[$tinkle]

I'm calling it now.

This qtr and 1st Q'08, gonna be a slide.

except for this:
http://www.investopedia.com/terms/j/januaryeffect.asp

i have 1 long pattern & 1 short pattern, both of which have held over a decade:
- (long) buy in late october, sell in mid jan
- (short) buy late friday, sell mid tues

if you know nothing else...

 

[ire]

And the best they seem to be able to do is say with hindsight which quarter it started.

Of course, they can pour back over the numbers. I was watching bloomburg and they had an economist talking about the recession worries and she said the only reason we haven't been labeled as being in a recession is becuase the economy continues to expand the payroll.

 

[LordOpie]

Here's a perfect example of the average consumer trying to make the best decisions while grabbing a piece of the dream... the question is, what advice will he get from agents and brokers.

http://www.ridemonkey.com/forums/showthread.php?p=2782490&posted=1#post2782490

 

[Toshi]

Here's a perfect example of the average consumer trying to make the best decisions while grabbing a piece of the dream... the question is, what advice will he get from agents and brokers.

http://www.ridemonkey.com/forums/showthread.php?p=2782490&posted=1#post2782490

if you can't do math, you shouldn't be making decisions that are entirely based on arithmetic.

 

[LordOpie]

if you can't do math, you shouldn't be making decisions that are entirely based on arithmetic.

that's just dumb. Why bother posting that?

 

[binary visions]

Here's a perfect example of the average consumer trying to make the best decisions while grabbing a piece of the dream... the question is, what advice will he get from agents and brokers.

Yep, and here he is, doing research.

Perhaps people who are making the largest investment they'll ever make in their lives should ask advice from people who do not directly benefit from their choices.

 

[Toshi]

that's just dumb. Why bother posting that?

my point is that you don't have to invoke evil on the part of brokers: the numbers are out there for all to see as it is. if one did any amount of homework (google, wikipedia, RM's lounge as bv notes) then it's possible to decipher what the numbers mean.

 

[dante]

except for this:
http://www.investopedia.com/terms/j/januaryeffect.asp

i have 1 long pattern & 1 short pattern, both of which have held over a decade:
- (long) buy in late october, sell in mid jan
- (short) buy late friday, sell mid tues

if you know nothing else...

I really, really hope you didn't follow your (long) strategy this year...

(and market's down another 220pts today...)

edited for updating numbers...

 

[dante]

As to the original topic, my feeling is that house prices have far, far, FAR exceeded people's ability to pay them. Housing prices doubled over the last 7 years, but average buying power for us households fell. wages barely kept up with inflation, energy prices have skyrocketed, and food prices have increased as well. This housing market would've run out of steam a long time ago (and been a much softer correction) without the multitude of exotic mortgages (interest only, ARMs, option ARMs, balloon mortgages, 40 year fixed, etc) that enticed people to buy more than they could afford.

Basically, it all came down to speculative buying, and speculative lending. Speculative buying with the idea that the prices would always keep going up (hmmm, dot com bubble?), and therefore option ARMs, Interest Only, etc mortgages made sense, and speculative lending in that the person with 2.5% as a down payment, a sub-prime credit rading and no ability to very his income could walk out with a $600,000 loan. The whole thing was a house of cards, a trillion dollar Ponzi scheme. It only worked as long as there were new people coming into the market willing to do whatever it took to get a piece of the action (hmmm, dot com again?).

As for who's fault it is, I think it's a combination of predatory lending, ignorant buyers and a government that looked the other way while the "housing boom" propped up the economy and alleviated the 2001 recession.

I don't know what the solution is... from an economic stand point it's going to take a massive number of foreclosures, along with the plummeting house values, to get back to a point in which the average person can afford a house with a traditional 30y fixed loan. 3x annual salary is a reasonable amount to be able to afford. 7x annual salary is not. This will hurt, though, both homeowners (especially any who bought in the last 3-4 years) and the overall economy as so far it's been propped up by "The American Consumer" who has been willing to beg, borrow and steal (ok, mainly borrow) in order to afford that new flat screen, the 40k SUV, the 4000' mansion, etc.

The alternative is to prop up the housing market with cutting interest rates, federal bailouts, loan forgiveness, lower taxes for homeowners, etc. This will alleviate some of the pain of homeowners, but will also prop up the housing market at artificial levels, prohibit new buyers from entering the market, and make it a much longer, more painful period of time before the housing prices fall more in line with wages/salaries.

So what's going to happen? No clue. The *only* way new people could get into the housing market was through risky/exotic loans (even traditional saving wouldn't work b/c house prices were going up faster than savings). Now that those are not available anymore, sales have dried up and prices have fallen... a little. The government is trying to prop up those sales/prices by cutting interest rates and talk of bail-outs, assistance, but if that happens there's still no buyers that are willing/able to come into the picture and start buying.

Thoughts?