Mark Hanson doesn't think we're out of the woods yet

NEW -> Contingent Buyer Assistance Program
[quote author="Nude" date=1256964786][quote author="RoLar_USC" date=1256964554][quote author="Nude" date=1256964373][quote author="RoLar_USC" date=1256964167][quote author="CapitalismWorks" date=1256961434]Question for RobLar. Do you own a home?</blockquote>


I don't see how that's relevant. I've been here long enough to realize you don't share personal information because when push comes to shove, the forum gets childish and make personal attacks; hence your question.</blockquote>


I have nearly 2000 posts and I own a home. Go find me and prove that a simple "yes" or "no" answer is threatening your security.</blockquote>


Are we starting up my fan club again? Try to stay on topic... or at least provide useful content...</blockquote>


No, I am challenging you to either answer a simple "yes or no" question or prove that answering such a question puts you at risk somehow. Either you own a home or you don't. Either you answer the question or you don't. But don't make up reasons to duck a simple question and imply that the members here are going to attack you based on your answer <strong>without backing up that accusation with some proof.</strong></blockquote>


Hahaha, anyone who has read the forum knows of the personal attacks. If it was a friendly forum I would answer any questions asked, but from past experience, it's not. I'm not saying answering that one question will lead to attacks, but I've made the decision, based on previous experiences, not to share personal information. Maybe to someone I view as friendly, but those people are limited.



Take your pick of any of the forum discussions I've had, there's your evidence. Learn to use the search button.
 
Its a very simple, question. I am guessing by your evasiveness that the answer is No. Proceeding on that premise (and lacking any indication otherwise), the natural follow up question is, Why Not? There are two possible answers (1) because you can't afford one you like and are hoping to increase your capacity for debt service prior to purchasing (2) because you believe that the market will provide better opportunities for you to purchase a home in the future.



Typically R/E agents try to own homes as it sends a positive signal to buyers as an indication of both sucess (at least enough to afford a home) and confidence in the purchase decision. That is why McMonigle's decision to rent in Shady was so telling, and why he made sure to mention that he was building an even bigger home to meet the needs of his family.



Conversely if my guess is wrong, and you do in fact own a home, I am curious to know for roughly how long, and how the price of your unit has performed over that timeframe? I believe this is important, because as you have oft pointed out, generalities based on aggregate market data obscure the localized dynamics, which, in your view, have moved inversely (or at least with low correlation) to the broader market. It may also serve to demonstrate your skill at timing the market.



FTR, purchased in '03 and sold in early '08 (QH). I listed in August 2007... one quarter earlier and I could have sold for ~15-20% more than my eventual sales price. I am currently renting.



Additionally, I do disagree with you view that the market is sustainable and/or recovering. Though the current dynamics are supportive (as indicated by sales levels and prices), fundamentals clearly skew the prospective path for housing prices toward the negative. In my view it is self-serving, though typical of R/E agents, to highlight those data that support the current buying decision while ignoring negative information. Since R/E agents are not fiduciaries, a fact of which most buyers and sellers are unaware, it becomes even more important for agents to "eat their own cooking" as a demonstration of their conviction.



You can PM if you like. I won't post your response, or reveal the answer.



If it helps, you should consider me a prospect. I am a current renter, with cash, looking to purchase a home in NB, CDM, NC, NLB, SWI sometime in the next 2-3 years.
 
[quote author="CapitalismWorks" date=1256965549]Its a very simple, question. I am guessing by your evasiveness that the answer is No. Proceeding on that premise (and lacking any indication otherwise), the natural follow up question is, Why Not? There are two possible answers (1) because you can't afford one you like and are hoping to increase your capacity for debt service prior to purchasing (2) because you believe that the market will provide better opportunities for you to purchase a home in the future.



Typically R/E agents try to own homes as it sends a positive signal to buyers as an indication of both sucess (at least enough to afford a home) and confidence in the purchase decision. That is why McMonigle's decision to rent in Shady was so telling, and why he made sure to mention that he was building an even bigger home to meet the needs of his family.



Conversely if my guess is wrong, and you do in fact own a home, I am curious to know for roughly how long, and how the price of your unit has performed over that timeframe? I believe this is important, because as you have oft pointed out, generalities based on aggregate market data obscure the localized dynamics, which, in your view, have moved inversely (or at least with low correlation) to the broader market. It may also serve to demonstrate your skill at timing the market.



FTR, purchased in '03 and sold in early '08 (QH). I listed in August 2007... one quarter earlier and I could have sold for ~15-20% more than my eventual sales price. I am currently renting.



Additionally, I do disagree with you view that the market is sustainable and/or recovering. Though the current dynamics are supportive (as indicated by sales levels and prices), fundamentals clearly skew the prospective path for housing prices toward the negative. In my view it is self-serving, though typical of R/E agents, to highlight those data that support the current buying decision while ignoring negative information. Since R/E agents are not fiduciaries, a fact of which most buyers and sellers are unaware, it becomes even more important for agents to "eat their own cooking" as a demonstration of their conviction.



You can PM if you like. I won't post your response, or reveal the answer.



If it helps, you should consider me a prospect. I am a current renter, with cash, looking to purchase a home in NB, CDM, NC, NLB, SWI sometime in the next 2-3 years.</blockquote>


Cappy - In my observation, the best agents, not necessarily the top sellers, but the best being those agents who take their clients interests as their own, ie. Scott Gunther, do not color the market as anything other than what it is. They seem to understand the fundamentals which guide any market in the long term, and are able to see past the blips and the short term price movements when guiding their clients. In my observation, the best agents are able to adjust to the market, down or up, and serve their clients accordingly. There will always be home sales, even in a down trending market, and the best agents will be involved in some of those sales.
 
I think the point that there will always be home sales is an important one. As I mentioned previously, I would probably be buying a home right now if I could afford something I liked. Though, in fairness, if I wasn't 99.97% confident the prices were going to fall I would probably be far more inclined to purchase now.



Regardless, I do take umbrage with R/E agents that spout self-serving positive views of the market while casually dismissing the mountain of fundamental evidence pointing toward a significant further correction. So, I try to provide insights that encourage a fairer assessment of the markets' prospects. I do, however, realize that it is virtually impossible to win and that in most instances opposing views serve only to entrench previously held opinions. And, therein lies the problem of confirming evidence bias.



I also freely admit that I am subject to that same confirming evidence bias (as indicated by my initial posts on the blogm during the time I was trying to sell my home, though I can say I was directionally right with regards to price). As such, I am constantly seeking accurate and insights that may serve to undermine the case for future price delines (emphasis on future). People like RobLar, with an interest in data, and an optimistic view can then be extremely useful information sources inaofar that they can help offset the risk of groupthink. The problem is that RobLar is subject to the same biases in the opposite direction, and perpetuates one of the most common stochastic errors by assuming that the future will look like the present.
 
[quote author="CapitalismWorks" date=1256967688]I think the point that there will always be home sales is an important one. As I mentioned previously, I would probably be buying a home right now if I could afford something I liked. Though, in fairness, if I wasn't 99.97% confident the prices were going to fall I would probably be far more inclined to purchase now.



Regardless, I do take umbrage with R/E agents that spout self-serving positive views of the market while casually dismissing the mountain of fundamental evidence pointing toward a significant further correction. So, I try to provide insights that encourage a fairer assessment of the markets' prospects. I do, however, realize that it is virtually impossible to win and that in most instances opposing views serve only to entrench previously held opinions. And, therein lies the problem of confirming evidence bias.



I also freely admit that I am subject to that same confirming evidence bias (as indicated by my initial posts on the blogm during the time I was trying to sell my home, though I can say I was directionally right with regards to price). As such, I am constantly seeking accurate and insights that may serve to undermine the case for future price delines (emphasis on future). People like RobLar, with an interest in data, and an optimistic view can then be extremely useful information sources inaofar that they can help offset the risk of groupthink. The problem is that RobLar is subject to the same biases in the opposite direction, and perpetuates one of the most common stochastic errors by assuming that the future will look like the present.</blockquote>


6-9 months ago this forum was predicting a completely different future. No matter what excuses are made, the truth remains the same, that 90% of the people on this forum have been wrong. I use homes in escrow statistics because it's the best indicator of future sales, but when I do that I get complaints that I'm not using current sales. The amount of homes in escrow are still increasing, which leads me to believe that over the next 30-90 days we will still have a strong number of homes closing. If activity remains close to where it is now through january then the housing market will have certainly reached it bottom.







And I don't care that much, no I don't currently own a home. I've thought about purchasing a little 1 or 2 bedroom condo in the next 6 months, but I'm not even sure where I want to live for the next 3-5 years. As of right now, I like changing locations every year. Plus, I want something I can grow into which requires me to save a little more. For these reasons, I'm in no rush but if I was a little bit older, I would definitely buy. Even with those reason I still have a relatively strong urge to buy something.
 
@RoLar:



First off, thanks for coming clean.



Secondly, I don't think you can start with the "Ooo... I'm right" stuff because you weren't here 6-9 months ago. What was your prediction back then?



And what was exactly wrong? Number of distressed properties are increasing, unemployment is horrible and credit is uber-tight... just because the pricing isn't exactly reflecting those facts doesn't mean the underlying factors do not exist.



Do you honestly think that government intervention and buyers-in-waiting are going to be able to solve those issues?
 
Thanks for the response and honesty.



I must disagree with your view that current sales are indicative of a stable markets. Your analysis assumes past is prologue, and ignores fundamental drivers of housing prices. The biggest single driver at present is RECORD low interest rates that are sustained solely on the back of astronimical Fed purchases. The Fed has committed to purchasing $1.25 TRILLION MBS, and have to date purchased close to $1T. That purchasing effort has narrowed the spread to Treasuries on agency MBS to it narrowest in history. Reliable estimates put the impact of Fed purchases of MBS at 50-100 bps in terms of spread (predicated on the notion that MBS spread should be higher than their historical averages becuase of heightened collateral risk). The Treasury purchase program also benefits MBS rates, and that program will end next month, likely resulting in a modest rise in reference rates. It will not be surprising in the least to see mortgage rates rise 100 bps + in 2010 (lacking further intervention).



does a 15-20% increase in rates impact home prices. You bet it will. Or should I say, I bet it will.



I believe your analysis based solely on current conditions, purposefully ignores these obvious eventualities. Thus it is met with scorn.
 
[quote author="irvine_home_owner" date=1256970651]@RoLar:



First off, thanks for coming clean.



Secondly, I don't think you can start with the "Ooo... I'm right" stuff because you weren't here 6-9 months ago. What was your prediction back then?



And what was exactly wrong? Number of distressed properties are increasing, unemployment is horrible and credit is uber-tight... just because the pricing isn't exactly reflecting those facts doesn't mean the underlying factors do not exist.



Do you honestly think that government intervention and buyers-in-waiting are going to be able to solve those issues?</blockquote>


Those underlying factors are only there to support your overall opinion, which was that prices were going to continue to plummet.
 
[quote author="CapitalismWorks" date=1256970659]Thanks for the response and honesty.



I must disagree with your view that current sales are indicative of a stable markets. Your analysis assumes past is prologue, and ignores fundamental drivers of housing prices. The biggest single driver at present is RECORD low interest rates that are sustained solely on the back of astronimical Fed purchases. The Fed has committed to purchasing $1.25 TRILLION MBS, and have to date purchased close to $1T. That purchasing effort has narrowed the spread to Treasuries on agency MBS to it narrowest in history. Reliable estimates put the impact of Fed purchases of MBS at 50-100 bps in terms of spread (predicated on the notion that MBS spread should be higher than their historical averages becuase of heightened collateral risk). The Treasury purchase program also benefits MBS rates, and that program will end next month, likely resulting in a modest rise in reference rates. It will not be surprising in the least to see mortgage rates rise 100 bps + in 2010 (lacking further intervention).



does a 15-20% increase in rates impact home prices. You bet it will. Or should I say, I bet it will.



I believe your analysis based solely on current conditions, purposefully ignores these obvious eventualities. Thus it is met with scorn.</blockquote>


By the time interest rates begin to rise, what will unemployment be doing? Do you think unemployment will still be on the rise? The purchase of MBS has always been a short term solution. Plus, it all depends on the rate that increasing interest rates effect price. At the same time, it could work against your argument that now is not a good time to buy. The future increase in interest rates can be used on both sides.



If interest rates increase as unemployment decreases, what will the end result be?



And another question: What happens to prices if interest rates are low all the way through the winter to the next summer "buying" season?
 
The data as presented is pricing and sales data, not fundamental data.

If I am trading, I want the fundamentals and the long term trend on my side.

But pricing data, (technical analysis), is critical for entry and exit points.

For long term investing, the fundamentals are everything. And relying on technical analysis exclusively for long term investing, ie. buying a home to live in, is like relying on a realtor to determine your timing. You may as well throw a feather in the air and see which way the wind is blowing.
 
To clarify: my point was that people are becoming permabears and being TOO negative may give you tunnel vision.



I agree that fundamentals are BAD and I don't see a sustainable recovery. I bought knowing I could see further declines. However, I also no longer underestimate the power and will of the US Gov to change the situation from an ongoing crash to years of sideways movement. Nor do I read Zero Hedge and the other uberbear blogs assuming they know the "real" situation. ZH would have made me broke had I followed their advice this year. That's not smart money.
 
[quote author="JCie" date=1256973934]To clarify: my point was that people are becoming permabears and being TOO negative may give you tunnel vision.



I agree that fundamentals are BAD and I don't see a sustainable recovery. I bought knowing I could see further declines. However, I also no longer underestimate the power and will of the US Gov to change the situation from an ongoing crash to years of sideways movement. Nor do I read Zero Hedge and the other uberbear blogs assuming they know the "real" situation. ZH would have made me broke had I followed their advice this year. That's not smart money.</blockquote>
You do not read ZH, yet you know that if you followed their advice this year, you would be broke.

What advice exactly has ZH given? I read ZH and I do not remember ever reading any advice.

And I am not broke.
 
[quote author="RoLar_USC" date=1256971415]



And another question: What happens to prices if interest rates are low all the way through the winter to the next summer "buying" season?</blockquote>


Please do not consider this condescending, but I find this to be the most perceptive and intriguing of your questions. Most of the other answers are obvious or at least seem obvious.

But, what if interest rates stay low?

And why would they stay low?

IMO, B-52 has no choice but to continue on the present course of inflate the housing market or die.

Will he be successful? And for how long? Even if he is successful at keeping interest rates low, will the housing market continue to inflate?
 
<a href="http://www.calculatedriskblog.com/2009/10/fannie-mae-delinquencies-increase.html">Some fundamentals,</a> even as sales increase.
 
[quote author="irvine_home_owner" date=1256972486]You didn't answer my two questions.</blockquote>


Sorry, answer to your questions:



1) I've been saying that the lower end was recovering and stabilizing and now I'm saying it's transitioning to medium priced homes.



2) I already answered why I believe your predictions were wrong.



and 3) yes.



Now if you could answer my questions. When do you see unemployment stabilizing and even decreasing? It has been the number one or two argument against housing for awhile now, so I assume it can also be used as an argument for stability of housing.



Interest rates will go up, I agree, it's inevitable. Will increasing interest rates outweigh the impact of decreasing unemployment? Furthermore, I think the primary reason they will let interest rates increase will either be because of inflation or because they believe the market is stable enough. Assuming it's not because the market is strong enough, do you think that inflation will have a positive or negative effect on housing prices?
 
[quote author="CapitalismWorks" date=1256965549]Its a very simple, question. I am guessing by your evasiveness that the answer is No. Proceeding on that premise (and lacking any indication otherwise), the natural follow up question is, Why Not? There are two possible answers (1) because you can't afford one you like and are hoping to increase your capacity for debt service prior to purchasing (2) because you believe that the market will provide better opportunities for you to purchase a home in the future.



Typically R/E agents try to own homes as it sends a positive signal to buyers as an indication of both sucess (at least enough to afford a home) and confidence in the purchase decision. That is why McMonigle's decision to rent in Shady was so telling, and why he made sure to mention that he was building an even bigger home to meet the needs of his family.



Conversely if my guess is wrong, and you do in fact own a home, I am curious to know for roughly how long, and how the price of your unit has performed over that timeframe? I believe this is important, because as you have oft pointed out, generalities based on aggregate market data obscure the localized dynamics, which, in your view, have moved inversely (or at least with low correlation) to the broader market. It may also serve to demonstrate your skill at timing the market.



FTR, purchased in '03 and sold in early '08 (QH). I listed in August 2007... one quarter earlier and I could have sold for ~15-20% more than my eventual sales price. I am currently renting.



Additionally, I do disagree with you view that the market is sustainable and/or recovering. Though the current dynamics are supportive (as indicated by sales levels and prices), fundamentals clearly skew the prospective path for housing prices toward the negative. In my view it is self-serving, though typical of R/E agents, to highlight those data that support the current buying decision while ignoring negative information. Since R/E agents are not fiduciaries, a fact of which most buyers and sellers are unaware, it becomes even more important for agents to "eat their own cooking" as a demonstration of their conviction.



You can PM if you like. I won't post your response, or reveal the answer.



If it helps, you should consider me a prospect. I am a current renter, with cash, looking to purchase a home in NB, CDM, NC, NLB, SWI sometime in the next 2-3 years.</blockquote>


Very interesting prediction cap.... I would have thought Rol did own because a lot of owners root for prices to stabilize and/or rise. It's the people who want to buy who root for prices to come down a lot more.
 
[quote author="awgee" date=1256975751][quote author="JCie" date=1256973934]To clarify: my point was that people are becoming permabears and being TOO negative may give you tunnel vision.



I agree that fundamentals are BAD and I don't see a sustainable recovery. I bought knowing I could see further declines. However, I also no longer underestimate the power and will of the US Gov to change the situation from an ongoing crash to years of sideways movement. Nor do I read Zero Hedge and the other uberbear blogs assuming they know the "real" situation. ZH would have made me broke had I followed their advice this year. That's not smart money.</blockquote>
You do not read ZH, yet you know that if you followed their advice this year, you would be broke.

What advice exactly has ZH given? I read ZH and I do not remember ever reading any advice.

And I am not broke.</blockquote>


My sentence was worded funny: I do read Zero Hedge. They give "warnings" and tell you to stay out of the fake market. It's not bad advice but losing advice for the past six months. I used to read ZH and Denninger thinking, "yeah, that's right!!". Now, I realize they, just like anyone else, cannot accurately predict the future. In fact, they are negatively biased just like some media is positively biased.



I'm just saying you can be blinded by negatively just like you can be blinded by positivity.
 
[quote author="JCie" date=1256980468][quote author="awgee" date=1256975751][quote author="JCie" date=1256973934]To clarify: my point was that people are becoming permabears and being TOO negative may give you tunnel vision.



I agree that fundamentals are BAD and I don't see a sustainable recovery. I bought knowing I could see further declines. However, I also no longer underestimate the power and will of the US Gov to change the situation from an ongoing crash to years of sideways movement. Nor do I read Zero Hedge and the other uberbear blogs assuming they know the "real" situation. ZH would have made me broke had I followed their advice this year. That's not smart money.</blockquote>
You do not read ZH, yet you know that if you followed their advice this year, you would be broke.

What advice exactly has ZH given? I read ZH and I do not remember ever reading any advice.

And I am not broke.</blockquote>


My sentence was worded funny: I do read Zero Hedge. They give "warnings" and tell you to stay out of the fake market. It's not bad advice but losing advice for the past six months. I used to read ZH and Denninger thinking, "yeah, that's right!!". Now, I realize they, just like anyone else, cannot accurately predict the future. In fact, they are negatively biased just like some media is positively biased.



I'm just saying you can be blinded by negatively just like you can be blinded by positivity.</blockquote>


It is true that one can be blinded negatively, but just because one thinks the market will trend further down does not make one negative nor does it signify that one is blinded negatively. In this case it signifies that a few folks have taken all available data into consideration and understand that the fundamental factors that created the down trend in housing prices have not changed in a manner that would make prices appreciate in any significant manner, and in reality have gotten worse by government and Federal Reserve interventions in propping up a market which needs to deflate in order to become affordable. Giving heroin to a heroin addict relieves the symptoms temporarily, but does not cure the addiction and the longer the inevitable is kicked down the road, the worse will be the cure.
 
[quote author="RoLar_USC" date=1256952952][quote author="graphrix" date=1256890730]Volume is there? WTF are you people smoking over there at NAR? Please, I wanna know so I don't become so... (must be nice)... naive. Sales volume is still 30%-40% <strong>BELOW HISTORICAL AVERAGES</strong>. Duh volume is up, it is up from record low volume not seen since the 80s. The problem is... it is still below average, meaning it is not up, it is still below <strong>NORMAL</strong>. Woo hoo sales are up from the last three most dismal years of home sales probably since the depression when adjusted for housing stock/population growth. People who say and/or believe sales are up are really bad at math and probably buy lottery tickets.</blockquote>


Please post sources for your numbers. From first hand data, over the past 2 months I'm seeing about a 20% decrease from 2005 sales volume. Not to mention, if todays sales numbers were the same as the 2002-2005 levels, you would expect prices to follow a similar pattern. I'm not arguing for substantial price increases, as always, I've been saying stability and slight price increases for the low AND MID-level price ranges. Yes, I think the recovery has moved onto medium priced housing. It's hard to check your "superior" math, when you don't provide support.</blockquote>


Getting your data from fantasyland doesn't count. From DataQuick:



September sales in OC:



02: 3848

03: 4976

04: 3585

05: 4072

06: 2664

07: 1643 (All time low not seen since the depression when adjusted for housing stock/population growth)

08: 2667

09: 2828



It looks like sales are off from 2005 by 31%, not 20%. The sales numbers are no where near 02-05 numbers, they are more closely following 06 and 08 numbers, and what happened to prices in those years and after? Stabilization my a$$, anyone who has studied the market in depth and knows what a dead cat bounce is, knows a dead cat bounce when they see it.



BTW, we all called a dead cat bounce in prices. Did you forget that? We were wrong that there isn't more inventory from foreclosures... wow... big freakin deal. It just makes the dead cat bounce worse when it falls. You must feel really special for being right for a whole six months, is your mother proud?
 
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