Guy’s February sales report showed "equity sales" representing 26% of all sales. An equity sale is defined as basically not a short sale or REO. It includes sellers who actually have equity in their properties, or those who bring cash to the table at closing (CTT on the spreadsheet). I was able to track 85 of the 87 equity sales Guy reported:
- 7 were builder sales, just listed on the MLS.
- 15 were properties being resold after a Trustee’s Deeds to private parties (NRES, Wood is Good).
- 2 were flips after REO sales.
So at least a quarter of the "equity sales" are either tainted or are MLS aberrations. You can run your own percentages, but true organic sales are far less that 26%, and correspondingly distressed sales are higher than 74%.
Median sales price for this group was $220,000. I thought that the true organic sales might be higher.
Here’s the chart. I’m guessing on some of the equity sales as I haven’t thoroughly vetted all the loans involved, but it gets us into the ballpark.
But what really stunned me was in the "terms" column. 25 of the 85 sales were for cash (plus 28 conventional, 25 FHA, and 7 VA). CASH buyers in our distressed market. Are they lemmings or lions?
Guy and I joke about the inverse relationship between the time we put into researching a post and the number of comments received.
This one was a huge slog for me, and i hope you find it interesting enough to comment on.
213 comments
Thanks very much Mike for this work. This is not at all insignificant. What this means is that at least 80% of all sales today produce no move-up buyer. The banks selling REOs are not moving up. Short sellers who are happy to get out are not moving up. Flippers who bought on the courthouse steps are not moving up. And no doubt some sellers in a so-called “equity sale” have no equity. They either are bringing money to the table or are no more than breaking even. I do not see how a market wherein at least 80% of all sales produce no move-up buyers can be considered healthy, or even normal. The normal market dynamic where the seller of the $200K house becomes the buyer of the $350K house, and the seller of the $350K house becomes the buyer of the $500K house, etc., is simply missing today.
So let me see if I understand:
The median priced house is $170K.
About 85% of all sales produce no move up buyer.
The median sales price of the so-called “equity sale” is $220K.
Let me ask a question of the bottom -callers:
Where, oh where, are the buyers going to come from for all those hundreds and hundreds of properties listed over $250K??
I can agree that the bottom has probably been reached for Smithridge condos.
So last month how many people sold their house, then took the equity and bought another house?
Hardly any.
I wonder if there are any escrow people who might comment on how frequent concurrent closings are today. When the seller in one escrow is the buyer in another escrow that close at the same time.
Mike, because of data like this, I would pay for this site. Thank you.
There’s an environmental commercial that used to air on TV. It’s a scene of tall sea grass with a few fish swimming around. Looks pretty nice.
Then it switches to a scene of what the same waterspace looked like before environmental change: seals, sea otters, big fish, small fish, coral, etc…..
The point of the commercial is that we have suffered from changing baselines. We believe the current scene is peaceful and nice. However, we are not aware of the carnage and destruction of the formerly complex ecosystem.
The Reno RE market is a perfect analogy to the ocean scene in that commercial. Sanguine bottom callers and recent homebuyers purvey a housing market that seems to look ok, and gives reason for cheer. They disregard the carnage that has occurred.
80+% DISTRESSED SALES MATTERS
The market above $300k will be dead for years. No move-up buyer, no high-salaried professionals, dim prospects for the state’s fiscal condition spell nothing but pain going forward at the mid to high end.
The burden of proof to counter this argument rests with the pollyannas, not the realists who simply comment on the world as it is, not as it once was.
I don’t think there are hundreds of properties listed over $250K. I think there are thousands.
And thousands more properties in some stage of foreclosure. And not just a couple thousand, but 7-8 thousand.
Just because the median may have leveled around $170K suggests absolutely nothing as to how thousands of houses priced 2,3, 4 or 5 times the median are going to sell. Especially when 85% of all sales produce nobody who has the money, or the interest, in buying another house. There is nothing less than carnage coming to the mid to upper end of the market in Reno/Sparks.
For some time I have been asking posters exactly what are their definition[s] of a “bottom?” By and large, I haven’t really gotten a cognant answer [but for skeptical]. Well now I think I have the answer. Rather than measuring sales volume or sales prices, it’s when the percentage of sales that produce someone who purchases another/move up house exceeds 15%. Now we know!
First of all, thanks Mike. Although I rarely comment on postings I’m an avid reader. You might remember that I’m a Californian who has flirted with the Reno/Sparks market for years.
That being said, I did a quick eyeball comparing the current sold prices with the previous sold prices. Without doing a complete analysis, it appears that a significant majority of the current sales are for more (and sometimes a LOT more) than the previous sales. Someone is making money in this market. I wonder who they are and what their strategy is. Anyone have any thoughts?
Thanks for the kind words - I appreciate it.
I’ve updated the chart to include previous sale dates. Many of these equity sales are really LONG holds.
Thank you for the data Mike.
On a certain level the implications are almost surreal.
Thats why I think calling some sort of bottom is truely assinine.
Mike, your question about cash buyers strikes an interest in me also. I did a little research on some of them. Sawbucks (highest cash purchase) was purchased by an investment securities firm out of Bellevue, Wash. at 204/ft. Makes you wonder if they are buying it to flip or have made so much money in the last year, they wanted a vacation home.
http://finance.yahoo.com/tech-ticker/despite-obama’s-best-efforts-housing-prices-have-further-to-fall-says-glenn-tongue-440185.html;_ylt=AgYELQDs0V840.91bjw7Pse7YWsA;_ylu=X3oDMTE2NDFwbG10BHBvcwMxMQRzZWMDdG9wU3RvcmllcwRzbGsDZGVzcGl0ZW9iYW1h?tickers=xhb,brk-b,xlf,rexi,spy,dia,%5Edji&sec=topStories&pos=9&asset=&ccode=
sorry for the link from hell .. but its worth a look.
Smarten asked about a definition of a bottom. Unscientific I know, but I’ve observed in both the dot.com and housing bubbles the same pattern:
When pundits on TV/media/journalists seem roughly 50/50% divided on if the market is going up or down, that is the inflection point.
Kid you not. I saw this exactly in early 2001’s dot.com crash where about half on CNBC wondered if the market was really all that strong and not too overheated while the other half dismissed those concerns (I got out of some, lost my shirt in others). Market peaked in March that year. I saw this again in late 2007 that the bulls and bears were equally divided with respect to housing and housing’s impact on the economy (I got out of some investments in both, and lost my shirt in others). I saw this again last year in the first quarter with everyone running for the exits in many markets in Jan and Feb, then around half of the pundits started saying it was a good time to buy/invest. The stock and corp bond markets bottomed in March ‘09 (I bought some stocks, but left in retrospect way too much in cash). To be frank, I’ve seen this again 4Q 2009 again where half suggest we are heading out of recovery and half into a long haul or double dip. My guess is the economic mess bottomed in 4Q. Now, I get the flavor around half of what I hear now suggests housing has bottomed while half laugh that off.
Now, I’m not naked: you know I’m in the latter camp primarily b/c my CRE part of the industry is last to fall and last to rise, so I’m somewhat jaded with that perspective. But now, given my very unscientific observations noted over several inflection points, I’m inclined to think we may be currently at a bottom of indeterminate lenght (though in no way possible a ‘v’ shaped bottom).
To Mike,
Great stats, and thanks for digging them up. I don’t see how either of you can keep up with the stuff you must do, let alone providing us data junkies pro bono statistics to chew on.
And to CL, I too agree with you that we have reached a bottom of sorts. The problem you’ve identified (and that I subscribe to) is that I fear we are destined to drag along the bottom for a long, long, long time–perhaps several years.
And will things get better, or just not get worse?
Who knows. The CRE piece of it is just starting to melt down. And this time, it will take no prisoners.
I got this in the mail today, for some reason it seems more appropriate for these times then any other time in the past decades:
“The difference between death and taxes is death doesn’t get worse every time Congress meets.” - Will Rogers
The great contributions of Adam Smith and Leon Walrus were to explain that it didn’t matter who was selling or why they were selling and it didn’t matter who was buying or why they were buying — the only thing that mattered was the transaction price. That was two hundred years ago.
Having said that, if pushed, I’d say that fewer move up buyers suggests a bottom and more move up buyers suggests a top. In essence, move up buyers are great contra indicators. I’ve always marveled at how most people approach the question of when to move up. If you have a $100,000 house and want the $200,000 house around the corner, the rational thing would be to move up when the market is down. But with one exception I’ve never known anyone who has had the nerve to actually do this. They’ve all waited until appreciation has set in. At this point “their” house is worth $150,000 and they’re now ready to take the plunge because in their minds they’ve now “made” %50,000 which will serve as free money to finance the move.
That’s fine but now the $200,000 move up house is worth $300,000, and the move that would have cost $100,000 before now costs them $150,000. So in my experience move up buyers are neither rational nor smart, and they pile into the market heavily near tops and disappear near bottoms.
CL,
Respectfully disagree. Bottoms occur when people are bleeding out of their eyeballs. Bottoms occur when people have lost hope. It’s that last shred of hope that forces people to maintain their denial, thereby fostering greater losses. Panic selling precipitates bottoms, not a 50/50 sentiment split between bears and bulls.
The weak hands need to be flushed out before any stable foundation can be built for a healthy, appreciating market. And 10,000 homes in shadow inventory will provide plenty of inventory to work against any increase in prices.
It’s all academic, though, isn’t it? If you really need a home in Reno, just low ball the bejesus out of the desperate seller and buy within earshot of the median to maximize your chance of selling on the other end with your skin in tact.
OBTW, not sure which version of Bubblevision (CNBC) you watch, but they’ve been bullish since Greenspan had a clue, which is too long ago to remember. It’s no secret that their ratings are directly correlated to stock market performance, which naturally affects their commentary. Google it.
DonC,
You are killing me. Absolute numbers of move up buyers are a contrary indicator. That’s a good one!
Man, if I didn’t know you were joking… That’s awesome. We are so lucky to be availed of that kind of brilliant insight.
Seriously, move up buyers presuppose existing equity and therefore an ability to put a substantial amount of money down. Lack thereof, assumes the opposite. So, we’re better off without qualified buyers! Awesome.
Mike,
I just eyeballed the 09’s and found that fo the 17 listed, 15 sold at a very significant increase in price, 1 at a modest increase and 1 at a breakeven. What am I missing here? Am I looking at the data wrong, or are some 09 purchasers making a bundle in a short time in a “down” market?
I’d sure like your opinion. Is there money to be made by the savvy investor, and if so, how might you and I do it?
Feel free to email me at my private email that I guess you can get from the webmaster.
RE: “I’m inclined to think we may be currently at a bottom of indeterminate length…”
I tend to agree that we are at or very close to (SFR median price within 5%) a bottom in Reno, not for the reasons you cited, but because the last 8-10 mos have seen DOM and price declines approx. flat.
EdBear, it seems you have missed a series of threads that Mike has put up about investment groups buying foreclosures and turning them around for tidy profits in very short order. Sometimes just a few weeks. For very signficant gains. There have been at least 3 threads about this with probably a couple of hundred comments. Perhaps Mike can refer you to them.
A lack of move-up buyers signals an improving market. That’s absolutely fabulous. Reminds me of some the great bubble logic….
Debt is wealth.
A mortgage is an investment.
Borrow more to increase your gains.
To Raymond,
Debt is wealth if someone owes it to you.
A mortgage is an investment if you get the payments.
Borrow at low rates to invest at high rates, but don’t be surprised if you lose at both.
Further,
The cash buyers in the stats that Mike dug up are in the best position. They are immune from the vagaries of the ‘market,’ because they don’t have to worry that the property value will be exceeded by their mortgage balance.
Whether the investments they made were ill-timed isn’t material. The important thing to remember is that they have established values for each property they purchased. And I’m guessing none of them will sell until the values rise beyond their purchase prices.
I’m sorry, but the statement that a lack of move-up buyers heralds a strengthening market has to be one of the most foolish things ever said on this blog.
Not quite as stupid as when Angie the loan officer said that a buyer ought to be wary of paying too little, but close.
I chuckle at the “surprise” that there are so few “true” equity sellers in the current market. It is no surprise to me that the sales satisfying skeptical’s def’n are folks who have owned for ten years or longer. With a tax code encouraging mortgages on principal residences, there are plenty of folks with negative equity and buckets of cash sitting on the sidelines.
Some of these are stepping up to the plate and are buying today. Others are waiting for a 10% increase in median price to believe bottom has actually been reached before stepping in as move up buyers. It is far easier to buy a stock (or a home) when the graphs are showing upward rather than downward trends. I think that far more people would rather buy after the market has rebounded 10% than risk buying when the market still has another 10% to fall. Others are the “buy and bail” folks who will purchase a new home (larger or smaller) and then walk on their existing mortgage. (Previous posts have documented a few of these.)
The over $250 k market, as always, will be impacted by the SF Bay market, which is up 10% in the past year. There are plenty of folks in the Bay who have lost a bunch of RE equity in the bubble burst and need somewhere more affordable to retire. The NV tax advantage is likely to remain long after CA and NV take the necessary steps to address their huge budget shortfalls.
There is also the longstanding “affordability” factor in favor of NV. My firm selected Reno for an office a few years back because of the huge after tax cost of living difference between here and Southern California. We relocated a bunch of people to this city. Once the CA economy starts creating rather than destroying jobs, we will see more businesses choosing Northern Nevada for the same reason. There are significant tax and labor savings for a firm that can operate from Reno rather than the Bay area.
The Economist (and plenty of other pubs, plus posters to this blog) called the upcoming bust back in 2004 with a cover story. The mainstream press continued to tout the RE boom well into 2007 when it was rather obvious to most that the show was over by the end of 2005. The popular press remains focussed on the futile efforts of Washington to “save” a handful of homeowners from foreclosure. Adam Smith’s invisible hand has corrected the imbalances of the RE market here in Reno (as evidenced by price stabilization, and month’s supply of inventory) largely without the help of worthless HARP/HAMP/Flavor of the Week save your house programs. Low interest rates and an end to Armageddon thinking (still present with a few posters here) by most are the real reason for the stabilization. Today the press is still focussed on the foreclosure story, but prices will quietly start to crawl back from their current depths with little fanfare.
The fascinating thing about the creative destruction of capitalism is the unanticipated benefits. The railroad bubble drastically improved the transportation infrastructure creating long term economic benefit for the country at the expense of the railroad shareholders who financed the rapid rail expansion. The dot com/tech bubble drastically improved the communication infrastructure creating long term economic benefit for the country at the expense of the tech investors/speculators. The real estate bubble drastically improved the housing stock of the country, cleaning up many areas of urban blight and driving down prices for those folks smart enough, dumb enough, or young enough not to get caught in the mess. It makes little sense to build today, so the oversupply will gradually be absorbed. By that time most of the folks who were earning their livings framing houses will have found alternate career paths, so construction costs will start to climb again.
The folks buying today and locking in for 30 years will be laughing in 2020 when prices and interest rates are both significantly up. EVEN IF THEY MISS THE BOTTOM BY TEN OR FIFTEEN PERCENT. How many of you bears have actually bought a stock within 15% of it’s bottom price?
“The great contributions of Adam Smith and Leon Walrus were to explain that it didn’t matter….”
“…I’d say that fewer move up buyers suggests a bottom and more move up buyers suggests a top…”
DonC YOU ARE AN IDIOT.
In fact, you’re worse than an idiot. You’re an idiot who cloaks his idiocy with the quotations of famous people. You’re an idiot who actually thinks he’s smart.
I’ll say it one more time because it feels so good.
YOU ARE AN IDIOT. Now, be gone.
We are close to bottom unless we are at the brink of armageddon. At least we all share the same opinion in that the bottom will be here for a long time.
You can bash me all you want as it is just my opinion. Good post Mike.
The compaison of the prices between the 2009 sales and the current sales proves that a LOT of money can be made in flipping the “right” properties. Take a look at the numbers.
Is anyone here interested in getting a group together, tossing $10 or $20K each into a kitty and taking a plunge? I’ve got the money, but we need astute knowledge of the Reno/Sparks RE market to make wise investments.
If anyone is game for investigating such a group, let me know and I’ll bet Guy or Mike could pull it together.
Not so sure about all the ranting regarding a bottom. It’s the tops we should be worrying about:
At or near the top of unemployment lists
At or near the top of foreclosure lists
At or near the top of personal bankruptcy lists
Need to get off the top of these lists before we can begin to think about being at a bottom of anything.
Sully — you do realize that all your “tops” would in fact define the bottom? IOW the top of unemployment, the top of foreclosures, and the top of bankruptcies would occur at the bottom.
More to your point about jobs, which is a good one since without jobs the housing market doesn’t exist, is the linked chart. This fun little chart shows how jobs follow corporate profits with about a one year lag. (This is sort of a “Duh” relationship: businesses obviously want to wait to confirm that profits are sustainable before hiring). During the last year corporate profits have risen sharply. As is the usual case, employment is following. My guess, unless you have some reasons for thinking that Reno is like Detroit, is that Reno will follow the national trend.
http://www.businessinsider.com/chart-of-the-day-real-corporate-profits-yy-vs-1-year-difference-in-unemployment-rate-reverse-scale-2010-2
More jobs –> more demand for houses –> higher house prices.
Free Falling said “the folks buying today and locking in for 30 years will be laughing in 2020 when prices and interest rates are significantly up”.
Could you please provide your reference for this claim.
I ask, because my models tell me that in 2020, nominal values of houses in Reno will be about 20% lower than where they currently are.
Don, I’m quite aware of the contrarian nature of tops, but I would like to see Nevada move down on these lists a little before even thinking about a housing bottom or even a scrapping bottom. Also, DC never ceases to amaze me with all their help (read intervention) to artificially make things move up. Heck, I could make a mountain move with a few trillion dollars to spend.
Chucklehead said to DonC “YOU ARE AN IDIOT. Now, be gone.”
No DonC you’re not an idiot. And even if you were, you should not be gone.
Were it not for the fact that our friend Derrick recently purchased a new Spanish Springs stucco condo, I would have guessed Chucklehead to be another one of his monikers.
But regardless, why do some on this board need to be so disparaging when someone takes a different position and then backs it up with fact (whether/not cognant)? We can disagree with one another all we want, but why does it have to degenerate into insult?
I’m amazed by the number of posters who have expressed their belief that we’re either at or within 5%-10% of a Reno/Sparks SFR bottom [I’m not surprised at all by the number who feel the opposite]. It makes me think that CL’s unscientific observations aren’t that far off. All I know is that when the consensus of residential real estate opinion is bullish, it’s a good time to sell. And when it’s the opposite, it’s a good time to buy. IMO those who have the guts to buck the trend will ultimately be rewarded. But of course, if you don’t play you can’t win.
And for a bear, once they miss a bottom, fear
will increase and they will never enter the game,
forever have regrets and root against others good
fortune.
Sully said “Also, DC never ceases to amaze me with all their help (read intervention) to artificially make things move up.”
Actually they have a new tact, which makes more sense to me that what they’ve been trying to do.
Rather than spending money to reform the mortgages of people who are underwater and aren’t likely to be able to stay in their houses even after the reformation, they’re spending the money to facilitate short sales in order to speed up the inevitable.
Deleveraging is an ugly process and no amount of lipstick is going to change that.
smarten - thanks for the kind words. The truth is that when I read the comment it gave me a good “chuckle”.
That said, like you I am puzzled by the emotion of some of the responses. It’s almost as if we were fighting over some obscure religious doctrine! LOL
One reason I would be reluctant to call for a bottom right now is lack of transparency and hence lack of price discovery. Government intervention in the housing market has completely distorted the true market value, unless you believe the intervention will remain indefinite, something I highly doubt.
It seems prudent therefore to wait until government exits from the market before calling for a bottom. Supposedly this process is going to start in May.
FWIW, I think there is going to be a another serious downtrend in prices - particulary with higher end of the market. Which is why I think Reno’s overall median price will be higher in Dec 10 then Dec 09.
I stand by my prediction of a $187,000 median in December 2010. I believe, like Sane Economist, that higher end properties will begin to sell at lower price points, thereby pushing up the year end median.
But I still believe that forecasting a bottom is impossible until you’ve identified an increase in something other than volume. A 3-4 month trend in rising median $psf would convince me.
That hasn’t happened yet.
DonC, no doubt, makes some statements which are quite confounding, but what really leaves me scratching my head is how he talks about “deleveraging”, and “deflation”, yet also talks about house prices increasing. I mean, huh? Purchasing a house in a deflationary environment is not wise. Your debt gets more expensive by the day as houses continue to fall in price.
First SE, for my entire adult life the Feds have intervened in the residential real estate market. The Feds make the mortgage market [and even what they don’t purchase/insure ends up being priced at some premium over what they do purchase] and there’s little doubt this is going to continue [in other words, the Government is not exiting from this aspect of the market].
Second, I find it interesting you’re down on the residential real estate market yet are predicting a higher median sales price and by osmosis, increased unit sales [how else can the median increase short of the low end of the market collapsing?]. So a month or more ago when skeptical laid out his benchmarks for a residential real estate recovery; and relied upon increased unit sales and an increased median sales price; he was mistaken; correct?
So there’s a residential real estate recovery according to skeptical and his group when unit sales and median sales prices increase, and there’s the second leg of the downturn according to you when unit sales and median sales prices increase; and according to Mr. BB when unit sales and median sales prices decrease.
Then there’s Waldo and his group who believe that without move-up [what about empty nester move-down?] buyers there can be no recovery, and DonC and his group who believe the lack of move-up buyers is a great contra indicator.
Talk about being all over the map…
I am a longtime reader of this blog (not an avid poster though) and have to say that smarten distinguishes himself by clear, comprehensive and courteous comments.
Smarten,
The extent to which the govt. has involved itself in the current housing market is unprecedented. Never before has the govt. involved itself in altering existing mortgage contracts.
You can argue that the tax write off on interest payments is govt. involvement, but even that is different, as the house price reflects that condition at the point of sale. Essentially this is the first time govt. has entered the housing market after the point of sale. Purists regard this as an assault on private enterprise, but that is another matter.
I’m not quite sure what you’re getting at with your comments above. But for clarity let me say this.
If a house sold for $1million at some time in the past, and now sells for $500K, my definition of that transaction is called a price drop. Also median price has nothing to do with unit sales, bottoms falling out or any of the other things you listed.
For me the bottom will be the price that reflects the new lending standards ie. mortgages requiring 20% down payment coupled with ability to pay the monthly amount. I think that is going to start towards the end of this year.
Smarten,
Just to set the record straight, I believe there will be more to a bottom than higher volume and higher median sales prices. Here are what I believe will characterize the bottom when it finally occurs (in 1, 5, 10, or 20 yrs?).
1) People will be totally disgusted with real estate.
The shear number of bottom callers on this blog gives me apprehensions that we are no where near bottom.
2) Underlying economic factors will need to turn.
Read: unemployment down to a healthy level; population decrease in Reno must turn around and become positive again; and there must be growth in the local economy. I don’t see any new strip malls being built lately.
3) Rising volume and medians good, but additionally a rising PPSF completes the trifecta, and gives me confidence that the worst may be behind us.
Qualitatively, someone made a great point recently (Sully?, Skrapguy?, Grateful?), when they stated that their money buys a much nicer house now than it did 1,3,5 yrs ago. And that trend continues. As long as that is the case, we have not hit bottom.
OBTW, so that I am perfectly clear, I believe we are in a bifurcated market right now. I believe it’s safe to buy a house at or under the median. However, I believe anyone buying significantly above the median is taking on significant risk. I can see price compression above $350k for years to come. FWIW.
SE,if I understand you correctly what you’re saying is that the ONLY residential real estate sales that can be considered when viewing the then state of the market, are conventional ones made possible with 80% LTV purchase money financing. Am I reading this right?
If so, I don’t think this has ever been the traditional measure - in part because it excludes probate sales; all cash sales; FHA/VA sales with 3% down; 80/10 [where the seller carries back 10% of the purchase price] sales; etc.
Traditionally we have looked at raw data such as average/median sales prices; DOM; unit sales; and to a lesser extent, PPSF. It’s almost as if now because of what the market is going through, we are invent new kinds of litmus tests [like the percentage of move-up buyers]. Is that what you’ve done?
BTW and on a completely different subject, since you’re an economist with an interest in conventional financing, I’m curious as to your predictions for long term mortgage rates for the rest of the year.
I’ve somewhat been following the mortgage market for the last couple of months and it seems to me that mortgage rates have again dropped. Still higher than they were 9-12 months ago but not warranted by the cost of money [the Federal cost of funds rate has certainly gone no lower (in fact if anything, it’s higher)].
And let me throw something else out there related to the availability of mortgages. I met with my hard money mortgage lender the other day and he told me he’s seeing all sorts of great borrowers seeking great [from the lender’s perspective] loans who simply CAN’T secure them from major institutional lenders. Professional people earning in excess of $200K annually; seeking 15% LTV first mortgages; with FICO scores in the very high 700 range; being forced to come to him for 5 year loans at 10%-11% interest/year and 5%-8% in loan origination fees. Can the inability to secure a mortgage actually be worse now than it was a year ago?
BTW PIR, thank you. I’m trying.
http://www.housingwire.com/2010/03/11/is-this-the-lull-before-the-storm-for-us-mortgages/
Smarten,
What the long term interest rates will be is obviously the 64K question. I’m in the deflation camp so I think they will be low for years to come. Which of course makes me a bear as far as the housing market is concerned.
I believe this is the single most important aspect about buying today, because at the end of the day it’s all about oppurtunity costs rather than costs per se.
Nevada unemployment back up to 13%. NV is second only to West Virginia in recording the largest jobless rate increases since Jan 2009:
http://globaleconomicanalysis.blogspot.com/2010/03/regional-employment-report-unemployment.html
Must be near bottom….
My guess, unless you have some reasons for thinking that Reno is like Detroit, is that Reno will follow the national trend.
Don, I’m thinking the chart will look like the 83 - 86 period over the next 2 - 21/2 years. And do I have any reason to think this? No, not any NEW reasons, the old ones will suffice.
Sully,
Are you saying the market will be flat for the next 2 1/2 yrs?
On the subject of jobs in Reno, or the lack thereof, there is no historical precedent for what is unfolding, economically speaking. This is yet another reason why even historical pricing may be a tad too optimistic at this point. Why are Detroit houses so cheap? Lack of demand due to a lack of jobs. Barring some miracle turnaround in the Reno economy, it looks like real estate prices will continue to erode for the foreseeable future.
skeptical, I’m not predicting as my crystal ball got a short in it a few years ago. I’m projecting, on the basis of the 1929 Dow.
So - the stock market will begin to fall and wipe out all the gains of the recent bull (back to Mar/09 level).
Real estate in this region will most likely continue flat.
Employment will follow the chart, that Don posted, or stay somewhat stable at current rate. The chart was based on national corporate profits and employment. Nevada is hardly a representative of the national scene.
Until I see (or rather hear) some buzz in and about Silicon Valley as to new hirings, I will remain very cautious about a recovery taking place.
Especially watching the coming Nov elections. If, democrats lose the projected number of seats (50) in the house, then Pelosi (top elf to santa) will be out as speaker and no longer able to control the direction of govt.
This could be a game changer, regardless of what happens in the senate.
As I said, its a projection rather than a prediction.
BB,
You are correct. The recent homebuyers on the blog are being intellectually lazy about this. Their standard arguments are:
1) it’s always darkest before dawn
2) show me a negative stat, and I’ll show you a contrary indicator
3) the permabears are just singing the same old sad song
4) in 20 years everything will be all right forever
5) I just bought my house, so it must be a good time to buy. Prices are only going up from here.
What they are ignoring are unprecedented (meaning NEVER before experienced) headwinds:
1) The greatest economic cataclysm since the Great Depression
2) Unprecedented unemployment rates
3) Still overpriced real estat left over from the bubble days
4) unprecedented inventory on the books, including the 10k shadow inventory
5) the massive gravity on prices induced by 80% distressed sales.
When confronted with these issues, though, all they can say is that some folks on this site are just always gonna be pessimistic.
To which I say, I’d rather confront the cold, hard reality than live in lala land and get my butt handed to me. Nobody’s gonna lose anything by renting for another few years.
FWIW.
I work in a small office in Reno. There are 6 other people besides me who work together.
One is a 50ish woman, divorced, who bought her house in 2007. She is upside down in her house about $120K. She bought with zero down and so has no real skin in the game, other than her diminishing sense of obligation. More and more she talks about walking away and going back to her home in Canada.
One is a young woman, about 30, married, who bought in 2006 and pretty much nailed the top of the bubble. She and her husband are so far upside down they stopped paying the mortgage 7 months ago. Still no default notice from the bank. They plan to stay until they have to leave but have no real desire to keep the house.
One is a man who is 62. His primary residence is bought and paid for. But he bought a house in Fernley in 2007 as an investment/rental. He paid about $180K or so. Houses on the street are listed today for $70K. He has stopped paying the mortgage and just wants to get rid of it.
One is a woman also about 60 who with her husband owns 4 houses in Reno, all bought before 1990, and all paid for. She is fine.
One is a woman about 50 who got her house in the divorce about 10 years ago. But from 2003 to 2006 she refinanced 3 times taking all cash out every time. Today she is about $150K upside down.
The last guy is about 60 who bought his house in 1990 has paid off the mortgage. He paid no attention to the inflating bubble, and now is paying no attention to the imploding bubble.
We work for a governmental agency. By July 1, some or all of us may be unemployed. The rumors are flying, but nobody knows anything for sure.
Now I know that this is not a big sample of Reno. But if things in other work places are like they are in mine, this economy is one hell of a lot worse off than most people on this blog realize.
FWIW.
Thanks Calinda .Nice to hear about on the ground situations.
re the state of the economy.
I too have a co-worker who is upside down. Of course, when we consider that 60% of all mortgageholders in Reno are upside down, I guess that is not so unusual.
Last week we were coming back from lunch and were talking about her situation as we were standing on the corner waiting for the light to change. I said to her that she was not alone in that situation. There were 2 other people standing there with us. When they overheard me say that, they BOTH said they too were underwater in their houses. One said he and his wife were going to stop paying the mortgage to save money because he was afraid he was going to get let go soon.
I know this is no scientific survey, and will probably be dismissed as meaningless. It does though support what Calinda said.
Thanks to Calinda and Caputo. This is the tragic devastation that bubbles cause, and it’s why they must be avoided at all costs. This is the mess that Greenspan created.
A contributor a few days back (DonC?) was cheering the advances to society as a result of bubbles. Well, tell that the Calinda’s coworkers and the tens of thousands in Reno like her.
I think the bottom callers on the site are just spouting and in their own little worlds. Perhaps they should take a few surveys at their workplaces. Ah, but then again, perhaps they don’t need to work for a living….
Empathy to the families out there that are severely underwater and fear for their jobs. This must be among the most trying of times.
2,133 NODs recorded ytd. It appears this fact is irrelevant to the bottom callers.
RE: “Purchasing a house in a deflationary environment is not wise. Your debt gets more expensive by the day as houses continue to fall in price.”
The deflation argument is flawed.
Yes, fixed debt becomes relatively more expensive but variable debt becomes relatively less expensive and if home prices fall at the rate of deflation, that would result in constant relative value.
Inflationary and deflationary periods have their own characteristics and neither is necessarily a bad or unwise time to buy a house or take a mortgage.
how is it that all these broken down apartments are being sold as condos now?
these places were apartment buildings for YEARS and now in the last few years they are all the sudden considered condo’s?
I wonder what the combined median price would be if we didn’t count these apartment sales as condo sales..
perhaps we could come up with a new median for apartment sales?
Seems to me a large % of the “condos” for sale in the 40K< range
were actually apartment buildings before the great boom of 2002-2005.
skeptical says “A contributor a few days back (DonC?) was cheering the advances to society as a result of bubbles.”
Not me actually but I understand the point, which is that while a lot of money is lost a bubble can provide real tangible benefits. For example, recently Spain greatly over invested in solar production. The result was a bubble and a nasty shakeout. But today, after the shakeout, Spain is the world’s leading producer of solar panels and the business is producing a lot of jobs — though only half as many as during the bubble.
That was the point that was being made. But I’m not sure if the same reasoning applies to financial bubbles or things like tulip bubbles. I’d have to think about that some more but my initial response is that these types of bubbles don’t really have the same silver lining that a bubble in infrastructure or new technologies has.
RE: “2,133 NODs recorded ytd. It appears this fact is irrelevant to the bottom callers.”
We may be using different defintions of “bottom.”
Bottom (to me) is when home prices stop depreciating.
NODs, unemployment, inflation/deflation, immigration/emigration, mortgage rates and even the weather may ultimately influence home prices but the only metric that actually matters is home price depreciation.
Sully: “Real estate in this region will most likely continue flat.”
Hence, a “bottom.”
BB says “DonC, no doubt, makes some statements which are quite confounding, but what really leaves me scratching my head is how he talks about “deleveraging”, and “deflation”, yet also talks about house prices increasing.”
Yes we’ve had deleveraging and that process is not over IMHO. But that doesn’t mean that all asset prices are going down. The stock market has definitely not gone down over the last year.
On deflation, I don’t think I said we’re in a deflationary period. I think what I said, or if I didn’t what I intended to say, is that the risks of deflation still seem greater than the risks of inflation so the Fed is not likely to tighten credit. A risk isn’t the same as the actual fact. Turned around a bit, there is a risk of inflation but very little inflation at the moment.
On housing prices, I’m not saying housing prices are going up. I have no idea what they’ll do, especially in the short run. What I’m saying is that, at current prices, the upside seems greater than the downside, so I’d be comfortable buying if I had a 5+ year horizon. The longer the horizon the more comfortable I’d be.
Keep in mind that tolerance for risk varies. Last year some people bought into the stock market and some got out — and they may all have made the right decision, though the buyers made out better financially than the sellers. If you’re going to buy and then worry yourself to death with second guesses you’re better off not buying, whether you’re buying houses or stocks or bonds or box cars.
SE says “The extent to which the govt. has involved itself in the current housing market is unprecedented. Never before has the govt. involved itself in altering existing mortgage contracts.”
Technically this isn’t exactly incorrect. For decades bankruptcy courts routinely rewrote mortgages. Also the Wagner-Steagall Housing Ac was a big intervention in the housing market. But no big deal, I understand your point.
But this “intervention” has been so ineffective you’d be hard put to it to claim it has affected the market much at all. So it doesn’t seem like it matters much if that action continues. For different reasons the same is true of the Fed buying MBS. In this case the exit will be very measured and is potentially reversible, which is probably why the markets don’t seem to be bothered by the possibility.
The one area where you may see some immediate effects of the government pulling back is with the tax credit for new home buyers. In CA for 2009 almost 50% of all buyers were first time home owners, and no doubt many of those buyers were animated by the $8K tax credit. That goes away this Spring so we’ll see what happens to this demographic. (Which is important since, as many have pointed out, the “move up” buyers are not going to be plentiful given that existing homeowners may have little if any equity in their houses).
Way back at the beginning of this post RI made a very good point that seems to be lost in the discussion. He pointed out that what we have now is really two markets within the total market. MikeZ says the bottom arrives when prices stop depreciating. Fair enough. In one of the markets within the market, prices have probably stopped depreciating. I beleieve that most people here would agree (maybe not BB) that prices of Smithridge condos and 800 sq.ft. 25 year old houses in Cold Springs have stopped depreciating. Are Smithridge condos really going to drop below $40K? There is in all liklihood a bottom in that market within the market. However, who here seriously suggests that prices of 4500 sq. ft. Mcmansions in Arrowcreek have stopped depreciating. Are those houses going to stabilize at $900K to $ 1.3 million?
This is the problem with simply looking at the median and generalizing to the whole market. At the low end of the market, the bottom is likely in. At the top, end the bottom is a long way away.
I agree with Clarence and [again] make the points: 1) there are many different price strata [not just two] within the residential real estate market as a whole; and, 2) if you’re a buyer interested in purchasing an <$200K SFR, what difference does it make to you what’s going on in the McMansion strata of the marketplace?
Skeptical has suggested that if you’re a buyer set on purchasing a home in today’s residential housing marketplace, it’s O.K. as long as you knock the bejesus out of the seller’s asking price. The problem with this logic, IMO, is that one man’s bejesus is another’s delusion meaning that even if you’re successful insofar as the former is concerned, others will describe you as being an “idiot.” At what point does a price reduction become a bejesus, and is the number a moving target based upon the strata of the market you’re interested in?
I also pretty much agree with MikeZ’s observation that although “NODs, unemployment, inflation/deflation, immigration/emigration, mortgage rates and even the weather may ultimately influence home prices…the only metric that actually matters is home price depreciation.” In other words, it DOESN’T matter whether a sale is/not “distressed;” nor if it exceeds the average wage earner’s ability to afford the payments on a 80% LTV purchase money mortgage.
Unless you’re a renter sitting on a boat load of cash, I assure you that you WON’T be celebrating the carnage to the economy [of which you’re a part] should non-delusional housing prices tank from today’s levels. So if we’re all going down the toilet, perhaps it makes sense to sip a bit of champagne beforehand?
MikeZ, you’re twisting my words to say I’m calling a bottom. I am more in line with Clarence.
I took the Feb sales, deleted condo,townhouses, commercial etc - leaving SFR.
Took the list and cut it at 350K. Then came up with a 165,500 median for 350 and under. For the 351K and up the median was 500,000. Don’t know where you would like the line drawn, but there is certainly two markets here, one normal and one that mimicks San Jose. We very likely are flat in the lower market, but if Calinda is anywhere near correct for this area, then the upper market has a long ways down trip.
A bunch of you are missing a point. Take a look at the current sales versus the last sales that were made in 2009. You’ll see that a LOT of money is being made by someone. Just look at the numbers.
I’ll ask again, anyone interested in ponying up $10 or $20K into a fund and taking a swing at some flips?
Let me know.
Sully,
I think what you’ve been saying about breaking the housing market into two halves makes sense to explain what has happened so far- the lower end has capitulated and seems to be relatively flat for the moment, and there are still a lot of delusional people with 900k mortgages pretending they can avoid short sales or foreclosures.
But what happens to the lower end market when the top finally does capitulate? When those 900k, 4000sf homes are listed at 450k, will anyone still pay 300k for a 3 bedroom on .15acres?
I see where people are coming from when they call the bottom for the lower end market, but won’t there be some further downward compression when the top end falls too?
As a renter looking to buy in that “top end of the bottom” price band, that’s definitely my worry.
WaPo story on the national shadow inventory- nearly 10% of mortgage holders nationwide are more than 3 months delinquent.
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/11/AR2010031104866.html
I’m totally with Clarence and RI on the point that there are different markets. The lower end of the market(s), just about everywhere, has washed out. People who for one reason or another were in houses they couldn’t afford have taken a bath and walked, and new buyers have taken their place. I’m not sure that this process is complete, but it’s definitely getting there.
The upper end of the market(s)still has a lot of people who aren’t willing to “lose” money, where lose money is defined as recognizing the loss that they’ve already suffered. So unless they have to sell, owners in this bracket are holding on. Even the CA Realtor Association has recognized this phenomenon and has said that activity in this segment is low because property owners have “unrealistic” views on housing prices. (The CA report is interesting but proprietary so no link).
The problem is that so long as they hold on waiting for the market to recover you don’t have much of a real estate market. Sellers won’t sell at reasonable prices and buyers won’t buy at unreasonable prices. With the exception of the occasional case where someone has to sell, you don’t have any sales and the market just stagnates.
geopower, you bring up a good question. Using the list of cash buyers that Mike posted I found that the over 350 market was a median of 475.5K and the under was 226.6K.
Since the cash buyers have no further obligations (mortgage) is this list showing a willingness to buy within reason, or are we seeing a bunch of flippers in the low end and tired of waiting in the high end.
I’m thinking the low end may have more owner occupied than flippers, but have no clue as to the high end. But I think the cash buyers are setting the limits, as they more likely than not are in it for the duration.
Also, as smarten mentioned, jumbo loans are becoming more difficult which would put an additional burden on the high end sales that aren’t cash.
Maybe watching the cash sales as opposed to wishy washy 3% FHA loans says more then just a list of sales for the month?
Anyone out there know of any lenders doing loans on fractional homes, such as 1/6th share Tahoe cabins?
Don C,
You made many interesting points above, and I have enjoyed reading this discussion. However, I do not agree with you that we are nearing an end to the involuntary foreclosure storm.
You wrote, “People who for one reason or another were in houses they couldn’t afford have taken a bath and walked, and new buyers have taken their place. I’m not sure that this process is complete, but it’s definitely getting there.”
According to data I saw during a meeting I attended at the local HUD office nearly two years ago, that office had identified 2010 - 2012 as a time frame when a significant number of five-year ARM, Neg Am and interest only loans would reset or become due in the Reno/Sparks market. During the last two years, I have seen little to indicate that such home owners have had much opportunity to modify those situations between now and then (unless they strategically defaulted as a preemptive measure). The Fed may be able to hold interest rates low until all this shakes out, which may help some with five-year ARMs that are about to reset, but what about folks who in 2005 to 2007 purchased middle to upper end houses with five-year Neg Am or interest only loans? Barring in creative refinancing, many (most?) will become shorts sales or REOs, which will push all segments of the market lower (although, as pointed out many time before, median sales price will likely rise).
I agree that the low-end defaults may be winding down, but it likely will be at least two more years until we know how many people who bought at the height of the bubble can afford to wait out the storm.
sorry ed.. I just allocated a handsome sum into some AAA muni bonds paying 4+%….
The returns I have experienced just in the finacial banks (GS,BCS,BAC,etc..) I felt it was best to put some of the profits into AAA muni’s for the time being..
of course im still long in the market and especially BCS which I bought quite a bit at 5/share.. but making gains aren’t going to be as easy as they have been the last year..
still possible.. just a lot harder!
of course it wouldn’t hurt to buy some YUAN and hold for 2-3 years…. especially considering president Obama’s plan to basically devalue the dollar and double exports..
eventually Beijing will let the YUAN rise.. speculation is that it’s already 20-40% undervalued ..
cheers!
Dman
maybe now Smarten knows why I sold my house and gain access to more liquidity?
DOW 6,500 was a GIFT! …
John — I was thinking about the lower end of the market specifically, but upon reflection I agree with your points. I was too influenced by thinking about the rate of change. While the rates of foreclosure are going down the actual number of foreclosures is still going up. So 2010 should see more foreclosures than 2009.
So is our dman really Derrick in stealth mode?
Yeah, sell your personal residence at a loss in order to access whatever equity remains so you can invest in muni bonds [remember WHOOPS?] paying a “handsome” return of 4% [NOT], and Chinese currency. Savvy move Derrick!
I’ll bet if you offered CL financing so he could make his fractionalized interest purchase of a Tahoe cabinette, he’d offer you more than 4%! And your “investment” would be secured by quality real estate.
Calinda, I agree on the state of the economy here. I moved here less than 6 months ago and have seen Chilis, Sports Authority, and that all-you-can eat sushi place in the Galleria area close. This was supposed to be the new growth area of town. Most would consider me to be a well paid professional and I was considering homes around the 300 range. But I too just got the pink slip. Within a few months I had some worries about that possibility and had thus held off on buying a home. Now I think I will have to move from the area because I truly realize how bad things are here.
Calinda, Caputo and Sam make valuable contributions. This blog is out of touch with Reno, for a couple of reasons. First, it appears many of the posters on the blog do not even live in Reno. They sit at their computers, analyze the data, and bring a nice cerebral analysis. They don’t go to the strip malls and see all the vacant spaces. They don’t see the restaurants closing down. They don’t have neighbors and friends who just got laid off. Second, this blog has a readership that is far above the daily experience of the average Renoite in terms of education, income level, and sophistication. This is not always bad, as it makes for often thoughtful and insightful conversation. But most of the people who post here have are better off financially that the average Reno resident. They don’t have a grasp on the precarious financial situation of the average Reno resident. they predict things that are far beyond the financial means of most Reno residents today. I am sure it is nice to be in a situation where all the talk of the struggling economy has only an academic aspect to it, but it causes them to be simply out of touch to the economic reality for many in this working class town. The map of Reno that is described on this blog is not what is actually present on the ground.
Calinda, Sam, and DanS, as well as the recent unemployment report, provide irrefutable evidence that the housing crash in Reno is FAR from over. We’re merely in the middle innings, and speculation is what’s driving sales right now, especially on the lower end. What’s needed for a housing recovery is an economic turnaround in the way of well paying jobs, not speculators rushing in and driving up prices.
I have always maintained that housing will follow an economic recovery, not lead it, and I have not wavered from this. In the next few years, we will be reading the stories of people defaulting who purchased in 2009 and 2010, thinking the bottom was in.
I just took a look at Mike’s chart and, WOW, talk about some serious knife catching. 1263 Mark Twain for $390k cash? WHAT?! I can almost guarantee you that those people based their decision on the previous bubble price, and not historical pricing- a BIG mistake. Those little houses were under $200k when this bubble started. The foolishness continues.
I finished my evaluation for the cash sales. Taking the 4 new houses and two condos out of the equation for lack of data.
The over 350K market paid 54% (median) of peak price, sawbucks skewed the data by 3% (it would be 51%). Sawbucks still has me pondering.
The under 350K market paid 51% (median) of peak price.
So, the cash buyers that are living in or using for rentals apparently are finding a place for their mattress money. I was not impressed with these percentages, as I thought 40% of peak would be more in line with current situations here (see DanS post above).
BTW, the house BB just mentioned was the 2nd worst purchase of the group (percentage wise) only fieldcreek beat it.
DanS noted:
…”They don’t go to the strip malls and see all the vacant spaces. They don’t see the restaurants closing down. They don’t have neighbors and friends who just got laid off.”…
–sounds like a description of our President and his inner circle of `Yes Men’ who are now running our country.
Good post, Mike. I guess you’ll have to be the final arbiter of whether the explosion of comments disproves your “inverse relationship” rule, or whether it’s the exception that proves the rule. As with real estate outlook, it can be spun either way, depending on your perspective.
I see from your chart that Mark Fox’s house finally sold, but he didn’t lose nearly as much as I expected, so maybe it shouldn’t count against his win/loss record
CommercialLender - The more I think about your definition of market inflection points the more right it seems to be, albeit perhaps not exactly for the reasons you posit.
Hopefully we can agree that markets are not based on anything objective and are not always rational. In essence they are driven by the proverbial “animal spirits.” Basically a market direction is set by supply and demand, and while supply may be fixed in the short run demand is highly variable. With respect to housing in the current climate, if people decide to pull their money out from under their mattresses and buy houses then the market will move up. If they’re fearful and keep their money under their mattresses then the market will continue downward. It’s the old tug of war between fear and greed.
If you start with a market trend, meaning most people are either fearful or greedy, then as more people move from fearful to greedy or greedy to fearful you’ll get an inflection point. So yes, at the inflection points you’ll see a division of opinion. But it’s not so much that pundits are divided in their opinion. It’s that the opinions of the pundits are mirroring, or perhaps channeling, the thinking of many others’.
Hi,
I do not get all the cash sales at above asking prices. This market is supposedly dead, but people are able to buy properties with cash at prices low enough they turn them for a quick buck?
I guess I’m puzzled as I thought it was more a case of people asking too much and having to entertain offers for less. Instead, properties are going to market and getting multiple offers within days above the asking price. Is it that the sellers are purposefully putting them out at a lower than normal price to attract a flurry of bids in what is in effect an auction?
Does anyone have an idea what the average spread is between asking prices and final selling price?
Bottoms are not made when people have mixed emotions and bulls v. bears is 50/50. Tops might have a reasonable amount of debate.
Bottoms occur when people are absolutely disgusted and absolutely certain that there is no hope.
Look at the 1939 and 1981 stock markets, the 1999 gold market, etc….
Please guys, do not put out your personal, uninformed opinions as if they are investing gospel. You are simply wrong. Inflection points are not bottoms, and bottoms do not occur when the bulls are still given credibility.
Bottoms are only proven in hindsight, and so far we have no data confirming a stable trend of increasing prices. Until that occurs, all this bottom talk is bull$hit.
DonC,
Would love to know what kind of skin you have in the game. I’ll be you have purchased within the last 2 years and do not live in Reno.
I have a far simpler measure of when the bottom will be reached. There is a buuble-built group of houses called Belsera off of McCarran in SW Reno. For about 2.5 years, the house on the point (which would have a stunning view of Reno) has been sitting half built with the roof tiles still sitting on the unfinished roof where the roofers left them 2.5 years ago when they walked off the job for non-payment.
There are 3-4 houses there that are on the market either as REOs or short sales. Going for about 50% off of bubble pricing.
When I see that house completed, I will know we are at the bottom.
[Carleton] “When I see that house completed, I will know we are at the bottom.”
An indicator like that - completion of a house currently on hold - would likely signal 6-9 mos of upside.
[skeptical] “Look at the 1939 and 1981 stock markets, the 1999 gold market, etc….”
Exceptions don’t make the rule. There are many more bottoms you could choose, the ‘98 bottom in real estate for example, that contradict your thesis.
[skeptical] “Please guys, do not put out your personal, uninformed opinions as if they are investing gospel. You are simply wrong.”
Consider taking your own advice!
[skeptical] “Bottoms are only proven in hindsight, and so far we have no data confirming a stable trend of increasing prices.”
Price appreciation would be on the upside, not the bottom.
Carlton, not knowing the price points of these unfinished houses you refer to, let me suggest that if/when you see construction resume, the “bottom” in their price strata was probably reached 6-9 months before. Just my two cents.
My money says MikeZ bought a house. He was on this blog long ago, with bearish sentiment, and now he’s singing the bulls tune. Same as Smarten. These guys buy a house, and all of a sudden the bottom is in. Blinders.
BB,
No doubt. I’d love to hear from a single bull who has NOT purchased within the last two years. As of this writing, DonC noticeably silent.
I am not trying to pick a fight here. I respect the views of any contributor, when cogently and logically presented. We all have biases, but it’s important to recognize those biases for our own good.
That said, cognitive bias continues to be a primary influence in the analytical process of most bulls on the Reno RE market, near as I can tell.
Should have added to the above that every “man on the street” report that’s been contributed to the blog (typically from persons that are not regular contributors) has been overwhelmingly negative.
The bulls just brush these aside, though, as if they don’t matter.
Well how about the fact that the bears, specifically Mr. BB, are singing the tunes they’re singing specifically because they DON’T own real estate? So what’s the difference.
Mr. BB and others know I too was down on the Washoe County Residential Real Estate market [as contrasted with ANY residential real estate market located anywhere] for some number of years. When I saw a change, I acted upon it [I have never hidden the fact that I own property]. The bears see change and respond, it’s not enough. For them it’s NEVER enough. Even when they’re forced to admit there’s been a market reversal, they still won’t act because they will have missed the boat. What we’ll likely hear is that the second [or third, or fourth] leg of the downturn is just around the corner.
Even skeptical states it’s an acceptable time to be buying residential real estate as long as the strata of the market you’re interested in purchasing has bottomed, and you’re able to cut the bejesus out of the seller’s asking price.
Assuming our oracle from the garden has any money to buy real estate, I’d be interested in hearing what he’s doing with it [medicinal marijuana?]. How about shorting residential housing futures?
Smarten posted:
“Well how about the fact that the bears, specifically Mr. BB, are singing the tunes they’re singing specifically because they DON’T own real estate? So what’s the difference.”
Another completely false statement. I have an (apparently unusual) ability to see the truth regardless of whether or not it is in my best financial interests. It’s called objectivity.
“Even when they’re forced to admit there’s been a market reversal, they still won’t act because they will have missed the boat. What we’ll likely hear is that the second [or third, or fourth] leg of the downturn is just around the corner.”
Now you’re a clairvoyant, able to predict the future actions and sentiments of a large segment of the US population? No, you’re not, this is just more of of the same nonsensical blather you’ve grown accustomed to typing.
“Assuming our oracle from the garden has any money to buy real estate, I’d be interested in hearing what he’s doing with it [medicinal marijuana?]. How about shorting residential housing futures?”
For your information, I do not drink alcohol, smoke cigarettes, or use marijuana. My interest is ornamental horticulture, and my work has never been about the money, it’s about waking up every day and doing what I love. While it’s obvious to me, and probably anyone who’s been reading this blog, that you earn more money than I likely ever will ($900k mortgage anyone?), you are no more of a person because of it. You epitomize hubris and poor character, and are the poster child for everything that is wrong with this country, basing the value of individuals on their flashy titles and net worth’s instead of their good virtues. I do a lot of work for people with money, and some I call my friends, while others never get a return call from me. I think it’s obvious which group you’d fit into.
The suggestion by Smarten that people bearish on real estate don’t own property is wrong. Very wrong. I have been about as bearish as anybody on this blog for longer than most people have been aware of this blog (RI and BB have been here longer). I continue to be bearish.
I own a house in Reno. In fact, I own two.
I also own a house in Reno. Count me as a bear.
I have no problem with anybody’s opinion on the current direction of the market. Bull or Bear. Fine. It is, however, a bit silly to suggest that the only people who are bearish on the market are non-owners foolishly sitting on the sidelines afraid to take the leap to ownership. As I survey the current housing market in Reno, I can see no objective reason to be anything other than bearish. I’m not here to try and talk anybody into seeing it my way. I am here, however, to tell you that I am a homeowner. The notion that the only people who see a lot of headwind for the market in the months/years to come, and therfore reach the bearish conclusion, are fradey cat sidleiners, is, quite frankly, a bit insulting. Some of us are capable of reaching a conclusion on the state of the market that may not be the most favorable for our individual circumstances. It is called objectivity.
Even by the end of 2012, 40-50% of home sales in the Truckee Meadows are predicated to be foreclosures.
skeptical — Well you’re half right but 100% wrong in where you’re going. I don’t live in Reno. But I’m thinking about buying. As for buying in the last two years you’re way off. While I’ve bought more houses than most people, I was lucky enough to buy long before the run up and to go into the last downturn totally deleveraged.
Obviously what you’re suggesting is that my views reflect my personal situation. In your mind someone who bought recently is motivated psychologically by a need to justify the purchase by having prices go up. You’re completely and impossibly wrong here — I’m a buyer not a seller — so it would be to my advantage to have prices continue to drop. They may, but given the data it seems that over the longer run there is more upside than downside.
My guess is that you’ve never heard of the term “projection”. Essentially projection means that you attribute to others those motivations which most animate you. My guess is that this is what is happening here.
To Carlton re/Belsera:
The Belsera project crashed because the developer went belly up 40% into the subdivision. That’s why the roofers didn’t get paid, and the costs to complete–cleaning up the liens, repairing damage wrought by three winters, etc., make the project unsustainable now.
Maybe another year of falling prices will make it worthwhile for someone to go in and finish it. But for now, it’s just not worth it.
[Bear]: “My money says MikeZ bought a house. He was on this blog long ago, with bearish sentiment, and now he’s singing the bulls tune. Same as Smarten. These guys buy a house, and all of a sudden the bottom is in. Blinders.”
Nope, wrong again. I already explained why think the bottom is here (or very close): because of the last 6-9 mos of data.
Stick to discussing the data, Bear, and forget trying to read minds.
[Skrap Guy] “The suggestion by Smarten that people bearish on real estate don’t own property is wrong. Very wrong.”
Skrap, go back and reread … it was Bear and skeptical who started the “cognitive bias” theme.
My statement on this subject was as follows: “the bears, specifically Mr. BB, are singing the tunes they’re singing specifically because they DON’T own real estate. So what’s the difference?”
Does the oracle gardner own real estate? Does skeptical own real estate? If they do, aren’t they pretty stupid for having seen the writing on the wall years ago and done NOTHING in mitigation [as our friend Derrick did]? Or is it a case of “do as I say, not as I do?”
If they don’t own real estate, am I the only one who sees a connection between those who tout further declines in the residential real estate market AS A WHOLE [as opposed to just one strata], and those who aren’t players?
So if a lot of these buyers documented via Public Records are buying and then re-selling at a profit, doesn’t this make it a buyers market for the astute businessman?
MikeZ, I don’t care who started the “cognitive bias” theme. My point was very simple:
It was a stupid thing to say that the only people who are bearish on the market are sitting on the sidelines afraid to make a move, and hoping for the worst.
Seems there are some others readers as well as myself who are bearish AND are property owners. Thanks Martin and Walter for helping to make it clear that not all bears have no skin in the game.
“Does the oracle gardner own real estate? Does skeptical own real estate? If they do, aren’t they pretty stupid for having seen the writing on the wall years ago and done NOTHING in mitigation [as our friend Derrick did]? Or is it a case of “do as I say, not as I do?””
How do you know we’ve done nothing, or not? You don’t, you’re just running your loud mouth again. What you fail to realize is that most people on this blog are not shallow narcissists like you and Derrick, and aren’t starved for attention, sharing the personal details of their lives with the world. Last time I checked, this blog was about Reno real estate, and not the personal holdings of the contributors thereof. You’ve got stupid covered, that’s for sure.
As long as the government keeps throwing money at this problem, with no forethought, analysis, or expertise, we are in for trouble:
http://www.huffingtonpost.com/2010/03/15/hardest-hit-states-given-_n_499390.html
“The five states hardest hit by the foreclosure crisis have been given only weeks to plan how to spend $1.5 billion in federal funding announced by the Obama administration last month.
Guidelines issued under the U.S. Treasury Department’s Fund for Hardest Hit Housing Markets on March 5 gave housing finance agencies in California, Arizona, Florida, Nevada and Michigan just six weeks to come up with plans on how to spend their share of the money.”
With this kind of unlimited intervention in the markets, we really don’t have American capitalism anymore.
Perhaps the bulls are right. A few billion here and a few billion there and after a while you could buy the whole state. Trouble is, our grandkids will be paying for it.
We argue to each other as if it really matters. This problem that we have with spending into oblivion puts the survival of our way of life in jeopardy.
Full disclosure: I do not currently own property, although I have the financial means to do so. I am just not convinced this thing is over, and believe that waiting a few years has no downside. I will buy a home when I believe the time is right. When I perceive a turn, as defined by previous posts of mine, I will pull the trigger, gut the seller, and have no mercy.
I’ll take you at your word, MikeZ. I’ve got no reason to doubt you. We used to agree way back when, but you’ve a completely different viewpoint on the market now. Time will tell who’s reading the tea leaves correctly. Not sure why you haven’t bought a house if you think the bottom is in. You expressed long ago your interest in buying.
Edit button, sil vous plait.
[Skrap Guy] “It was a stupid thing to say that the only people who are bearish on the market are sitting on the sidelines afraid to make a move, and hoping for the worst.”
Skrap, the cognitive bias argument /was/ stupid. smarten pointed that out by turning it around on Bear and skeptical. Do you get that?
‘When I perceive a turn, as defined by previous posts of mine, I will pull the trigger, gut the seller, and have no mercy’
Funny how we criticize the buyers and developers when in the end, it’s all about whether we make money on our deal. Human nature I guess. Sit on the sidelines and be an expert, or enter the game and take criticism.
Those wanting to stay safe will always be on the sidelines commenting on others.
[Bear] “We used to agree way back when, but you’ve a completely different viewpoint on the market now.”
We still agree on most points, Bear: I bet we agree that Reno RE isn’t going to appreciate anytime soon, especially not until job and income growth returns.
Thinking we’re at or near the bottom does not make me “bullish.”
This is a very different market today than 3 years ago, ~50% down from peak, and with data that shows at least some short-term price stability now, so yes, my viewpoint has changed.
I take that as the sign of an open mind, not cognitive bias.
Hey mike….
119 Comments!
while this thread has had the usual drift away from the original topic, nice to see you got rewarded for your efforts.
Now if only it wasn’t the case that every thread ends up being yet another discussion on whether the market has hit bottom. Yes its interesting. But how many times do people need to say over and over and over that yes the market has bottomed, no it hasn’t, yes it has, no it hasn’t, yes it has, no it hasn’t………
‘Now if only it wasn’t the case that every thread ends up being yet another discussion on whether the market has hit bottom. ‘
Seriously? Every thread has always ended up with the same conclusion, so this is a surprise? Fact; It’s a bad time to buy unless you know how to make the situation work for you.
How many people/ bloggers/ articles/ opinions does it take to say the same thing?
What I have to laugh about is in all the ‘experts’ that write on the blog naysaying RE, a good half don’t even own real estate ( which makes me wonder why they’re on a RE blog) and it would seem NONE had the foresight to back up their new found expertise shorting the market.
Is the reality because they couldn’t buy they are now secretly happy those that did should suffer?
To all who argue about why people sit on the sidelines:
I’m sitting on the sidelines for three reasons–
I don’t have a down payment;
My credit stinks;
I don’t want to be saddled with a 6 figure debt.
“What I have to laugh about is in all the ‘experts’ that write on the blog naysaying RE, a good half don’t even own real estate ( which makes me wonder why they’re on a RE blog) and it would seem NONE had the foresight to back up their new found expertise shorting the market.
Is the reality because they couldn’t buy they are now secretly happy those that did should suffer??”
You mean after all this time, Downer, you still don’t understand why people who don’t own real estate come to this blog? Is it completely lost on you that thousands came to learn about the market BEFORE they bought a house, oftentimes because they noticed some serious distortions in median price vs. median income? Can you back up your assertion, with fact, that half of the people here don’t own real estate? Can you provide us with the evidence that NONE here used their knowledge to profit from the bust?
Without getting personal, many bottom callers have stated or insinuated that if you don’t own a house, you don’t have a right to comment on real estate.
Boy, what a boring blog this would be if only the underwater homeowners could contribute and commiserate.
I would submit that that filter alone would result in an overwhelming number of people who made bad real estate decisions, and therefore might not merit one’s attention. Readership and interest would decline. It’d be like listening to the sound of one hand clapping. Great suggestion….not!
As an aside, I was very disappointed when the new administration littered the country’s economic posts with the same hands that led to this mess (Summers, Bernanke, Geithner, et al). I believed a wholesale clearing of the house was in order, so that new thinkers, unsullied by past decisions that brought our economy to the brink, would be able to take bold action and change the course of our economy. Instead, the same old hands that got us into this mess took the reins to ensure the status quo was preserved.
It’s not a direct analogy, but the last person I would take advice from regarding real estate is anyone who bought a home between 2001 and 2008. Quite to the contrary of DBNO’s logic, I believe that not buying real estate in that timeframe actually indicates more insight than those mindless bulls who had “skin in the game.” (or the cajones to get an interest only NINJA loan with neg am and a balloon payment after 3 years.)
FWIW, I did short NEW, PMI, FNM, MGIC, and others. I was early on some. I wasn’t greedy enough on others. Does that qualify as “skin”? Hell no, if you ask me. It really doesn’t mean squat.
The logic of the argument is all that matters. The logic of the contributor is the soul criteria that should be used to judge a post. I could give a rat’s behind if someone owns or not, flips or not, rents or not. What matters is whether they present a cogent argument, backed up by facts, persuasively argued (and preferably with at least 8th grade grammar/spelling/syntax).
When I’ve gone after someone for cognitive bias, it’s been the case 100% of the time that they have bought a house in the last 2 years. You do the math.
And for those out there who think that they lack bias….wow, if only we could all be so perfect. We are all biased, in our own way. If you choose to ignore that fact, you will pay the price eventually.
In short, we are all just speculating at the end of the day. But anyone who wants to speculate on rising prices in a market with nearly 13% of all homes in some stage of default; >60% of all homes underwater; and 13% unemployment can have at it. I’ll continue to sit on the sidelines and call it as I see it, and wait for the day when the price point finally makes sense, giving all the variables enumerated previously.
Don’t vent on me if you’re underwater or skating on thin ice. You shouldn’t bought the place to begin with.
skeptical says “With this kind of unlimited intervention in the markets, we really don’t have American capitalism anymore.”
Huh? What on earth are you talking about when you say “this kind of unlimited intervention”? The mortgage interest deduction, which is a direct government intervention in the real estate market, probably costs $1T over a decade. And it’s been doing that for decades. And you’re worrying about $1.5B. This is like leaving all the doors and windows open and worrying that the insulation in the walls is only R9.
As you seem to be defining it, capitalism hasn’t existed in this country — nor in any other country for that matter — for time eternity. No big deal. Capitalism isn’t a religion, it’s just one of many systems designed to distribute goods and services. If it works in some instances — and it frequently does — keep it. If it doesn’t — and sometimes it doesn’t — then get rid of it.
In this regard, in case you hadn’t noticed, over the last few years what we’ve witnessed is the failure of capitalism. Capital market were given a lot of freedom and they just plain plum fell flat on their faces. Couldn’t handle the liquidity. So why would anyone think these markets — with their 97:3 leverage debt ratios and collateralized debt offerings — were a great idea?
Errata to above rant: as I was a homeowner into 2004, I’ll give a pass to anyone who bought a home at a good price in 2003 or earlier. Beyond that, it was clear to any logical person that we were in bubble territory.
skeptical says “Without getting personal, many bottom callers have stated or insinuated that if you don’t own a house, you don’t have a right to comment on real estate.”
I don’t think anyone actually said anything remotely like that.
As an aside, I have no idea how to effectively short the real estate market. Plus shorting is for people with strong stomachs and a lot of capital — when you short your downside is effectively unlimited. Given that you have expressed a certain degree of risk adversity, not a bad thing, you would seem to be a terrible candidate for engaging in short sales of any kind.
Skeptical, I’m not going to rant on you. In fact, I agree with many of your observations. You state that, “for those out there who think that they lack bias….wow, if only we could all be so perfect. We are all biased, in our own way. If you choose to ignore that fact, you will pay the price eventually.” My point exactly.
You continue to be an example of being very vocal in ones real estate views without resorting to name calling and degredation. I thank you.
DonC said, “I have no idea how to effectively short the real estate market.”
I don’t trade in the stock market so I’ll have to defer to those who do. But a couple of years ago I thought “they” [whomever they may be] introduced a residential real estate index for 12 or so major geographical markets that could be traded on the Chicago Exchange as a commodity? If this investment vehicle in fact exists, then you have the ability to “short” real estate if that’s your desire.
The problem though is what we’re seeing in Reno/Sparks. Even though most of us feel the residential real estate market as a whole is not going to rebound anytime soon, the median sales price is likely to increase. That being said, IMO it would be a poor decision to be shorting real estate on one/more of these commodity indices. In fact in a perverted sort of way, it may actually be a good time to be going long [but as I said, I’ll leave those decisions to the experts]?
Regardless, I think there IS an investment vehicle that allows investors to bet on the future [one way or the other] of residential real estate.
two RE ETF’s:
SRS ultra short (bear)
URE the long version (bull)
Looking at the charts, the SRS appears to be at or near its bottom. Little room to move here.
Much better idea then trying to trades futures, unless you have a crystal ball thats in working order.
Yeah we really do need an edit button. I got that wrong the SRS, as its a short fund, is scrapping near a bottom which means there is a possibility it can move up which is not good for RE. Maybe its better to not try and bet on RE for awhile.
Sully — those are REIT indexes, aren’t they? So the SRS is not really a vehicle for playing the residential real estate market. Also, and this holds for all indexes or ETFs, for technical reasons relating to the daily average calculations, even if the market goes south, you probably won’t see the type of returns you probably think you should be seeing.
I guess you could short homebuilders or financials. But these approaches are hardly perfect vehicles.
Yes, thats correct. Bad example.
The only one I could find that was made up of residential related was the XHB, homebuilders index.
It does have options available, but is a long fund, not short.
I’ll go ahead and suggest that the appropriate way to short houses is to not buy them at all while they rot away on the mls. Unlike the stock market, you don’t have to borrow shares, and there are no margin calls when massive government housing stimulus creates marketplace distortions. Once you do decide to buy in, you can count all that money you saved as income earned, but not pay taxes on it.
BB says “I’ll go ahead and suggest that the appropriate way to short houses is to not buy them at all while they rot away on the mls.”
That’s very good advice. However, you’re usually best off not buying when they’re flying off the MLS. You want to buy when they’re not moving and people think they’re never going to move. I doubt that anyone is going to be able to time the bottom — some will but that’s just probability — so buying on the way down is as good as buying on the way up.
You don’t get that many down cycles in a lifetime. I’ve known a few people who are still waiting for the “next correction” after the October 1987 crash. No reason for panic buying but if in your personal situation it makes sense to purchase and you get a good price and a good loan rate, then it’s actually a better than normal time to buy. (IMHO of course.) This is especially true given that the the largest cohort in our history is just beginning to from households. This has been delayed but it won’t stay that way forever.
Renting is also an OK option. For most people I’d favor a home purchase because it gives people some leverage, sets their housing payment levels, and forces savings. If you are very disciplined the latter two factors don’t matter but very few people are that disciplined.
Mr. BB says, “the appropriate way to short houses is to not buy them at all while they rot away on the mls.” What a bunch of crap.
Correct me if I’m wrong [someone], but “shorting” an investment purchase means you’re selling something you don’t own at today’s price with the expectation you’ll make money on the sale by purchasing it back at a lower price sometime in the future. How do you propose making money on the sale of real estate if you don’t sell today and purchase at tomorrow’s arguably lower price? Or is it that you’ve somehow made money by doing nothing and avoiding the whole purchase/sale thing?
What you’re suggesting is what I call the osterich [or Titanic] technique; stick your head in the sand and do nothing. In fact that’s the same mentality that supports your decision to buy nothing and do nothing insofar as everything is concerned [being oblivious to everything that’s going on around you].
You can do the osterich thing if you like, but do some of us a favor and please don’t come up for air long enough to allow you to post comments such as these on this blog [I really don’t care about your other horticulture blogs].
For someone who’s so quick to call others “stupid,” you’re a real piece of work.
To the extent I made my last point together with derogatory and disparaging remarks, I apologize I guess I just couldn’t resist[. That runs contra to the civility I feel posters should exhibit to one another.
That said, I stand by the point I tried to make.
All the wealth is made by those invested when
the market makes big moves (up or down).
Those who let fear paralyze them from taking risk
and investing in their beliefs, should not offer commentary.
I can’t even argue with the illogic of bantering bears previous post. It is so revealing into how
a perma bear evolves.
‘Errata to above rant: as I was a homeowner into 2004, I’ll give a pass to anyone who bought a home at a good price in 2003 or earlier. Beyond that, it was clear to any logical person that we were in bubble territory.’
SK- How gracious of you to absolve all those that bought between 2001-2003, ones you previously dissed. This must validate renting for you, huh? I’m thankful that the last property I purchased was in 2000, so I don’t have to be grateful for the forgiveness you’re offering.
That’s a big head you’ve got on your shoulders.
DBNO,
No worries. Let me know if you need anything else.
smarten — I think BB has it right. Yes selling short involves selling something you have to buy later. That’s the problem. If it takes off then you have to cover at what might turn out to be a very high price. And you have to do this even if the price plummets the next week.
So his idea of not buying and just waiting for the prices to drop has much to recommend it. It’s a more conservative — your time line isn’t set — but essentially same way to play it.
Plus as I mentioned I don’t think there is a realistic way of shorting the residential real estate market so it’s a bit of a moot point.
[And wouldn’t an Edit/Delete button be nice? I have wanted one from time to time.]
“To the extent I made my last point together with derogatory and disparaging remarks, I apologize I guess I just couldn’t resist[. That runs contra to the civility I feel posters should exhibit to one another.
That said, I stand by the point I tried to make.”
You’re a mental case, Smarten. It’s obvious. You’ve been making disparaging comments for years, all the while telling others how they should behave on the blog. When you can’t control your diarrhea of the mouth, and lose it, you offer disingenuous apologies in a transparent attempt to distance yourself from the behaviors you supposedly condemn. These trite little apologies after the fact fit perfectly inline with your sleazy character. If you’re going to say something, at least stand up to it. Have you always been such a wuss?
Thanks Skep. Since you’re asking, in ‘83 I bought a property that was under water in ‘86. Can I be forgiven for that? I’d appreciate it.
Obviously there’s no way, in a literal sense, to short the housing market. But, since loudmouthed people who bought depreciating assets like to deride others who aren’t sitting on albatrosses, and accuse them of not “profiting” from the bust, I offered an example of how they actually are profiting from their “expertise.”
If these people who are supposedly burying their heads in the sand would have purchased depreciating assets when these loudmouths did, they would have lost hundreds of thousands of dollars. Instead, they were smart, and they sat on their money while others hemorrhaged it. In turn, they didn’t end up with $900k mortgages. Yes, a $900k mortgage!
This is really no different than those who had the foresight to get out of the stock market, or not get in, before it plummeted. Are they ostriches with their heads buried in the sand? No. Sometimes, the best “investment” is the one never made.
“bob_c said,
in March 16th, 2010 at 6:33 pm
I can’t even argue with the illogic of bantering bears previous post. It is so revealing into how
a perma bear evolves.”
I’ll tell you what, bob_c- when you understand the word illogical, and how to correctly use it in a sentence, you can start arguing about my posts. Fair?
[bob_c]: “Those who let fear paralyze them from taking risk and investing in their beliefs, should not offer commentary.”
“Should not offer commentary?”
Ridiculous! Stop trying to silence those who dare to disagree with you.
We’re all adults here, act like it.
To all,
If I had stayed the course, my home would have been paid off in 2009, and I wouldn’t be paying rent on a much smaller apartment now.
But multiple refinancings and second mortgages later finds me with no house but still paying my hard money lender on the second that was wiped out when my first went to foreclosure.
You can call me idiotic, stupid, or whatever you want. But as I’ve moved through the past three years, I’ve learned not to repeat the mistakes of the past.
That doesn’t mean I won’t make new ones. Just that I probably won’t make the same ones again.
‘Obviously there’s no way, in a literal sense, to short the housing market’
Really? and you base that off your vast knowledge of all things?
You might want to reconsider that statement.
I suppose “illogic” works in bob_c’s sentence, but illogicality was what my mind thought belonged there. Anyway, bob_c, feel free to tear apart my posts. Get in line, though.
billddrummer — Very sorry to hear about your situation. Hopefully you’ll put this behind you as you move forward.
To DonC,
I thought I’d gotten past them myself. It’s just the idea that people are now questioning whether they should or shouldn’t buy property, when even having that choice is a privilege.
I’ve also lost a marriage and a job, but those are other stories for other times.
In the meantime, I’m almost finished with the first draft of my novel. Right now it’s fit for me to read, but no one else.
I’ll let you know when it’s ready for public consumption.
what do you mean there is NO literal way to short housing?
At last check I shorted home builders 2 YEARS ago and made a KILLING…
idiot….
hmm actually MORE than 2 years ago..
Why isn’t anyone paying attention to me?
Unrelated to everything else in this topic, but funny as hell: http://tinyurl.com/yb2gsyg
The Onion: I Wasn’t Going To Buy This House Until I Saw The Realtor’s Headshot On The Sign
derrick which contract on what exchange are homebuilders??
I fail to see how shorting homebuilders equates to shorting house prices, specifically Reno, NV house prices. Perhaps somebody else can enlighten me.
BB-
using grammar is the last line of defense
in an internet dispute and really futile
not being versed in this topic i propose to
this board to seek out ’short’ candidates as
specific to the reno real estate market as possible——how could one make money if the
market goes down
there has got to be a REIT of some type
or i’m open to any ideas on how to profit
on the way down
this is a legimate request and there are some pretty knowledgable cookies posting here
MikeZ, that was classic!! Recall a few months back when I questioned why all Realtors (TM) have head shots? If I put my photo on a loan app or purchase contract, it would be racist.
****
Not that I spend much time in defense of anything BB says, but I believe his ’shorting’ comment was not literally meant shorting a RE index per se but taking a position to profit from a downward sliding market, in his case SFR values dropping. That was his bet; buying was Smarten’s bet - we get it. I ’shorted’ too, by selling my primary and renting and by selling an investment home. Oops on my other real estate investments that weren’t so lucky, but oh well. I’m forced to hold for the long haul, or ruin my credit, but I made that bed and I’ll lie in it.
****
BB, you and Smarten and others spar often, yet Smarten and others, myself included, have told everyone our backgrounds enough for readers to be able to make their own assumptions on bias and validity of whatever assertion we make. You have not, unless I missed it.
Did you or did you not buy a house in the past 3.5 years that you still own? Don’t need details, just would like to know if you took the advice you offer or if you are offering advice you wish you took.
bob_c; I read an article yesterday regarding your question. REIT’s have moved up since Mar/09 to the point that they are no longer being recommended by most market gurus.
The XHB took its worse dive in 2007 and now looks like it is staging a comeback. Individual stocks usually do move before the rest of the market catches on.
Since the REIT and XHB index are dependent on the member stocks, I would think now is not the time to chance a small profit versus a potentially large loss
even though I think the market may yet go lower. The risk/reward ratio does not look that appealing to me, as compared to a potential crash in the Dow, S&P 500 and NASDAQ. A much broader base in which to pick from.
CommercialLender-
I’m not here offering advice. I’m posting about a housing bubble, and the negative economic effects poor governmental policies have had on this country and it’s people. My personal situation is unimportant. I don’t care who you are, nor should you care who I am.
To CL,
Thanks for calling out BB.
And to BB,
What’s the big deal? Just answer the g*dd*mn question, OK?
“I’m not here offering advice.” Nice try. How about for the past several years not only have you been ‘offering’ advice but repeatedly you’ve lambasted others for stating rationale for and acting contrary to your opinion. My question was/is simple: as we’ve all offered strong opinions herein but some of the more vocal ones have done so with disclosures as to their situations, why not shed light on whether you are a homeowner or not or acted upon what you saw/see?
I nevered said I care about who you are, though you guessed correctly on that tangent, only your bias whether real or perceived. We all, yourself included, have flatly rejected certain things in the past that the NAR/Yun/Leerah said because we know they contain or are compromised by bias.
Not trying to pick a written fight here, just trying to understand some of your prescient observations or otherwise ignore them.
Obviously there are numerous ways to short the RE market. Shorting those public companies that build the houses and commercial buildings, or by shorting those that invest in them would be a few. Even the banks that lent on projects such as Corus Bank, the bank that financed the Montage would have been an excellent bet if you knew the housing market was going to crash. As for specific regions like Reno, research REITs that invest in the basin and you could get area specific. There is no literal way to short the house next door, but then that wasn’t the point.
It should also be obvious this is not the time to be doing this. But those of you that absolutely knew what was coming, way back when, I’m surprised you didn’t put your money where your mouth is and pick up some jing.
As my dad used to say to the people that were full of opinions but did nothing ‘you got the talkin’ part down…’ I prefer ‘all hat and no cattle’ myself.
DBNO, apparently you have very little experience in shorting stocks or indexes. In the example “if you knew the housing market was going to crash.”
Ok - when? 2005, 2006, 2007? In Reno, nationwide? I just said the XHB didn’t make its biggest move until 2007, by then everyone could see real estate was no longer rising by the yards. Also, XHB should have moved down long before 2007 yet it didn’t why? Insiders were selling by the truckload for two years or more before. Anyone that shorted in say 2005 or 2004 that could see this fiasco in the making, would have also lost their shirts in the process. Having a bad feeling for something is one thing, following up that bad feeling with a bad bet - doesn’t seem to make sense either. This brings up the old adage:
The market can stay irrational longer than you can stay solvent.
That appears to be the case with XHB.
FWIW, back in Aug/Sept 2008 I mentioned the possible failure of a large bank, bokerage or insurance company. The post is still there. At that time I also bought from 10 - 30 puts (each) on all the major bokerages, banks, Capital One and AIG.
I just didn’t advertise it. Still, if I had to do it again, I probably wouldn’t have shorted the XHB or any other related industry, simply because of the risk at being short. Think infinity if you’re not right.
Sully — You are absolutely right on. In my mind the key points which hopefully everyone understands are:
“The market can stay irrational longer than you can stay solvent.”
and
“I probably wouldn’t have shorted the XHB or any other related industry, simply because of the risk at being short. Think infinity if you’re not right.”
If you are going to short anything (housing, banks, REITs), it would be a good idea to hedge your short with an offsetting play in something else that’s moving the opposite direction–such as gold vs. the euro, for example.
That way you can protect your downside risk if the short goes south by selling your long position and covering the short.
This morphed into an investment thread, which I think is interesting.
Carry on.
Some people, including myself, like living in their homes and do not necessarily think of them as an investment first. I bought in Reno in late 2006 after selling in San Jose (made a load of money).
I lost now what is 300K+ lost equity. Does that hurt? Hell yes! But after sitting out on the patio yesterday looking over the Spanish Springs valley makes the pain go away rather quickly.
What was crazy during looking for this HOME is a real estate agent trying to sell me million dollar homes and taking out jumbo loans. No thank you! I did see the bubble coming but I did not think it would get this bad. Yes a miscalculation, but I enjoy my home now, and being in my early 50’s I wouldn’t mind staying here the rest of my days.
Want to know how people will afford million dollar homes? Want to know how the government will pay for trillions of debt? Only solution I see is inflation of biblical proportions. Who gets screwed? The people retiring like me! Eeekkk!
We need JOBS beofre recovery can even start. Where are all the California companies moving here? I’m still waiting…. Maybe we can get Google to install the new gigabit ethernet here!
Sully, BobC, you are correct. Poorly thought out reasoning on my part.
Mixed two points I was trying to make and came out with dumb logic.
“billddrummer said,
in March 17th, 2010 at 12:47 pm
To CL,
Thanks for calling out BB.
And to BB,
What’s the big deal? Just answer the g*dd*mn question, OK?”
Are you serious?! Just because you’re some chowderhead who lost his house and enjoys spreading his personal sob story all over the internet doesn’t mean others want, or need, to follow suit. Some of us appreciate our privacy and anonymity. No, I will NOT share personal details about myself. Put that in your attention loving pipe and smoke it.
“Nice try. How about for the past several years not only have you been ‘offering’ advice but repeatedly you’ve lambasted others for stating rationale for and acting contrary to your opinion.”
Ok, smart guy, show me where I ever offered advice. I haven’t, and you can’t. This is a real estate blog, not CNBC’s Fast Money. Whether I am sitting on millions in real estate, or living in a cardboard box in SF, is irrelevant. I have offered my viewpoints on the state of the Reno-Sparks real estate market and you are, as well as everybody else, free to ignore them completely if you so wish.
The idea that nobody here is credible until they qualify themselves by sharing personal information is the most ludicrous thing I’ve ever heard. My two favorite contributors here, Reno Ignoramus and SkrapGuy, are as anonymous to me today as they were the first time they ever posted. They earned my respect by what they said, not by what sort of investments they are holding, or the flashy titles they may or may not have.
Mr. BB’s so full of himself, he can’t remember what he posted yesterday on which of his many blogs. According to him, “Ok, smart guy, show me where I ever offered advice.”
Although I’m not the “smart guy,” let me take a stab at it:
“I’ll go ahead and suggest that the appropriate way to short houses is to not buy them at all while they rot away on the mls” [Mr. BB on March 16 at 2:11 P.M. on this very topic (see above)].
Oh I can hear the response now. That wasn’t advice. It was merely a “suggestion.” Well to whom exactly were you suggesting Mr. BB, and how did your “suggestion” differ from your “advice?”
Some additional Mr. BB fodder:
“I had my house broken into two years ago, and they stole everything of value” [ http://www.kitsapsun.com/users/BanteringBear/comments/?page=1#ixzz0iUwoIhcf ]. This probably explains why he can’t afford to purchase real estate - even depressed Reno/Sparks real estate.
You see Mr. BB, if you just came clean with some of us, you wouldn’t put us in the position of having to dig up information on you.
Gotta agree with Lender, Bear, not only do you offer advice all the time you can get quite upset when people here disagree with you or your advice and resort to name-calling.
“Chowderhead?” “Sob story?” Come on, there’s no need for that.
So, you bought a house within the last few years?!
More advice from Mr. BB -
“I hate to break the news to you fourfirs, but you’re overpaying for that acreage right now. I have actually looked at the exact parcel you are buying. Prices in Clallum County, in some instances, have quadrupled in just a few short years. I don’t know who’s telling you that land prices are going to double again in the next several years, but it sure sounds like realtor speak. Prices on land will be coming down, not going up. I am not sure if you are familiar with the real estate bubble, but look into it. Washington is one of the most overpriced states in the country. The reason you haven’t found many good parcels, is because there’ve not been a lot on the market as of late. Most people have been holding it since prices were going up so fast. And the speculators and builders were grabbing anything decent once it hit the market. In the next 5 years, I anticipate a much larger selection, at drastically reduced prices. And especially in remote areas such as Port Angeles. I have been tracking land in and around western WA for better than 5 years. Sounds like somebody is selling you a bill of goods. It’s never a good idea to buy anything at the market peak, which is exactly where the area is at right now. In 5 years time, I will be able to buy a house on 5 view acres for the same price that the 5 acres are selling for right now. Mark my words” [ http://www.city-data.com/forum/washington/54303-banana-belt-region-2.html#ixzz0iUzhavuE ]. I guess those words weren’t advice either, were they.
BTW, this post was made by Mr. BB on April 1, 2007 so either it was an April Fool’s joke, or you’ve only got two years to make good on your promise!
More words of wisdom from Mr. Congeniality:
“I base what I say on facts…I actually take great pleasure in people disagreeing with me. It reassures me that I am on the right path. This is because the majority of people are unable to think for themselves, and subscribe to the herd mentality” [ http://www.city-data.com/forum/washington/54303-banana-belt-region-2.html#ixzz0iV1Zu0My ]. It sure sounds to me like our Mr. BB considers himself to be superior to the rest of us in the “herd” because unlike him, we’re unable to think for ourselves.
As George Carlin used to say, “the stunning arrogance.”
And people wonder why I am loathe to share things about myself when there’s a stalker like the Incline Village Narcissist out there? Please…
More self=serving insight as to Mr. BB’s credentials to give advice on real estate:
“I have been pro real estate my entire life up until 3 years ago [2004], when everything got too far away from fundamentals” [ http://www.city-data.com/forum/washington/84621-n-w-housing-bubble-2.html#post763039#ixzz0iV97vJOE ]
I DO own real estate, and I have shared that in the past, and on THIS blog. This is NOTHING new. If anything, it bolsters the fact that I am objective, as rising prices would be a boon to me, would they not? To me, though, the fact that I do is irrelevant.
I find it bizarre that Smarten spends hours upon hours reading my posts from years ago. Is your life in that new house really that bad? Viagra not working, and the wife out on the town? What gives, old man?
I sold a bungalow overlooking the Puget Sound in 2006 for $400 per foot. I turned around and bought a fixer farmhouse on 3 acres for $98 a foot. What does it matter?
Where did I ever give advice on this blog, MikeZ? Instead of running your mouth like all the other haters, why don’t you at least point to the thread?
WOW. Share a couple of facts about the guy and all of a sudden he’s singing like a bird. A little bit more insight as to who this “real estate pro” really is:
“I have been considering relocating to Portland, Maine from the west coast. I have known a few people who have grown up there and love it. It will be a big move should I do it. My main concerns are: I have a big dog and so I need to find a rental house which will accept us [he’s a renter]. I want to live in more of a rural setting (I’m a gardener) and wonder how much rents are, and how plentiful my options will be. Also, what are wages like in the area? I don’t have a college degree (though have 3 years of college) but have many skills. My long term goal is to open a small, specialty business. In the interim, I need to find anything. I wouldn’t mind working in the kitchen of a fun restaurant as I love to cook. Are people friendly in the area? Are there many dating opportunities for a single guy in his mid 30’s?” [ http://www.city-data.com/forum/portland-area/54326-big-dog-i-want-start-over.html#post444401#ixzz0iVF3DlMF ].
And FWIW Mr. BB, I can watch American Idol and search the internet [for only about an hour] simultaneously. Actually, enjoyed learning a bit more about you - from the horse’s mouth no less!
Smarten,
you are impressive. Laughed my tail off!
However, I’m not trying to ‘out’ BB, I really don’t care who he his, but I’d just like to read his posts with some idea as to his personal background or bias. He’s one of the most prolific posters here and one of a few who readily rail against other anonymous posters here, therefore he opens himself up to the challenge of telling a tidbit of what his background is. I don’t care about RI’s bias, as BB cites him, because RI doesn’t go spouting off at everyone incessantly.
Having read a few of his -supposed- posts in the Seattle area, he is at least consistent and was prescient there in 2007, too. I respect him for that. But why not give it up: not personal data, just whether he bought a home during this mess, sold, whatever. Not address and SSN for God’s sake. His supposed desire for anonimity is laughable given my very simple and non-revealing request.
****
BB,
now to you: yes, often and over several friggin’ years you offer your advice and lambast those who don’t follow you. Who are you trying to kid? Don’t play word games with me, as in the past you’ve tried and failed. I say again “nice try” and now I’ll add to it “take a hike.” You have now joined Derrick in the list, now 2 names long, of posters I’ll simply skip to save time.
Finally, shame on you in your prescious anonymous world where you can call people “IV stalkers” like you just did tonight to Smarten but can’t even offer up if you happen to be one of 200+ million homeowners in the USA. Smarten, need I remind you, gave up his personal residence, his financial situation, his thoughts and methods so that some interested and mostly appreciative anonymous people could glean a bit of knowledge from him to use in their own situation. Kudos to him for sharing to help his fellow man. You should, but I rather suspect won’t be, fully and totally ashamed of yourself for calling Smarten a ’stalker’. Baseless and utterly classless and you damn well know it.
So, saying goodnight and take a hike, I’d like to also stoop to your level and use my last word to you by calling you what I and perhaps the rest of this blog by now sadly recognize you to be: Pussy. But I won’t, because I have class.
[Bear] “I turned around and bought a fixer farmhouse on 3 acres for $98 a foot.”
WTF, Bear!
What happened to the unqualified: “Purchasing a house in a deflationary environment is not wise. Your … house continue to fall in price” above?
Not only do you offer advice and then deride others who disagree, you don’t follow you own advice!
FWIW, the prior 4 posts were not received of me prior to hitting ’submit comment’. I appreciate that BB did finally share this info.
(note to self: try not to piss off too many people on the RRB. It might come back to bite you.)
FWIW, while I believe the various criticisms of BB are fairplay, I would sincerely miss his contributions and hope that this latest round doesn’t cause him to hibernate again.
You can go f*** yourself Commercial Lender. I just offered up that I’m a homeowner. Wasn’t that the information you requested? You’ve been talking about ignoring me for years. Either stick to your guns, or shut up about it.
MikeZ- you’ve been on this blog about as long as me. You should remember these facts about me. This is not new. If you want to join these guys Bay Area connection circle jerk fest, I’m disappointed in you.
funny how the anonymus one’s on the net have story lines that are hard and when backed into
a corner always critisize spelling and grammar
You know, Skeptical, I think you’re on to something, and it is about time for me to go on hiatus. When the mob mentality takes hold, and this is not the first time, the blog really suffers. This whole thing has gotten so far off thread that it’s really pointless.
Unlike others, I never wanted my life to be fodder for the blog. I am most happy being anonymous, and have never once asked others for personal information, and only commented on theirs when they force fed it to us. The fact that I’m a self-employed gardener who owns a house in another state is irrelevant insofar as Reno real estate is concerned. Others may disagree, so be it.
I’m not big on apologies, but I’d like to offer one to Mike, Guy, and the good people of the blog who I respect, especially all of those anonymous readers out there. I’ve allowed my extreme distaste for certain individuals to contaminate my message. I’ll pass the torch to others who are, perhaps, a bit more PC. Good luck to all.
-BB
bb we are new to reno. you have helped to save us over $200,000. please stay.
Well this blog just went to hell. The only person that had any real common sense on this blog is now gone.
Apparently, “the only person that had any real common sense on this blog” (no quite correct, BTW) couldn’t take even the lightest of constructive criticism or disagreement.
I hope you return, Bear, but with a more adult and open attitude. You have much to contribute here.
BB
You may have your youthful followers, who consider you to be the “king” of this blog, but if anything, you are a vulgar, disgusting, little boy, with a “trash” mouth, who is “posing” as a adult.
Really, I am sure everyone wonders just “How old are you?” You certainly do not act your age.
When this blog degenerates to the point that people are now calling themselves “Anti-BB” perhaps it is time to go BB. Nobody needs that kind of personal animosity.
This used to be a really fine blog. Personally, it saved me hundreds of thousands of dollars. I say thanks to RI, Lindie (who has been gone quite a while now), BB, Wazoo (who doesn’t come around much anymore either)for keeping me from making a big mistake.
The testosterone levels on this blog are just way out of hand now. Seems “being right” is the most important thing to the regulars here now. I note that even RI, certainly always of bearish sentiment, but who never personally attacked anybody, doesn’t post much anymore either. That is a loss.
The little boy mentality on this blog is leading to the end of what was a tremendous source of help to folks like me.
Is anyone interested in the commercial real estate business?
Feel free to comment.
Polly,
This blog ebbs and flows. If you go back into the archives, as I have, you’ll see that nothing much has actually changed over the last few years. There was just as much emotion and personal invective back then, if not more.
One should expect such in a relatively unsensored blog such as this. That said, it’s incumbent upon the reader to filter through the nonsense and benefit from the tremendous amount of info shared here. I have also learned an immense amount by following this blog, and potential buyers in the greater Reno area who visit the blog are at a tremendous advantage.
A year or two back, the question was posited as to whether this blog has any affect on the actual Reno RE market. Judging from the number of folks who have recently commented that they’ve saved hundreds of thousands of dollars by reading the RRB, I believe it has.
BB will be missed, and I hope he comes back soon. He was like the greek chorus of a real time tragedy that is being played in front of our eyes. That said, I’d always cringe whenever it got real personal. Personal attacks only serve to divert the blog from the important matters at hand and to inhibit those being attacked from further contributing.
I guess I understand now why politicians get so personal and so negative. It certainly is alot easier than cogently and logically presenting your views and rigorously arguing your point.
In short, there’s nothing new under the sun. I think rumours of the blog’s demise are greatly exaggerated.
Oh, and BTW, I won’t ever use my ’sob story’ again, since my ‘chowderheadism’ was oviously showing.
Personal experience provides good examples of what to do or not to do. I share my stories in hopes that others don’t make the same mistakes.
If that makes me a chowderhead, I’ll have some tarter sauce.
I just hope that the detour this one took, doesn’t deter Mike from his great research. I spent about 4 hrs just on the cash sales he had already identified. I can only imagine how many hours he spent putting this together in the first place.
Shorting the real estate market.
There is a new book just out: The Big Short
http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393072231
which documents a few stories of some smart folks who made small fortunes putting their money where their mouths were and shorting the financial system when it became obvious to them that things were going to blow up because of the ridiculous sub prime loans which were being made to feed the Wall Street Ponzi machine.
While I was smart enough to know the market was at or near the top when I bought in 2005 (everyone needs a roof over his/her head and for me it was a lateral transfer), I wasn’t smart enough to recognize the magnitude of correction coming and join the renters. I took some money out of the RE market at or near the peak, but left too much in.
As you know, I think the time is now far too late to make any real coin shorting the market. From today’s WSJ, the SF Bay area median price is up 20% from Feb 2009. I think many followers of this blog recognize the lagging correlation between the Bay Area RE market and the Reno market.
http://online.wsj.com/article/SB10001424052748704207504575130020202083044.html?mod=WSJ_hps_LEFTWhatsNews
I find it odd the posters who ridicule those who have recently purchased as trying to justify their purchase by calling a bottom. It seems to me that anyone who has recently purchased has put his money where his mouth is, and only time will tell if his call was right.
Billddrummer - Anyone interested in the commercial RE business?
Now there is a business with opportunities to be made on the short. Not sure if anyone has access to official vacancy rates in Reno, but I don’t think there will be much pick up in occupancy any time soon and word on the street is that lease renewals are coming in around $1.00/sf, well below the $2.00 - $3.00/sf at the peak of the boom.
Ironically, I was much more prescient on the commercial implosion than the residential implosion. It seemed obvious to me that retail in Reno and Las Vegas was getting grossly overbuilt back in 2006, yet folks kept building for two more years at least.
The office implosion was less obvious because you needed to recognize the huge amount of space being leased by developers, title companies, realtors, engineers and others tied up in the business.
Sully, I’ll forgive just about any detour if it generates 200 comments! That is the second highest ever on RRB, trailing only the Montage post at 237. Sure, there was some idle bantering going on, but lots of good information was also imparted (and a couple brilliant one liners!).
To Free Falling,
I agree with you 100%, especially about the office market. With the FIRE (finance, insurance & real estate) sector decimated over the past three years, class A office space has gone begging for tenants, even at rock bottom rents and rich concessions.
I read an article today that expects the commercial office market to show signs of stabilizing this year. But then I also read an article that projected delinquencies on MBSs backed by commercial real estate to reach 25% by year end.
So who’s right?
I tend to think the higher delinquency factor will win out, driven by increased vacancies and lower property cash flows, no matter what condition the assets are in.
To my knowledge, there aren’t many MBS financed properties in Reno–most of the commercial loans here are portfolio-held by commercial banks. But I do remember seeing an industrial property on Longley Lane, fully leased, long term tenants, selling for a 13% capitalization rate–essentially half price when compared to boom-related income property values. The lender? A REIT. Possibly needed to raise cash.
My favority one liner?
Derrick: “Why isn’t anyone paying attention to me?”
You know it’s a good thread when Derrick pops up, feels ignored, goes away, and no one even notices.
And further–
Colliers International here in town seems to have the best database on commercial real estate. Their website is http://www.colliersreno.com
I think it was CL (??)that made and excellent point that the commercial problem is going to go through its process much quicker than the housing downturn. Without government help the losers will be made to face the music in real time.I keep hearing from those I consider savvy that commercial REIT’s are the upcoming bet to invest in. If so, maybe recovery on the commercial side will coincide with the housing market recovery. I’m thinking both are still 2 years or so away.
BDD - can’t really have writers block for your book with the last 24 hrs of posts, huh? When are you going to let us know how it’s going?
To DBNO,
Thanks for asking. I started the manuscript on March 2, and so far have written 40,000 words. The story is fairly over-the-top, but not too far-fetched. All the characters are believable. There is a character based on one of the bloggers here who is, let’s say, not going to survive to the end.
The first half takes place in Seattle; the last half here.
I’m 80% done if it were going to be a 50,000 word book, but it looks like I’ll need at least another 40,000 to do the story justice.
Still plan on typing “The End” by March 31.
And that’s how it’s going.
I’ll have to figure out a way to sneak ‘chowderhead’ into someone’s conversation.
BTW, most of these people talk to each other face to face–there’s some light texting, but no heavy duty Internet use. I think people like to read conversations.
In a way, it’s like noticing how seldom people on TV shows are actually watching TV–they’re talking to each other.
Thanks again for asking. I’ve already got a couple of ideas for my next one, thanks to many of the posters here.
Free falling makes an excellent point. From about 2003-2004, it seemed that every shopping center, strip mall, and business park was at least half filled up with realtor offices, mortgage companies, title companies, and other real estate related endeavors. The bubble’s burst has caused a substantial retraction of all those businesses and they left a lot of empty space behind.
I really hope BB isn’t done for good. I’ve enjoyed his insight for the last four years on here and also on the housingbubbleblog. Just extended our lease on our rental house until next year. I just don’t see a housing turnaround in the near future. IMO, artificially (tax credit, low interest rates) inflated unit sales for a few months doesn’t count. I am tired of this mess. A lot of people can’t even get their rotting teeth or their kids’ teeth fixed because every dime goes into their bubbled mortgage on a house they’re about to lose. FWIW, I think BB’s been right on the money with his predictions, and will likely continue to be. Thanks, BB
I join with Polly and second her comment. This blog saved my ass back in 2006 when I came to town and was looking to buy. Back then all the bandwagon in the RGJ and the media was you can’t go wrong buying a house in Reno. The posts of RI and Gotlots and BB opened my eyes to the existence of the huge bubble in Reno. Back then, even Diane Cohn was cheerleading the market, but those guys never relented in pointing out what was happening in Reno. I thank Diane for allowing RI and BB and Gotlots to continue to post when every other realtor blog was just a shill site for the market.
I don’t know if BB will come back, but in any event I say thanks to him and RI and Gotlots (wherever you are)for opening my eyes and saving me from a colossal mistake.
DBNO says “I keep hearing from those I consider savvy that commercial REIT’s are the upcoming bet to invest in.”
My REITs from February 2009 to February 2010 just about doubled. I think the big run up may be behind us. This is not BTW a brag about investment acumen. I’ve had these since 1996 or so and I didn’t dump a bunch more cash into them last year, which in retrospect would have been a good thing to do.