Housing Market Takes a Hit

Discussion in 'Economics' started by Mike805, Apr 19, 2005.

  1. #41     Apr 30, 2005
  2. jasonjm



    you gotta be kidding me?

    if that is what I had to buy I would move to tennessee or montana in .1 seconds
    #42     Apr 30, 2005
  3. jasonjm


    even better, if I owned a few of those and people were willing to buy, I would sell them in .001 seconds and move to somwhere else
    #43     Apr 30, 2005
  4. Did you even read what you had posted in that link?

    From the link: "Give it time....especially DHI's continued world record of 108 consecutive quarters of earnings increases. When this POS falls look out."

    Can anyone here not read what this guy had posted? Anyone here ever call a company that had 108 consecutive Q's of earnings increases a POS ?

    Buying based on fundamentals is the only viable method of investing and trading. Buffet, Templeton, Peter Lynch,etc. etc... You won't find charters up with the elite because chart reading is absolute bullshit. Chart reading is nothing more than a gimmick by salesman to sell software.

    And private companies are noble? LOL. You really have no clue about anything.
    Guess ya never heard of a 10Q; but squiggly lines can predict the future!
    #44     May 3, 2005
  5. I think this is the most revealing and illuminating post Convert has come up with to date about his personal investing style.

    Just keep reading those 10q's from Yahoo Finance and everything will work out for you! Damn those squiggly lines anyhow!
    #45     May 3, 2005
  6. Banjo


  7. Cutten


    #47     May 4, 2005
  8. U.S. housing starts rebound in April
    Building permits post biggest rise since December 2002

    Construction of new U.S. houses rose 11% in April to a seasonally adjusted 2.04 million annualized units.

    This follows a 17.6% drop in starts in March to 1.84 million units, which economists attributed to cold and wet weather.


    Wow, ya mean the weather really does affect the housing market?!
    #48     May 17, 2005
  9. Quote from Covertibility:
    "Buying based on fundamentals is the only viable method of investing and trading. Buffet, Templeton, Peter Lynch,etc. etc..."

    So I guess then it counts when Buffet takes real estate profits "off the table"? OWP


    Buffett finds parable in sale

    'Value' investor says his Laguna Beach home's high sales price is an example of real-estate risks.

    The Orange County Register

    A dilly of a bearish signal.

    Legendary investor Warren Buffett sold a Laguna Beach home, then cited the sale as an example of the nation's overheated real-estate markets.

    In February, the world's second-richest man sold a 51-year-old, two-bedroom, ocean-view house in Laguna's Emerald Bay neighborhood for $3.5 million.

    The result is signature Buffett. He bought this home practically at a market bottom in 1996 for $1.05 million, according to county records.

    Buffett, 74, still owns another nearby home in Laguna - one he bought for $150,000 in 1971. Buffett said 18 months ago this house was worth $4 million - but make that $5.2 million today, based on appreciation rates for O.C. homes.

    So why sell?

    Buffett, who resides in Nebraska, isn't short of cash. Forbes magazine estimates his net worth at $44 billion.

    This is a largely risk-averse guy who's had a great knack for so-called "value investing," Wall Street lingo for bargain shopping.

    Buffett's wisdom is dispensed every year at the annual meeting of the company he runs, Berkshire Hathaway of Omaha, Neb. At the most recent gathering on April 30, he discussed his home sale as part of an analysis of U.S. home prices.

    According to a partial transcript of the Berkshire meeting posted on CNN's Web site, Buffett told a crowd of 20,000 fans that, "certainly at the high end of the real-estate market in some areas, you've seen extraordinary movement.

    "People go crazy in economics periodically," he continued. "Residential housing has different behavioral characteristics, simply because people live there. But when you get prices increasing faster than the underlying costs, sometimes there can be pretty serious consequences."

    At the meeting, Buffett's longtime partner, Charlie Munger, even used the B-word - as in "bubble" - to size up risky markets "in places like parts of California and the suburbs of Washington, D.C."

    Buffett added a recap of his sale in Laguna Beach: "It was on about 2,000 square feet of land, maybe a twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60 million an acre."

    Broker Johnny Fotsch, who sold Buffett's home, doesn't share that worry-wart view. He sees continuing demand from around the globe for trophy O.C. seaside properties.

    "People are jumping to buy these homes," Fotsch said.

    Then there's Mohnish Pabrai, an Orange County money manager who has attended Buffett's annual soiree for eight straight years. To Pabrai, Buffett's $60 million acre figure was a brilliant way to describe the market's extreme sizzle.

    "That's a stunning statistic," he says. "By any measure, that's ridiculous."

    You can be sure Buffett doesn't know all the demographic particulars that are habitually cited to justify the high home prices here.

    Yet he's no real-estate novice. Berkshire owns stakes in everything from building supplies to manufactured housing to the nation's No. 2 real-estate brokerage that includes Irvine-based Prudential California Realty.

    Don't doubt Buffett's track record. Under his guidance, Berkshire deftly assembled an eclectic collection of successful businesses outside real estate from insurers to newspapers to See's Candies and Dairy Queen.

    A knack for bargains let Berkshire's book value surge at a 22 percent annual rate since Buffett took control in 1965, twice the overall stock market's gains.

    So who wouldn't want to hear more from Buffett on his Laguna home sale? Your trusty columnist dialed up Omaha and got a Buffett assistant to take my name and phone number. She said she'd pass on my interview request to Buffett.

    I'm still waiting for his call.

    A taxing situation

    Buffett's Laguna homes previously stirred different emotions, when Buffett signed on two years ago as an economic adviser to Arnold Schwarzenegger's blossoming campaign to become California governor.

    The Wall Street Journal interviewed Buffett at the time and reported Buffett questioning the logic behind his long-held Laguna home having a far smaller property-tax bills than his less valuable residence in Nebraska. Those comments suggested Buffett thought California's budget problem might be eased by raising property taxes.

    This notion didn't go over well, especially since Schwarzenegger's camp was running an anti-tax campaign.

    Buffett insists the Journal took his thoughts out of context. In a letter to the newspaper, Buffett said he was questioning the fairness of the state's property taxes.

    He noted huge variances in tax bills for his two Laguna homes, bought a quarter century apart. Buffett's first O.C. home drew a $2,200 tax bill for 2003. Tax on the other one, just sold, was $12,002. (Tax on his $500,000 Omaha home? $14,401!)

    "Wildly capricious," is how Buffett described California taxation that's based on price paid at acquisition, not on current valuations.

    Buffett's 100 percent correct on this.

    Chilly outlook

    Buffett strikes out once in a rare while.

    He supported John Kerry for president.

    And Berkshire reported $384 million in investment losses in its most recent quarter, largely from a wrong-way bet on the U.S. dollar. Despite those missteps, Berkshire made $1.36 billion.

    Comparatively sluggish profits hurt the stock. The S&P 500 index's gains beat Berkshire's performance the past two years, the first such losing streak for Buffett in his four decades with the company.

    Also, insurance industry scandals touched a Berkshire unit. General Re last week acknowledged that regulators might sue one executive for undisclosed transgressions.

    While that targeted executive is seemingly far from Buffett's circles, it's still a blow to Buffett's otherwise pristine reputation.

    Add those up and you may presume Buffett's lost his touch.

    But recall 1999, when this pragmatist issued unpopular warnings about overvalued tech stocks. He uttered a great quip involving a Dairy Queen ice cream pop: "The Dilly Bar is more certain in 10 years than any software."

    Six years later, look at the Nasdaq stock index, heavy with computer and software shares. It must gain 25 percent to return to where it was the day Buffett put Dilly Bars on the investment map.

    This same guy was smart enough to buy a second Laguna house in 1996 when few folks wanted O.C. property.

    Buffett fan Pabrai is stunned that the value of his own Irvine home soared to maybe $2 million in recent years. So he agrees with Buffett's assessment that real estate is a risky game today.

    "The nature of all sorts of markets is to go through far more extreme gyrations than we think is the norm," Pabrai says.

    At least, Buffett didn't use a Dilly Bar analogy to question the sanity of O.C. home values.
    Copyright 2005 The Orange County Register
    #49     May 17, 2005
  10. Good article OWP.

    I just got out of two properties in Santa Barbara CA in the last 6 months and another one is currently in escrow. I made over 120% gain combined on the properties. I can only attribute this to luck and some good timing, I wasn't really expecting such a rise and by most accounts not many were.

    Buffet is right about this one. If you look at construction costs and then try to price in "60 million per acre" the numbers just don't make any sense here in coastal CA. I am in the market for a rental at this point because of simple economics in my area:

    Avg 3bdr/2ba home in decent area = 1.2mil
    Total expenses assuming 20% down loan : 7000/month (rough estimate).

    To rent an equivalent property = 4500.

    To me its a pretty simple cost/benefit scenario.

    #50     May 17, 2005