‘If You Can’t Price It To Sell, You Won’t Be Able To Do It’
A busy week means a long desk clearing post for this blogger. “The median price of a home on Maui dropped to $690,000 in April, $35,000 less than in March, according to the latest report from the Realtors Association of Maui. Also declining were the number of homes sold, 68 in April compared to 107 in March and 116 in April 2005.”
“Hawai’i’s housing market continued to show signs of cooling in April, with sales of previously owned homes falling by half in two Neighbor Island markets. Prices on Maui, Kaua’i and the Big Island were below records set last year and earlier this year, providing further evidence Hawai’i’s housing boom is slowing.”
“The largest decline in sales volume occurred on the Big Island where 59 condos were sold last month, a 54 percent drop from 128 a year earlier. Big Island single-family home sales declined 30 percent. The median price for Big Island single-family homes sold in April was $439,900. That was down from $449,900 in March.”
“It’s not easy to sell a house, and now there’s more tough news for sellers. The buyers’ market that started in the Midwest is now moving into cities where housing used to be hot. The glut of houses for sale in Cleveland is now a glut of houses nationwide. Agent Tim Bradford said sellers are dropping prices. ‘Probably because they’ve bought, they need to sell. They’ve already moved into other properties, and they have to get out of the house, so they have to do what they have to do, which is the adjustment of the price,’ said Bradford.”
“That’s nothing new in Cleveland. The area has been in a buyers’ market for well more than a year, and inventories right now are up almost 25 percent. That’s why realtors say if you don’t have to sell your house, don’t, hold onto it until the market levels off.”
“‘If you can’t price it to sell, you won’t be able to do it. There is too much inventory,’ said Bradford. This is something Clevelanders already know, and something sellers in hot housing cities are now learning.”
“There is a risk of a decline in prices in Northwest Arkansas in the next year or two, said Augustine Faucher, director of macroeconomics at Moody’s. ‘The concern is that [the area ] may be overbuilt,’ Faucher said. There has been a 47 percent increase in supply of homes in Northwest Arkansas in the past year, with many completed but vacant homes on the market.”
“Phil Johnson left Pittsburgh to work in Anne Arundel’s red-hot real estate market six months ago. So far, though, it has proved harder than just printing up some business cards and waiting for the phone to ring. ‘It’s a service industry. It takes a lot of hard work and dedication,’ said Mr. Johnson, a real estate agent win Severna Park.”
“And perhaps a little help from sellers who have flooded the market with more homes, and still think they can demand any price. The tide has turned: It’s a buyer’s market.”
“Milwaukee-area streets sported twice as many ‘for sale’ house signs last month as ’sold’ signs, Metro MLS reported Thursday. April produced 3,565 new listings in the four-county area, 15% more than a year earlier, as existing-home sales slid 8.5% to 1,708. So far this year, 13,094 properties have poured onto the market, 25% more than a year ago and a whopping 49% more than two years ago.”
From the UK. “Mervyn King warned on Wednesday that spiralling levels of personal debt are now ‘a potentially large social problem.’ Louise Brittan, head of insolvency at Baker Tilly, said that becoming bankrupt had become ‘a bit of a joke, frankly’ for people.”
“‘People think it’s OK not to pay off their debts,’ she said. ‘This is only going to get worse. What we have here is a cultural change.’”
“The number of single family homes and condominium-townhouses on the market in Broward County in April surged. The Realtor Association of Greater Fort Lauderdale said 8,838 single-family homes were available in April, more than triple the 2,327 homes on the market for the same month the year before.’
“April condo-townhouse inventory, at 11,490, was more than quadruple the 2,492 units available in April 2005. Single-family home sales were at 746 in April, down 1,093 homes for the same month the year before. April also saw 923 condo-townhouses sold, down 30 percent from 1,321 units for the same month the year before.”
“RAGFL President Dori Longhini said the market is changing in favor of buyers.”
“Rising interest rates, higher home prices and picky buyers cooled the Twin Cities housing market in April. The number of home sales fell sharply last month, while the inventory of metro-area homes for sale has never been higher. ‘We have a lot of inventory to choose from, low interest rates and a lot of financing options,’ said June Weiner, president of the St. Paul Area Association of Realtors. ‘Buyers are not knocking down our doors, which surprises me.’”
A very busy week for this early in the month. It’s hard to see how the national numbers could be up with so many local reports being down. My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics!
I know that zillow.com has some, shall we say, “issues” but I think the following is interesting nonetheless. Enter an address, click for more information, and you can get a graph showing the property’s price trend. You can also select ZIP, state, or US as a comparison. Select the US. According to zillow’s figures, prices (I presume these are quality adjusted prices, they don’t quite say) in the US peaked in Nov. 2005 and have been headed slowly down ever since. Wonder what OFHEO will say in 3 weeks?
Funny that in all the media reports on zillow, I’ve never seen this noted.
I find the data interesting on Zillow also .The U.S. chart seem to be going flatline and seems to want to edge downward . I am waiting for Zillow to update for April 2006 because I haven’t seen that yet for the areas I check .
Great work, Ben. Thanks from all of us.
This bubble stuff really seems to be gaining momentum now. I think that prospective buyers are beginning to understand.
Thanks so much for doing all this Ben. Been so lonely the last couple of years as the prices escalated and I felt like the only one saying it was unsustainable. Am glad to know all the crazy people who believe in living below their means, saving for a raining day, not rushing to buy junk just because everyone else is, and waiting until the fundamentals are acceptable before “investing” have a place to go. Again, thanks!
yes!!!
Too bad our saved dollars are evaporating. Well, atleast mine are.
Hang in there. The collapsing real estate (read: credit) bubble will be a hugely disinflationary event.
I would say deflationary.
Eventually, yes.
Warren Buffett couldn’t have said it better himself.
April condo-townhouse inventory, at 11,490, was more than quadruple the 2,492 units available in April 2005. Single-family home sales were at 746 in April, down 1,093 homes for the same month the year before. April also saw 923 condo-townhouses sold, down 30 percent from 1,321 units for the same month the year before.”
______________________________________
Thats a balanced 12 months worth of inventory
This was a good week. Alot of the predictions from a year ago on this blog are really consistenly coming to fruition….Thanks to Ben and all on this blog for your insights.
Vic (Bubble Butt)
Oh, BYW:
If anyone is interested in the Orange County CA April numbers, here is the link. Avg completed sale volume down 25%
http://www.ocregister.com/ocregister/money/atoz/article_1132671.php
I thought Hawaii was as bubbly as anywhere else?
Why is it that the median on the big island is nearly $100K less than CA median?
It’s stats like this that really show the magnitude with which the CA median has risen so high, so fast. (And, maybe why that median cannot sustain)
consider:
~1000x more land is available in CA than HI.
~2-3x more traffic in CA than HI.
~100x worse air quality in CA than HI.
- granted, there is more business opportunity in CA.
~on average, better and more mild weather in HI.
~better beaches/”lifestyle” living in HI.
and yet, you still pay more for the identical home in CA.
For one thing, I heard that real estate in Hawaii does not come with the land. Someone correct me if I am wrong, but don’t you get a 99-year lease on the land, or something to that effect?
Some properties are leasehold, but most are fee simple and you own them like anywhere else.
yes, but buyers beware - you must understand what you are buying in HI!
Problem vs. Hawaii is jobs. CA has a higher per capita, more in the boom areas (SFO/SJC, San Diego).
And so that drives the price… Having moved to SF in ‘98 from Milwaukee, I thought prices were insane even though I was getting an insane wage from my company. Little did I know about wage/asset inflation at the time.
Damn!!!
As soon as a dream home hit a low # on the North Shore, I am there. No comparison - IMO. I love HI.
I lived in CA and I hated it. It is dirty, gross, overcrowded and quality of life is LOW (LA County).
There’s your problem. California is not LA. LA certainly is generally dirty, gross, overcrowded, etc. but neither is it representative.
I watched “It’s a Mad, Mad, Mad, Mad World” last night with the kids. I couldn’t get over how spacious and uncrowded So. Cal. looked back in 1963.
Isn’t that great? Da “Big Dubbuya” in RPV, the absolutely empty San Bernardino County, the farm towns, the sleepy beach towns. Here’s the inevitable website:
http://members.cox.net/mkpl4/mmmmw/thumb.htm
Thanks for the link!
Most houses on the big island are under 1000 sq ft. many are on leased land so the purchase price does not include the land
I was out to lunch with coworkers, they brought up RE on their own and generally agreed a slow down is occuring. However, they would only admit to things being “flat” for now.
They are in the denial stage….anger is next. Come September you’d better have armor on at the table. They’ll be lashing out at whoever is in the path.
BayQT~
Christopher Thornburg, senior economist video
Awsome lecture (I would have paid for it but its free!)
He talks extensively about RE bubble.
(Nothing new for this blog members, just validation)
http://video.google.com/videoplay?docid=-2640239019877885520
I watched this last night (was it you that posted it?) Terrific presentation by Chris. He’s a great speaker and his argument about the housing market was very persuasive. It runs about an hour, but I highly recommend it.
John in Va — the hour goes by quickly. Great video presentation. I’ve downloaded it for posterity and for sending to friends who are receptive — I also downloaded the Google video viewer because, from the video file extension, it looks like you have to use that viewer to play the video. Thanks for the link.
Sorry — thanks to Colorado Renter.
Great video but he has some major blind spots. First he subscribes to the plateau theory, thinking the price of housing is going flat until 2010. The hole in his plan is the fact the entire CA economy is being driven by RE right now - no RE sector means no jobs, which means massive foreclosures, which means massive inventory increases which means a massive plunge in prices. All the data was sitting in front of him but he refused to connect the dots.
An increase of 150% followed by a plateau is not a bubble; that’s simply called a rapid increase in price. Important distinction, I think.
He addressed this in the talk. A bubble doesn’t mean a bust, it simply means that there’s a serious disconnect between fundamentals and market reality. Furthermore, he made a good point that eventually the market price and actual price for housing must converge, and it can either be quick or it can be a 5-10 year phonomenon.
I think it all depends on employment. He made a good point how historically real price declines and unemployment are correlated. He also made a good point at how California’s largest job sectors in the past half-decade have been construction, financing, and retail. I’m at a bit of a loss at how he doesn’t then predict increasing unemployment (and, hence, real price declines in real estate in a much shorter time span).
In any event, he noted that real prices in an RE slowdown usually don’t appear until a year after the increase in inventory/decrease in sales volume. By that logic, we should start seeing real, non-trivial declines in house prices by Nov. 2006 or there abouts.
Yeah he addressed in a most orwellian way. A bubble doesn’t burst my ass. So we’re all just going to sit tight and wait 10 years for inflation to make housing affordable again? If he hasn’t noticed there are no wage pressures at all. Rising inflation is a NEGATIVE, people can’t afford higher priced houses because there has been ZERO income growth. Besides, I think he is just playing nice. He knows it’s going to tank.
Yeah, I was scratching my head at that conclusion, too. He really didn’t support it — it seemed kind of gratuitous. The only situation in which I could see a plateau forming is if sales volume dropped and inventory remained level or declined. That would mean that neither buyers nor sellers were interested in conducting transactions. However, with rising inventory and falling volume, we have a classic supply/demand disequilibrium scenario. Sellers want to sell at the inflated price but buyers don’t want to buy, so a surplus develops (price P’ sits above the market-clearing price P at the intersection of the supply & demand intersection). Eventually prices must fall for the surplus to clear the market. In fact, Chris’ graph of what happened in So CA in the early 1990’s showed a huge price correction. He didn’t explain why this time will be different — if anything, you’d expect it to be worse, given the extent of exotic-loan use.
I believe that what’s happening is this: many sellers are relatively recent buyers who can’t afford to drop their asking price below a certain point - they simply don’t have the cash to make up the difference at closing. So they’re stuck. They’ll hold out for as long as they can, bleeding cash each month and praying for a miracle. When they’re broke or simply decide to sacrifice their credit rating to save what cash they have left and bail out, they’ll capitulate and the lienholder will take over. They’ll sell it at a loss to get it off the books and that’s when we’ll really see a downward price trajectory.
oops - at the intersection of the supply & demand intersection should have read at the intersection of the supply & demand curves
John that’s my thinking. I’m guessing I could hang on to a house for 6+ months by begging, borrowing, or stealing, before they eventually kicked me out. I’m thinking Xmas 06 will be the time when reality slaps a lot of faces.
A lot less toys under the tree this year.
I came away with the same conclusion. He said two things would bear on the prices going forward: employment and liquidity. Others have pointed out the employment data, if the growth in employment is being driven by construction, financing and household related retail what sustains the growth to support the increased debt burden going forward?
The second prong is the more troubling aspect. While there may not be an exact repeat of the S&L crisis where liquidity is writhdrawn, he warned that you won’t get burned if you don’t go beyond your means. Hasn’t enough of the herd done this to signal a real problem? It seems like a significant portion of the population has relied on price appreciation to bail them out, with the huge amount of mortgages reseting, interest-only, neg amort loans…good grief. Great presentation and well worth the hour, but got to wonder if he’s simply hedging his conclusion so as not to be dismissed as a Cassandra!
Also have to disagree with the “bury the head in the sand” coping strategy. People may stop looking at price de/appreciation levels, but they will certainly be barraged with information we simply have much more access to information as compared to the last real estate boom. Witness this blog, the streaming video presentation, and Zillow as some examples. The population is reacting quickly and decisively to pricing information of late. If you don’t believe me, see the recent grousing over gas prices and the consequent, never-seen-before plunge in consumer confidence that was released today.
This will surely play out slower than some of on this blog have come to expect, but I don’t think prices will be the same in real terms in 2011. Not by a long shot.
My wife and I also viewed this hour-long video. Brilliant, and we also think Prop. 13 is a great thing. Great perspective - thanks for the link! Recommended viewing, and I don’t think he’ll be slammed as much by this blog in the future.
Watched the video - it’s very interesting and informative. Definitely worth the hour.
I think Dr. Thornburg has posted here before (or someone has stolen someone’s anecdote). He said in that talk that he was at a West Hollywood restaurant and overheard three actors talking…. I could have sworn I read the exact same anecdot on this blog in the past.
Thanks everyone who thanked me for posting the link. You are welcome! Glad to contribute something that fellow bloggers enjoyed.
Credit goes to another formus (which is not housing related) where I picked it up.
Dr. Thornburg presents a nice powerpoint summary (and data to back it up) of all of us saying on this blog for last 2 years or so.
Where some of us differ with him is the extent to which bubble unravels. Lot of us expect Texas in late 80’s style burst (10% drop per year over several years) given the extent of speculation, risky financing, ignorance and not to mention prpblems facing global and US economy. Also bigger the boom, bigger is the burst (and Thornburg agrees that this boom dwarfs anything we have seen in past 50/60 years)
He thinks it will be milder and prolonged correction.
Very few mainstream economists had predicted extent to which NASDAQ correction before it actually happened or even when we were 6 months into correction (although many prdicted the trend correctly).
I feel it may happen in this case too. They will always come up with good explanation after the fact !
thanks colorado_renter
i watched in full yesterday night. it is very funny, informative.
He covered all bases. though some of us would like him to say bust. he mentions it texas/japan. he says something like this has never happened and as a forecaster he looks at the past to see the pattern and predict the future.
he mentions that people accuse him of being incorrect three years in a row. both put together i think he is little shy of gloomy predictions.
most of that was covered in the video is covered here
http://www.edab.org/newsletter/Quarterly/EastBayQuarterlyForecastApril2006.pdf
“as a forecaster he looks at the past to see the pattern and predict the future”
Looking at the pattern in the past one can see that speculative bubbles ALWAYS end lower than their beginning point; so housing will drop. This also tells us that the bear market in equity stocks is not over, in fact it has a long way to go because this time isn’t different in the stock market, either.
Sounds like “Spring” has sprung a leak!
As for the Good Nat’l numbers versus weak local #’s…Keep in mind the locals match units for units versus prior period.
While the Fed’s have economists to “seasonally adjust and add or subtract by the birth / death rate”,,, this is great for what accountants call “Swag” what is your best guess & what number would you like it to be?
Ignore FED Govt. #’s they have made themselves irrelelvent and are built to perpetrate FRAUD on our little children and our grandmothers.
I was in Las Vegas for work all this week and I noticed 2 things.
1)I was staying at a new hotel on the south end of the strip and I was on the 15th floor. When I looked out of my window I could see so much empty land with nothing on it, it made my head spin, BLM or not there is no shortage of land on here.
2)Today at the airport and on the plane I spoke to several people. Of course the main topic was real estate ,but not how much it is going up but how much it will be going down, I was shocked, the tide is definately turning in public opinion.
Oh, also I was in Summerlin yesterday and they are building 2 huge condo buildings called Queens Ridge. I thought they would be starting at around 300-400K. I saw the sign and it said from 1.2 million, WHAT?-this is right next to the Sun Coast Casino, really luxurious surroundings,not! This building should be ready for occupancy right in time for the first wave of foreclosures, just sit back and watch the fire works people, just like the 4th of July.
How were the strip clubs? LOL.
insurance rates going up, up up in Florida.
http://news.yahoo.com/s/ap/20060512/ap_on_bi_ge/hurricane_insurance_3
That’s going to be the real nail in FL’s coffin–can’t close a RE transaction w/o insurance. And the morons who bought all of these “investment” condos around here aren’t going to be happy when their association fees triple b/c their insurer dropped their coverage and they had to resort to Citizen’s. And with regard to no longer writing policies on mobile homes–it seemed stupid to me to insure them in the first place–doesn’t anyone remember the Three Little Pigs?
This really is a perfect storm (no pun intended). Rising mortgage payment, rising gas payments, rising property taxes, and rising insurance. It’s hard to see how Florida RE prices can avoid a huge correction.
It’s true that unless something is priced right, it wont sell. In fact, even the average Jersey county is seeing inventory explode with unsold homes all over the place. Check this nasty graph out:
BubbleTrack.blogspot.com
Bubble-X — thank you for the link. That is exactly the post I’ve been waiting to read. True, it just reaffirms what I already believed, but it has decent statistics to back it up. My next home probably will be in Podunk — I was looking for evidence that Podunk is affected in basicvally the same way as bubble areas relative to prices and inventory. This is it.
That’s why realtors say if you don’t have to sell your house, don’t, hold onto it until the market levels off.
Don’t you love how Realtors have your best interests at heart? What they meant to say is, “Nobody’s buying anything because prospective buyers are shocked at the for sale signs springing up everywhere like dandelions, and that’s hurting my commissions. If you don’t mind, please refrain from listing your home until the bottom completely falls out and prices are 30% lower than they are today. Then feel free to go ahead and list your property. That will help me immensely.”
Right John in V.A…. I never thought I would see the day that realtors would ask people not to list their home so the market system could be tampered with to produce false lower supply .
How self-serving can these people get ? I can’t stand it .
We will ultimately have the last laugh - they are losing their monopoly grasp over this industry. Slowly, yes, but surely.
Many of these people are lazy slimebags. I personally would rather sell used cars.
I’d be the last person to defend realtors, but people on this blog have attributed cynical motivations to realtor recommendations both to sell now (so they can get their commissions) and not to sell now (so the commissions will be higher later). Most realtors are going to get flushed out of the system in the next year — and they are people, too, with families, mortgages, mouths to feed, etc. Of course their motivations are self-interested. But isn’t that true of us as well? I know mine are.
From the UK. “Mervyn King warned on Wednesday that spiralling levels of personal debt are now ‘a potentially large social problem.’ Louise Brittan, head of insolvency at Baker Tilly, said that becoming bankrupt had become ‘a bit of a joke, frankly’ for people.”
“‘People think it’s OK not to pay off their debts,’ she said. ‘This is only going to get worse. What we have here is a cultural change.’”
Last year’s badge of pride for US households: Buying an expensive home using a 100% financed, I/O option ARM.
Next year’s badge of pride ” “: Stiffing your creditors, and sharing the spoils of Uncle Sam’s bailout package for F-Bs (not sure what form that will take yet, but I am pretty sure that it will be taxpayer-funded).
cut that out, that bail-out talk! I won’t fund it; it’ll be bad enough bailing out the banks as we’ll have to do, but I won’t fund the F-Bs no way…I’ll join the ranks of the tax withholders, the from-my-cold-hands rhetoricians on that one
The UK blurb I found interesting vis a vis the new backruptcy laws in the US. Does anyone know what the relative hardship is for UK BKs? I know this blog has considered the new US bk laws, but I wasn’t around here when they were being proposed and signed into law. What was the reasoning and how might it relate to the claim about ‘cultural change’ in the UK? I think a lot of folks here in the US were also thinking it was no biggie to get one of them lawyers advertising on late-night and mid-day tellie, and just wait it out the 7 years or so. Did the advocates of the new bk laws here argue that this was disastrous, that it was messing with their bottom line, was it all under the radar and mostly done via lobbying groups?
I just don’t see a sudden change from the every-man-for-himself individualism and the ownership society sloganeering turning into bailout for all the little FBs. The effects a huge RE crash would have broadly on the economy should be so significant that it wouldn’t look like a specifically FB-directed bandaid anyhow I’d guess…
ARMs Control
That adjustable-rate mortgage seemed like such a great idea. Then interest rates started climbing.
“‘We have a lot of inventory to choose from, low interest rates and a lot of financing options,’ said June (Oscar Meyer) Weiner, president of the St. Paul Area Association of Realtors. ‘Buyers are not knocking down our doors, which surprises me.’”
Hey Weiner, real estate transactions were 200-300% above 25-year trends for the past few years in St. Paul. Ya think just mebbe folks have already bought?
Hey Weiner, didja know that the population of St. Paul has been slowly shrinking for the past few years, about 1% every 12 months? Ya think mebbe that will have an effect on RE sales?
“And perhaps a little help from sellers who have flooded the market with more homes, and still think they can demand any price. The tide has turned: It’s a buyer’s market.”
Old Realtor’s (TM) mantra: “Real estate prices always go up.”
New Realtor’s (TM) mantra: “It’s a buyer’s market.”
Smug bubble blog commentator’s pearl of wisdom: “It’s a renter’s market until prices finish bottoming out, and that will not happen until at least three years from now.”
It’s a “poison” market [skull and crossbones] …danger…stay away for your own good.
bk to be considered social problem, like drunks and bums
flippers will become a victim class and get tax bail money
1) I admit it, I watch Spongebob Squarepants. Or at least my daughter does, yeah that’s it. My daughter.
2) Anyway, the latest episode Spongebob’s rational friend Sandy saves him from a scam in which they are trying to get him to BUY A CONDO!
HAHAHA. Yes, the idea has entered public consciousness.
lol
plankton researched this…
Well the creator is from San Diego!!!
and went to school at Humboldt State.
check out their bearish RE sentiment.
http://www.humboldt.edu/~indexhum/projects/housing_summary.pdf
too funny!
maybe that will convince my husband it’s not time to buy….nah…
The Minn/St Paul realtor who’s surprised by the slowdown is a hoot. Isn’t that where they were burying St Joe’s statues last winter, praying for a sale?
Don’t they have a St. Patrick’s Purgatory in Ireland? We’ve got a St. Joseph’s Purgatory over here for FBs.
The St. Joe’s statue is a national trend.
‘We have a lot of inventory to choose from, low interest rates and a lot of financing options,’ said June Weiner, president of the St. Paul Area Association of Realtors. ‘Buyers are not knocking down our doors, which surprises me.’”
How shocking! Maybe price matters, after all?!
anyone has dreamed of relocating to sunny california,thousands of condo’s are being built in cosmopolitan oakland’s downtown…..whole city blocks of condo’s!!! in every construction phase from hole in the ground to nearly complete…near the greyhound station and major freeways!!! your dreams can come true!!! from the mid 400,000’s buy now!!!!
I can speak for the east SF Valley here in So. Cal., there are condo buildings going up everywhere, priced min. 400,000s. I don’t know how they are finding enough buyers, but I guess they wouldn’t be building them otherwise, right?
Oakland condos for everyone!
Someone mentioned the problem of the value of our long, patiently waiting dollars evaporating even as we wait for this bubble to burst. I bought some metals, based on this blog, but not nearly enough. Any suggestions, at this point, on what to do? RE is, of course, a hard asset, but it’s not exactly time to jump in on that one. Or is inflation so high that it’s worth the risk?
As long as you are in short term T-Bills you should be OK. The Fed will keep the rates well above perceived inflation. BB said his comfort zone for inflation is 1-2%. The lastest measure was 2%. 3-month T-Bills currently yield a bit under 5%. So you are making 3% by waiting.
Would work if the “perceived” inflation picture were more accurate. Seems like inflation is higher than that.
What is your evidence?
Price of gas, healthcare, going out to eat, gold, RE, etc. Not scientific, just seems like my $$ get me less.
gets
The reported CPI has been massaged into meaninglessness over the years. See http://www.gillespieresearch.com/cgi-bin/bgn/
I haven’t noticed healthcare go up, but I guess thats because the insurance company pays it. I go out to eat often and I haven’t noticed a change in prices. I have noticed gas go up. I buy my wife jewlery occasionaly, but I don’t have a feel for that price level. Real estate has actually gone down where I live. So have cars and computers. Toys for the kids. Furniture. And I giggle every time I go to Home Depot, things are so cheap. Also clothes are cheaper at least on-line.
Thanks, interesting link. All I know is, I see doctors and lawyers who can barely survive here in LA. Maybe it’s just LA, but it didn’t used to be that way.
Don’t speculate with your down payment.
Energy stocks
Actually, this is quite the problem. We used to have choice - diversifying across different kinds of investments so that if one went down the others might not be on the same cycle. But that has changed recently. See.
http://money.cnn.com/magazines/fortune/fortune_archive/2006/05/15/8376864/index.htm
It’s a real conundrum. I was in foreign funds and saw last week that they also move in tandem with US funds. So, what’s the point?
A nationwide drop in housing will deflate the money supply, just as the rise in housing prices inflated it. Once the housing bust gets seriously underway your saved dollars will strengthen, although not everything will drop in price or drop by the same amount. You can count on buying more RE and stocks with your money later, though, than you can now, so I think 3 month Treasuries are the way to go right now, too. We get ours through Treasury Direct; it is easy, and there are no fees.
When we sold our house 3 years ago and put the money into Treasuries the yield was just 1%. I didn’t even consider it income. But now with the yield approaching 5%, the nest-egg is actually covering half of our rent. It feels like a waste to consider parting with that stable in-flow of money. I deeply understand how higher interest rates reduce the value of other assets.
Gas hits $4 in West L.A. Ironically, the picture taken of the gas price sign at the station depicts a billboard Ad in the background with a picture of Donald Trump promoting a “Real Estate Wealth Expo” See the picture at the Cycle Santa Monica! blog. It is quite hilarious.
Los Angeles Friend In Deed