Economists grapple with home prices

[daveham_IHB]

Here's a pertinent article from the New York Times.



http://www.nytimes.com/2008/08/09/business/economy/09bargain.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1218541392-1pF1nJM7MPn8jawqk0ncjg



Key paragraph:



?I try to avoid house price forecasting,? said Paul S. Willen, senior economist and policy adviser at the Federal Reserve Bank of Boston. ?Let me just say this, as an economist, that asset pricing is something we?re exceptionally bad at.

 

[TeamworkHomes_IHB]

Valuable article for everyone.



"For these reasons, some experts argued that it was silly to try to build a mathematical model for the market?s overvaluation. Too much is unknown, they say, to make any predictions"



As I stated in another post, anyone claimed to know when the market bottoms is either a fool or a liar. The world is not black and white, there are many unseen variables in working to effect the outcome of any event. In case of housing price, it is not just about subprime mess, short-sale, and reo. There are other forces in play. It is a confidence game played by multiple parties. "Fear and Greed" is the only unchanged in a constantly changing world.



News media are most biased in reporting housing prices, just compare their tone in both boom and bust years. The difference is as day and night. It is understandable that their job is to sell news and advertisement; it is also understandbale that National Association of Realtors is in the business promoting homeownership, legislator's job to restore confidence and order in the market place. Consumer's job? Not to become a copycat, repeat "somebody said so and so". It is in their best interests to read and receive balanced news and views of the market, then judge the facts using their own critical thinking.

 

[no_vaseline_IHB]

Two years ago I could rent three and a half SFR's in my neighborhood for the same money I could own one.



Today that ratio is down to two rentals for the price of owning one.



I don't need the Fed to tell me what kind of a deal I got goin' on.

 

[graphrix_IHB]

[quote author="Informed_Decisions" date=1218717429]As I stated in another post, anyone claimed to know when the market bottoms is either a fool or a liar. </blockquote>


No, no... you got that backwards, if you can't figure out when we are near bottom then you are either a fool or liar who has a motive to sell homes. It's pretty sad that you haven't taken the time to use the search function, because then you wouldn't insult us with remarks like that and know that we are way, way more informed than you will ever be.



cracker_box_boy feels that he has permission to no longer be nice with insulting and ignorant comments like this.

 

[awgee_IHB]

[quote author="Informed_Decisions" date=1218717429]

As I stated in another post, anyone claimed to know when the market bottoms is either a fool or a liar.</blockquote>


And as I have stated many times, anyone who implies that one needs to know the exact market bottom or top in order to time the real estate market is more interested in their commission than providing you with pertenint information. Those who claim that no one can know the exact bottom or top are purposefully obfuscating the truth about timing markets. In order to time the real estate market, you do not have to predict the future or use some mathmatical model. The only people who imply that you have to predict the future or use some mathmatical model in order to time the real estate market are realtors, or those with an agenda to seperate you from your money.


The real estate market is the easiest market to time and is done with a small amount of common sense and a small amount of observation and a larger amount of patience. To know when the bottom of the real estate market has been reached, wait until it has passed. The bottoms and tops of the real estate market are easily observable once passed. And you do not need to buy at the exact bottom or sell at the exact top in order to profit immensely. It isn't rocket science.

 

[acpme_IHB]

informed decisions,



these models are not a mousetraip for calling the bottom -- as awgee said, no one has an interest in the exact timing of the bottom except those directly profit from it. you do realize the RE market is bigger than just home buyers and realtors?



these models do provide a valuable input that can help in everything from valuing apartment companies to forecasting walmart's sales growth to helping the fed set monetary policy.