Monday, July 06, 2009

New Housing Chart to Ponder

I created this chart with newly released (30 June 09) Standard and Poor/Case Shiller housing data - selecting a few cities of interest. Problem is: I don't see a floor OR green shoots anywhere.

Vegas and San Fran have even fallen back to 2000/01 price levels - Gee, think I actually forecasted this... (link 1, link 2)

BTW: Anyone else catch which way the trend line is heading? How about a bottom - any bottom in sight?


Anonymous said...

In a way it's rather funny to recall that just a short time ago the "name" analysts were saying that the housing market would bottom xxx, or yyy.
Yet those dates kept getting extended.

I've read somewhere (can't remember exactly where) someone who experienced the Great Depression saying something to the effect "we thought prices for assets had hit bottom...yet they kept dropping".

Unemployment & wages... those are the key factors. If the median income if dropping then there is no way for housing to do otherwise. How far will it go? That depends on how high unemployment goes or wages fall.

So will the current administrations efforts turn things around. Well, is it possible to turn water into wine? Is there a perpetual motion machine? Can excessive debt be cured by taking on even more debt?

Folks such as Paul Krugman call for a 2nd round of stimulus; I have to wonder what meds he is on?
Where would we get this money? We can barely find enough buyers now, much less unleashing another round of government excess to finance.

As many others have opined, I've got a feeling this will end badly.

Randy said...

Those Great Depression Quotes may have been read here:


Completely agree with you on Wages/unemployment, but also don't forget about rising interest rates - another housing price killer.

As the US budget gaps swell, foreigners will shy away from the dollar and/or demand a much higher yield for taking on the risk of holding our debt - mortgage rates are tied to the 10yr yield.

Yes, this will end badly.


BxCapricorn said...

A few years ago, I remember Robert Shiller discussing housing prices and saying that they would most likely go far below the 1999 levels, as they "over corrected". The interviewer did not like this idea at all, and as CNBC "journalists" often do, protested this claim during the interview. I'm personally glad to see the idea of real estate investment, as dead. Generationally dead. Buy a home, live there, enjoy it. It's like a car, and loses value over time.

45north said...

How about a bottom - any bottom in sight?
things are getting serious, Randy what do you think about California giving out IOUs? Here's an article

Las Vegas was featured in this photo-essay by the NY Times

The Echelon: I'd say this was science fiction but it's not. Great photography!

Bottom? feels like we're in free-fall.

God bless America!

Ishkabibble said...

A lot of people have been crossing their fingers, shouting that we're at bottom and watching to find out if they're right. People will continue to watch in fear until obvious signs abound... or until they are forced into action by personal circumstance.

There will be no bottom while the signs are abound. Though the public isn't ready to admit we're falling as far as we are, they know to worry. The problem is that they don't yet realize we can't have recovery without genuine output. They wait for the system to correct and yet they won't work to correct it.

Want employment? We'd have it if we were repaying debt instead of borrowing more.

Want international trade? There's international demand for all the food and necessities the US can produce.

Want foreigners to value the USD? Start redeeming those FRNs for something of worth.

Want recovery? Be realistic. It will not occur before the collapse. Until the US shifts from a net borrower to a nation of repayment, we're still heading down the slope... and that's one long slope.

Randy said...

45 North:

California IOU's: Would be laughable if it wasn't so damned serious - I fear social unrest could be near soon.

One issue left unmentioned: Is the Fed Gvt actually accepting these IOU's as payment for Social Security, Federal Taxes, etc. Additionally, what about employee retirement plans and health/life insurance?

Ishkabibble: Concur - true recovery is unrealistic until we shift from a borrowing nation to a creditor once again - but don't see that happening...

I firmly believe this global economic shift/transformation will lead to another global war.


Anonymous said...

Great to see you're back Randy. If you are still burnt then try to rest up longer because I have a feeling that this fall will be another replay of last year. I would rather see you well rested and prepared for when the next leg down starts. For the first time everyone will collectively start to realize that this Depression is not escapable and the Green Shoots Bernanke was describing is just another false promise. I don't think Obama and Biden would publicly admit that they underestimated the crisis if they thought things were going to get better. He is already campaigning for his next term so its very obvious to me that he knows 3 years from now, things are going to be much worse. I love it when I hear all these people say "no one saw this coming". Imagine what this country is going to look like 10 years from now. 20 years. 30 years after Obama's policies. We are still messed up from FRD's policies. Maybe we'll get lucky and the Earth will end in 2012 like the Mayans predicted. said...

Nice to see you back Randy. Missed your writing.


Randy said...

Thanks guys, it's good to be back

Anon 3:24 - agree, much more economic pain lies ahead