In the end, years from now, this will all seem so obvious. But like human behavior during all bubbles, our monkey brains are hardwired to see trends, and go along with crowds. The trend was up, up and away, and the crowd was rushing to buy homes regardless of the fundamentals.
Now our monkey brains simply change directions - homes will be seen as horrific financial catastrophes, as the crowd rushes to sell at any price.
Despite a cool-off in home prices, more markets are overpriced than ever, according to a new survey.
Higher interest rates, especially for adjustable rate mortgages, helped push some housing markets into the overpriced category last quarter, according to Jeannine Cataldi, an economist with Global Insight, which conducted the analysis with National City.
"Significant slower appreciation, or outright declines, among overvalued markets are a signal that we are in the early stages of a correction," said Richard DeKaser, National City's chief economist.
Top 10 Cities / Overvalued %
Naples: 101.5%
Bend: 89.3%
Salinas: 79.4%
Merced: 78.4%
Madera: 76.9%
Port St. Luci: 74.0%
Stockton: 73.9%
Santa Barbara: 72.8%
Miami: 70.8%
Punta Gordo: 70.2%
September 21, 2006
CNN/Money: More home markets 'extremely' overvalued. HP: Our monkey brains just doin' their thing
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38 comments:
Finally it as though everybody believed the ralty whores were all virgins
I wonder what happens when people lose everything. What move do they make next? Sell the wife?
Our flying monkey brains!
I concur with mr vincent, that 50% should do it...I think the list should have included San Diego
we went up too far now we'll go down too far
do the math - if you go up 50% in a year, it only takes a 33% fall to get back to even
and don't forget this is on leverage. anyone who bought in the past year or so, even losing 10% will lead to foreclosure and bankruptcy if they sell and add in the selling costs and monthly cash flow losses too
Markets SHOCKED, SHOCKED I SAY by Philly Fed slowdown. . .hard landing??? . . .where is Claude Raines when you need him (Gambling at Ricks'?). . .Didn't anyone bother to read the blogs and look at the for sale signs on their block???
We are indeed primates, Keith, now you're catching on.
Thus the title of my site: Orangutan Behavior
www.cagednews.com
great point paintblot. US$ feels contrarian doesn't it? Oil feels contrarian today.
ideas folks?
bananas
I think now is a really good time not to gamble with your money. All sort of sh*t will be hitting multiple fans over the next two years. Find a good solid mattress or sturdy coffe can.
paint and keith, if you are contrarian 100% of the time, you will always lose. You have to go with the crowd sometimes, just be sure to leave the crowd before it starts to exhaust itself.
By the way guys, since the US decided to leave rates unchanged, the following central banks have raised their rates further:
Australia
Czech Republic
Denmark
Hungary
Iceland
India
Japan
Slovakia
South Africa
Sweden
Switzerland
Turkey
UK
Considering the US' current fiscal situation, what does that tell you is happening?
What a BS numbers,maybe times 2 ...
Suburb where I live close to Chicago is 100% overvalued.
tobasco - I agree - and timing is everything
people laughed at me when I bought my last loft - told me it was overpriced, that people in Phoenix wouldn't ever want to do "loft living". it was one of the first lofts in town
people then laughed at me when I sold it, saying there was no bubble, real estate only goes up and up
but there was a ton of money to be made following the crowd and buying houses - in 2000, 2001, 2002, 2003, 2004. the key was to get out before the masses
so... what's a great play today?
Hey a picture of borkafatty!!!!
I told you guys there is money to be made in porn. Realty Whores go XXX
Keith,
Good question.
American stocks are in the midst of a secular bear market, so I'd stay away from most of them. Even good co's will be dragged down by a flat market and lack of capital infusion. Selective puts isn't a bad idea, especially mid-level consumer spending related.
Real estate, well obviously stay away for a few years until the ARM bomb has fully exploded and the smoke has cleared.
High yield bond funds might not be a bad play as it is looking more and more like Bernanke is going to inflate our way out of this mess and may end up lowering rates again in the not too distant future.
Commodities are generally in the midst of a secular bull market, so are not a bad play. They are a good bet against inflation, but could lag if a recession turns deflationary. Doesn't look likely, though, as I think the move to stop publishing the M3 number is the most telling thing the government has done with regards to their future plans, which will most likely be: print more money.
Also, cash may be king, but not dollars. Other central banks are defending their currencies by raising rates, meanwhile the US has stopped raising. So, converting your cash to currencies that continue to raise their base lending rate is a good hedge.
Lastly, the commodities bull market has proved to be quite good for Canadian and Australian stocks, so those markets continue to look like decent plays. They have each hit all-time highs within the last year and show no sign of slowing down much any time soon.
Given all that, a full on depression in the US would hurt everyone and leave very few good options available, but I don't think the Fed will let that happen. There's a reason we have a fiat currency, and that is to be able to inflate our way out of any depression, and it looks like we will do just that.
Hope that helps.
Hey is that your picture Keith. No it's the look I get on my face after a Realty Whore finishes on her knees.
Oh yes, and strip clubs...in the end strippers always end up with the cash.
Hey bork nothing to add? your mom make you get off the computer.
No, find the wife a second job. Something in the health care industry. Most men's wives are either too old or too plain for making it in porno.
The following cities are at least 40% overvalued according to Global Insight Second Quarter 2006 Report.
Naples, FL
Bend, OR
Salinas, CA
Merced, CA
Madera, CA
Port St. Lucie-Fort Pierce, FL
Stockton, CA
Santa Barbara, CA
Miami, FL
Punta Gorda, FL
Riverside-San Bernardino, CA
Medford, OR
Yuba City, CA
Modesto, CA
Redding, CA
Bakersfield, CA
Fresno, CA
Atlantic City NJ
West Palm Beach, FL
Sarasota, FL
Chico, CA
Napa, CA
Prescott, AZ
Cape Coral-Fort Meyers, FL
Deltona-Daytona Beach, FL
Ocean City, NJ
Vero Beach, FL
Vallejo, CA
Bellingham, WA
Fort Lauderdale, FL
Santa Rosa, CA
Oxnard-Ventura, CA
Palm Bay-Melbourne, FL
San Luis Obispo, CA
Santa Cruz, CA
Panama City, FL
St. George, UT
Sacramento, CA
Visalia, CA
Ocala, FL
Flagstaff, AZ
San Jose, CA
Portland, OR-WA
Phoenix, AZ
Eugene, OR
Oakland, CA
Reno, NV
Mount Vernon, WA
Carson City, NV
Orlando, FL
Santa Ana-Anaheim, CA
Kingston, NY
Wilmington, NC
Las Vegas, NV
Nassau-Suffolk, NY
Hanford, CA
San Francisco, CA
Tucson, AZ
25 out 58 are in California
bork, honey!
Mama say's no more chit chat with your little computer club, it's time for nitey nite!
I say we pimp Keith out and we all sit home on our asses
paint,
from that article you linked: "signaling an end to the five-year bull market"
Since when has any long term bull market ever lasted only 5 years and without two of the main players, gold and silver, ever having made new all-time highs?
Link to that article 5 years from now, it should be pretty comical.
the most imformative thing on that Bloomberg page is Abby Cohen saying stocks will outperform bonds, which means you can absolutely take it to the bank that bonds will outperform stocks.
There is no way in hell the Fed will allow hyperinflation. Kill Americas #1 export ?? No way.
Get ready for some deflation, and I say some because it will happen to assets, not your basic items though.
Me I am putting cash away and buying real-estate in a couple of years....positivley geared real-estate that is that will give me at least 8% ROI.
I'm just waiting for the slaughter.
B.T.W...I'm also buying some gold (have been doing so these last couple of years). 1) Because it always keeps it's value 2) because I LOVE looking at it...
I lost everything. Now I'm on disability and housing assistance.
Here in Reno, its flipper haven. I follow the market for my area, here in the SW. I'm not even talking about new homes-these are old homes built in the 20's-60's.
Almost all of them have been resold in the last 5-7 years. Alot of living trust purchases (retirement monies) And numerous homeowners are paying late property taxes this quarter. Well, its no wonder, all the improvements inside and out, I'm not surprised Home Depot and Lowe's has seen record sales numbers.
The Golden Phoenix Casino is now being converted into Condos along with the old Comstock Hotel, and another old hotel I dont know the name of - all were gutted, and are in the beginning stages of retro as we speak, along with SFH's going up like crazy in the NW and S.Suburban areas of Reno.
I know Phoenix's bubble is huge, but I really think Reno's is much bigger.
Why else would Nevada's moto be: Nevada, wide open.
Paintblot said:"Probably something like art, but you've got to know what you're doing".
Agree.
I agree with Paintblot -the advertising machine for gold is really starting to gear up...
AOL.com has a new game called: "Gold Rush". Something about finding bars of gold in a treasure hunt type of web game. Even the banner at the top of the page shows Washington Mutual Bank's gold bars moving down a conveyor belt. Fascinating.
Also, here in Nevada, the mining companies are doing really well, so I hear.(my huband does business with them) they are extracting
large amounts of gold and silver from the mines here in Northern Nevada.
with this high inflation, gold fever will take off...
Just to let you know, I'm not a goldbug by any means, just observing the trends that develop.
Keith,
OK you want to know how to make money in October it is quite simple short the DOW. There it is simle as could be.
Yeah folks, they've done it again. Those lawless real estate and appraisal industries have sucked the wind out of homeowners once again, just like the late 80's. This time, real estate appraisals should be eliminated and valuations done by lenders
Glide Path to a Hard Landing....Look out below.
Thanks Bork you dork. (':
The onlylanding is going to be a Realty Whores mouth bouncing her mouth up and down in my front seat of my car.
I just went to a new development in the Sacramento metro area. The salesman offered me an upgraded home (granite counters, laminate floors, upgraded carpet,landscaping) with 50K in incentives, dropping the price to around $360K out the door if I used their lender. He then told me that although it's a buyer's market, I should buy now because these next release of new homes wouldn't have these kinds of incentives because the builder won't need to give incentives by then because the builder had cut back on construction.
I think I'm going to wait and see. I'm betting that the incentives are only going to get better for the next year or so.
That's the smart thing to do.
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