(From Yahoo Finance): "Recovery Invisible, Firms Write Off 2003 Sat 12:02pm ET - Reuters After two years of hoping in vain for a recovery, which many said was only six months away, companies are now writing off all of 2003 and focusing on 2004 for any improvements in their markets." All the tones are grouped in clusters... -pavement
Crap, that's the same thing I thought when I read that, just a few minutes ago. Maybe it's not true contrarian then. . .
IMHO: If the economists and CEO's can predict the future, there will be no recession in the world. Experts at at a conference on the U.S. housing market in LOS ANGELES think that the economic fundamentals is still 'OK'. http://cbs.marketwatch.com/news/story.asp?guid={C2CAB9EB-17F3-4850-B41A-7964180B7EBA}&siteid=mktw
no offense, but i dont think representatives for DataQuick, HomeGain and Fidelity Nat. Title Co. are unbaised. the other comments by the "sources" should have been followed by: "And what does that mean." the "rational buyers and sellers" heading almost made me pee my pants. the guy talks about the 25% YOY gain in san diego, but less than 1/10th of the sales were "flips" of homes purchased witin a year earlier. oh, that makes it okey! gee, does that mean 25% YOY price gains are sustainable as long as less than 10% of the sales are "flips." BTW, id guess the apt flips might be higher now than in 1989-1990, even considering that the huge drop in rates, rental rate increases and price increases have allowed folks to refi all their down payment out (25%) on last year's purchase and buy another one this year! and its even sweeter for people that already had apts before the recent runup! id suggest the signs of a bubble are in the psychology of the market, whatever that market may be, and not whether interest rates will be 6.5% or 6.0% at the end of 2003, whether 23% of folks buying wanted larger homes, etc. the signs of a bubble or mania are the same as in the stock market, or tulip market, ... one is a complete lack of fear. people are buying real estate with almost no fear, except the fear of missing out. does that sound familiar? that analyst can come up with any support for "why this time is different." like, consumer confidence is down, but people arent afraid to buy cars or homes. the cars being sold are function of no money down, no payments and price concessions. i dont want to own that paper! people are paying very high prices at a time of low unemployment, historically low interest rates (at least in most of our investing lifetimes)... whats the upside from there, and socal hasnt been hit be the recsession yet. the thing that eventually knocks the pegs out from under socal real estate will be something or the aggregate impact of somethings that cannot be pinpointed at this time. i suspect unemployment will increase as folks move to less expensive, more business friendly states. they did it in the early 1990's, of course now they cant afforf to move back! :eek: i suspect businesses will relocate in search of cheaper labor, lower taxes, less stringent environmental laws and cheaper facilities. eventually this may be out of necessary due to foreign competition.
I have no idea about the US housing market: Housing foreclosures are at multi-decade high. A friend of mine is moving from Toronto to New York City. He told me that the average rental price at Manhattan was 30% off compared to that of three years ago. Yet, month after month, the US government comes up with strong home sales data.
QQQBALL.... You beat me to the punch with a much more potent and informed(CA perspective?) response. I agree 100 % with the aspect of "it is different this time" attitude in the article. With a quote of "The market is really sweet right now," the top is near. Unfortunately, as with all things where the public is excitable, it could continue for 6 more weeks, months...???
inventory is very low and there are still plenty of buyers. just like the tech bubble, the market can/will remain over-bought for much longer than considered rational by many folks. the top will be plain after the fact, much as someone in Spring 1990 could conclude the the Summer of 1989 was probably the "top" last time. apt rents have really jumped and i think they are unlikely to go back to the levels just of just a few years ago. so values will declined due to a combination of multiplier compression, higher vacancies, more competitive rents, higher operating expenses and turnover costs, and of course - collection losses. unemployment in orange and san diego counties still remain below or near 4% (i think) and it feels alot like late-1989 when it looked like we had entirely escaped the national recession due to our "diversified economic base"... only to realize later that we were the last into the recession and certainly the last out. talking of a real estate top here in southern california is certainly contrarian, bordering on blasphemy... and similar to the tech bubble, when experienced investors warned of tops well before the eventual top and were laughed at unmercifully, the continued increase in r.e. values has made anyone recommending caution look like chicken little. i know im not buying at these priecs, im sitting on my hands and waiting, but the more money i see people making, the harder it is to keep still! im sure others have felt that way in the stock market just before buying into a top!
As I am sure you are aware, Buck Knives just threw in the towel and announced plans to move to Idaho. Reasons: cheaper land, cheaper labor, cheaper utilities, cheaper taxes, cheaper........ That is 500 or so jobs down the tubes, not insignificant for an area like east county.
Rental vs Commercial vs Residential follow their own market logic. Further, it is well known that real estate "bubbles" can be and often are very local. nitro