Maybe if the economy crashes hard the Dow will take a 50% dive like housing should.

August 04, 2006 9:03 PM
Anonymous said...

I was driving around upstate NY last weekend . Never saw that many for sale signs ever. Every little trailer on 1/2 acre of property was for sale. Now here is the question: Obviously all these people dont really want to sell, they just heard about prices going up and wanted to sell their property to cash in 200k and up. This is not going to happen, they will get them delisted and stay where they are. So I think a lot of those homes for sale are just people who would sell if they could but dont have to and will not. Thats my explanation for the sharp increase. Wishful thinking but no real impact.

August 04, 2006 10:01 PM
foxwoodlief said...

And where is the demon of inflation? Ignored. Have you tracked the price of everything from food to cars lately? I saw a small, 2006 mazda that would have sold for $12-14,000 two years ago and the ad said starting price $24,000. Go to the supermarket and milk almost $4 a gal, a steak will cost you $14-18, and I opened a can of tuna and after draining off the water realized the can was the same size but the amount of tuna in it was 1/2. Oh, and have you watched as a Big Mac has shrunk to 1/2 it's size?

The government has lied to us about inflation. The only thing that hasn't kept up for 1/2 the American population is wages. The other half have seen their incomes go up or double in ten years.

What will happen? I think the solution will be a world war. I think that has been the ruling elites solution to the absorption of all excess capacity.

August 04, 2006 11:57 PM
foxwoodlief said...

Oh, and compare housing costs in most cities to renting a hotel room. In most cities you can rent a house for less than ten days at a hotel.

August 04, 2006 11:58 PM
Anonymous said...

this doesn't indicate a bubble. it is a signal of hyperinflation and debt monetization under way -not unlike the gold and oil prices that started spiking at the exact same time. housing is a commodity and inflation hedge not unlike metals.

That $5000 mortgage ARM adjustment won't be a problem when your median salary pushes past 150k in a couple of years

August 05, 2006 2:32 AM
Anonymous said...

Just the rise in Phoenix inventory of 40000 homes in a year, thats over a trillion dollars to mop up. It ain't gunna be pretty multiplied by 100.

August 05, 2006 8:06 AM
Anonymous said...

I agree with the impending doom, but this chart is not in its proper form. Case in point: a 10 percent rise on $10 is NOT the same $1 as a ten percent rise on $60. Charts showing price increases, inflation and the sort, whether house or stocks or oil, need to be in a logrhythmic format. In fact, housing prices from the 60's-mid 80's never did keep up with inflation (though this chart would make you think it did). Many will argue (and we'll see if it is true) that the steep rise in the last 5 years merely brought us a bit higher than where we should have been all along. I still anticipate a big drop, merely from the rise of interest rates. Put this into the proper chart, and those "channels" will take on a whole new and more accurate meaning. If we are going to explain this whole dangerous phenomenom we should use the best descriptive charts. Statisticians can always bend the truth by presenting it in the wrong way.

August 08, 2006 8:33 AM

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