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Slim goes on a public forum and says he is an economist. If you admit that publically, in this year, then why are you surprised by the response?
I totally agree with what you say on statistics ("...lies, damn lies and statistics."-Mark Twain). How about:
"Figures lie and liars figure. The most common method used is known as Statistics"- Cliff Schwartz
and, of course, it is not a science:
"You can lay all of the economists in the world end-to-end, and they STILL will not reach a conclusion."
OR "...why can't (the Physics Deprtment) be more like the Mathematics Department, all they ever need is paper, pencils and wastepaper baskets. Or more like the Economics Dept., they don't even need the wastepaper baskets."-from a letter from the Budget Committee to the Physics Dept. denying their request for a particle accelerator.
Admitting that here, Slim, and you are playing to a rough audience.
Thank you for the enlightening discussion. One side thinks we're at the bottom, the otherside feels there is a 10% further decline.
Practically speaking, it would suggest we're near the bottom considering Las Vegas median prices have dropped greater than 60%. Keep up the good banter.
Next look at what PMI says: Lower Home Prices in Two Years? (http://www.pmi-us.com/video/david_berson_jul_09.html - broken link)
Educate me on what's wrong with blog | Mark Hanson Advisors analysis. Mark is a consultant for the mortgage companies.
In the Vegas area:
One out of 20 homes are in foreclosure.
69% of all homes owe more than they are worth.
22.6% off all home owners in Vegas are currently behind on their mortgage or in foreclosure.
NV unemployment is over 13% and is predicted to increase at least until spring.
I could point you to a dozen more sites that scrub the data saying that other forces are in play that will push Vegas homes lower.
In one of the above WSJ links. It says: "Mark Zandi, chief economist at Moody's Economy.com, predicts that average national home prices will bottom out in next year's third quarter, assuming that employment begins growing again in mid-2010. But prices in some metro areas still have a long way to fall, he believes. Prices in the second quarter of 2010 will be down about 30% from a year earlier in Miami, 27% in Orlando, Fla., 24% in Las Vegasand 23% in Phoenix, Moody's Economy.com forecasts."
I hope like heck that all areas go up in value (I own three homes) but the reality is, people are buying because the market is being manipulated (cheap rates, $8K credits causing "no money down again", and intentionally reduced supply. In reality, the rate of pending foreclosures are increasing even though the posted inventory is being reduced.
Since betting is legal in Vegas, Olecapt, do you care to make a real bet that prices will drop in Vegas at least 10% more a year from now???
So instead of pointing to the last three months of homes sales (which IS positive), address these other concerns and I will consider you balanced. I don't hear many people in your position (a Realtor) discuss all of the factors in play.I wonder why.....
So how could we structure a real bet so that it's legal?? I'm saying Vegas drops a good 10% in a year.
Take your pick a $100 or $1000. For $100 I will put up cash. For one thousand an IOU. Ain't gonna tie up a grand for a year on a silly bet even if it is a sure thng.
And it is not really a sure thing...but I would think more than 80% probability.
Most of these modeling things have little connection to reality. Had an old boss who was covinced that our process could be satisfactorily modeled and save us millions and millions in development costs. So the models were developed at great cost with huge amounts of data collected and reduced. Finally got to the point where we had models that were perfectly in tune with almost all past history.
Only problem was they did not work worth a damn to project the next outcome. These complex multi variable models tend to work that way and ours claimed to have some first principle physics in them. Great looking back just awful looking forward.
Las Vegas is local. We have had high unemployment for a while now. We continue on. We have had houses foreclosed out the giggy...we continue on. I don't see anything changing our outlook in a big bad way anytime soon. Might even be some good news though to speculative to project anything yet.
No I don't think we will get whacked strongly by alternate A and options. The really toxic option stuff was rare here.
No I don't see anything changing on the foreclosure front..gonna run along at about its present rate for at least 2010 maybe longer.
Basically it appears that both REOs and shorts are stable. In fact the most interesting thing is the classic (Classic is the new buzz word for not REO and not Short). That appears coming down toward short and REO though it has a long way to go. Note that there are also likely quality defferences between the populations which may mean they never conincide.
Just remember that Las Vegas and a few other places went down vastly worse than anywhere else. That having happened why would we presume they will recover in the same way? That is of course two edged...but the local stuff does indicate a bottom. Still not enough of an up though to think we are exiting that bottom.
I think trouble remains until we begin to see some improvements in the visitor and revenue statistics. We may well sit in this bottom until that happens. But City Center brings some buzz and perhaps some visitors.
Hang on...spring comes eventually...both literally and figuratively.
Mark Hanson's blog is a very informative one but its on national data not LV or NV. Same thing with a lot of other sites.
RealtyTrac's foreclosure stats are relied heavily (ie 1 in 20) but it doesn't track the stats to sales nor does it breakdown what kind of foreclosures these are.
Statistically, LV's home sales are very much higher than in previous years (34.4k sold for 9 months this yr compared to 28.6k in 2008, 18.5k in 2007 and 30k in 2006). More importantly, the bulk of 2008/09 sales are mostly foreclosures which mean a sizeable chunk of homes have already been foreclosed and resold.
Housing inventories are already very low and if banks could foreclose, they'd already done so to catch the $8k wave. Even if those who are already unemployed are still managing to hold on to their homes, the shadow inventory may not be as large as some imagine. RealtyTrac's 40k foreclosure filings may seem like a lot but even if everyone of them forecloses (which is unlikely), that's the equivalent to ~1 year's inventory.
It's not that bad cos its been already bad for some time now. The consolation is that the massive wave of existing foreclosures to date has been cleared by falling prices and continued property interest from homebuyers.
Do prices really have to drop 10% to attract more buyers? Anyone who's been trying to buy a home in LV would think otherwise esp with the crazy multiple offers for each unit. I've noted that sales prices are closing above listing prices.
October GLVAR data will be interesting to watch. It looks like its going to buck the trend and post larger numbers with again another price creep.
The insanity is that we continue to ride through a stretch of record or near record demand with stable or falllng price. We have an insatiable demand and still prices hold. If you want to find the weird in this sceanario figure out how prices can be held stable in the face of such demand. It appears as if price, as a limiting mechanism, has been removed...maybe that is what is happening.
October is up or the same. Which is quite incompatible with normal seasonal trends. We normally drop from September to a low in December/January...does not look like it is going to happen this year. It looks like price is roughly stable. Again hard to believe.
People buy off of sense of urgency. Price a home at below market, give them $8K of free money with fiddle with the interest rates and people will be bidding. That sense of urgency merely pulls in buyers from future months (think cash for clunkers). With the clunker's program, it was a sellers market and they were not dealing in the end (spanning even MORE people trying to get in that deal). For a while anyways. If your prediction is true that 10% less REALLY won't spur demand because it is so strong right now) then why is NAR all worried about extending it???
I'll price a $1M home for $100K. How many offers will I get?? So what. It will also sell above asking.
Think deeper. With nearly 70% of the people upside down on their homes in Vegas (THE #1 predictor of defaults) and 22% of the people behind at least 1 month, and unemployment going beyond 13%, I'm going with the predictions of Zandi, Berson, and others. Others will stare at sense of urgency sales as "proof" we bottomed without ever addressing those $300K+ homes in the coming waves.
How solid of a market is this without further downward pressures considering NAR is worried about the end of the $8K 1st time buyers credit ends.
It will be down 10% in a year (below April pricing) when the sense of urgency is gone. Rates will be a percent higher, the free money will be gone, and the "payments" will be less affordable so homes will slow by a lot. You heard it hear 1st.
I am sure there is some pressure for the credit...but I doubt it is the big driver...below the median it is running 2:1 conventional and cash versus FHA. That indicates a market with a very large investor population...they don't get the credit. Also shows how weird this market is. That below median is normally very high in FHA and first time buyers. Not now.
Note again that Las Vegas is likely not following the national triend. There are very, very few places in most of the country selling below replacement costs.
70% of what is upside down? 22% of who is a month behind? These numbers don't mean anything unless precisely defined. I do not believe 70% of Las Vegas homes are upside down. Cite a source for such numbers. Include the details...how measured, when, how estimated etc.
Slim goes on a public forum and says he is an economist. If you admit that publically, in this year, then why are you surprised by the response?
I totally agree with what you say on statistics ("...lies, damn lies and statistics."-Mark Twain). How about:
"Figures lie and liars figure. The most common method used is known as Statistics"- Cliff Schwartz
and, of course, it is not a science:
"You can lay all of the economists in the world end-to-end, and they STILL will not reach a conclusion."
OR "...why can't (the Physics Deprtment) be more like the Mathematics Department, all they ever need is paper, pencils and wastepaper baskets. Or more like the Economics Dept., they don't even need the wastepaper baskets."-from a letter from the Budget Committee to the Physics Dept. denying their request for a particle accelerator.
Admitting that here, Slim, and you are playing to a rough audience.
Shall I make the popcorn for this thread, again.?
Rough audience's fine and everyone's entitled to their opinions. I won't hide my background and that's only by training. My day job's different and entirely unrelated to real estate.
What smacks me is when someone cites and supports one economic analysis claiming a 10% drop then claim that all economists are untrustworthy. Isn't that contradictory?
My opinions are generally consistent with olecapt's posted observations / opinions.
To olecapt: The demand's there but price hasn't gone up cos the excess supply's still clearing. Price's will have to go up eventually if the unsold MLS inventory keeps going down. Either that or more inventory will come online to keep sales prices trading within a narrow band.
I agree in part with views that demand will go down as FTHBs would already have bought if they wanted the $8k but I don't see sufficient data to suggest this will have a significant downward pressure on prices, going forward.
I would point out that the selling price of REOs has been over 104% of list for the last two months or so. And yet the list price has remained almost constant.
RE markets don't do that. The list moves up until the achieved is a couple of percent below the list. Try to talk even a sophisticated buyer into making an offer well over list.
The big REO guys agree it is a problem but blame it on the appraisers...that the appraisers continue to assert unwarranted downward pressure on price. I don't believe that as a full story as the intial price set is generally done by a Broker's Price Opinon made by some RE Agent...generally one engaged heavily in REO transactions.
In general in RE sub one month inventories raise price and ofthen enthusiastically. Not in this market.
Actually, it can only go on as long as China keeps buying the money being printed. If they stop buying, we're all in trouble.
I read an interesting article somewhere (maybe "The Economist") which basically stated that China has no choice but to continue to buy up US debt, otherwise the debt they already own would become worthless. That's a gross simplification, but it captures the basic premise.
To be clear, I certainly don't want the housing market to crash any further.. Falling home values has associated collateral damage. In my line of business, a certain level is tied to housing sales. I also have three homes. I'd like those three to go up in value.
To Slim10. In actuality, some economist are calling for an even greater drop. As I stated, Mark Zandi Chief Economist of Moody's predicts Vegas will be down 24% by Q2. I picked 10% drop in a year because it's lower risk for a bet. So about now, the only optimistic economist is Lawrence Yun of NAR. Go figure. The biggest optimists on any board usually have something to sell as they try to present themselves as balanced (being "balanced" IS part of the sell). I'm not referencing you.
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Re:
So about now, the only optimistic economist is Lawrence Yun of NAR. Go figure. The biggest optimists on any board usually have something to sell as they try to present themselves as balanced (being "balanced" IS part of the sell). I'm not referencing you.
