Hot Air
In this piece in today's WSJ about the rapidly cooling housing market, David Lereah, chief economist for the National Association of Realtors, said "The air is coming out of the balloons."
Let's recall an excerpt from this WaPo article slightly over six months ago:
Let's recall an excerpt from this WaPo article slightly over six months ago:
"There is no national housing bubble," said Lereah, chief economist for the National Association of Realtors and author of the recent book, "Are You Missing the Real Estate Boom?"So the "air is coming out of the balloons" now, eh David? When did those balloons inflate in the first place?
"Any talk about the housing market crashing is ludicrous," he said.
Lereah said the national real estate market is an amalgam of local real estate markets and that for a local bubble to burst, there would have to be "rising housing inventories, double-digit price appreciation for several years consecutively and then a local negative economic effect, like big job losses. Right now, most local areas have a lean supply of homes. And the Washington area is creating tens of thousands of jobs rather than losing any."
posted by The Cunning Realist at Tuesday, November 15, 2005
48 Comments:
I think that the 'real estate bubble' concept is just a media invention. RE speculation has been around for a long time and it still comes down to location, location, location. If you have a property on the coast there's no such thing as a bubble. What a bunch of cheesey financial sheep we are!
I can definitely see the cooling here in DC. The WaPo had an article his past weekend that confirmed what I felt. Last April a house 2 doors down sold in 3 days for $521K. The house next door (same size, same design, same developer) sat on the market for over a month and just sold for $514 (they had it originally listed at $529).
Of course the business section of today's WaPo had a story about how people earning the median income could not afford an average priced house in the district and would even have trouble finding a place to rent due to shortages in stock and prices.
I've been seeing this cooling in Fairfax Co., VA for a few months. A house down the street had the for sale sign up for about 2 months until it finally sold. Last year the same house would have sold in a day.
I don't believe you can find accurate sound information in the WSJ, or any financial journal; so the flip-flopping doesn't surprise. They have to sell, they have strong biases, and they do and whatever. Truth is hard to come by these days anywhere; and its never been more important - buyer or reader beware. The WSJ Opinion Journal on PBS is awful.
Just recently I picked up a journal from AAII and on its front cover (suppose to be a rational well-rounded financial journal for those not in the financial field), "How to evaluate an IPO". That's their sound financial advice. Ho hum. This is the norm though on mainstream financial publications. And the infomercials about investing are plentiful. Money is scrambling to find places. Nope I don't see an end to the housing bubble. Lots of new development and mortgage products. I purchased a book in 2003 about the "coming housing crash" and I believe it to be one of many junk book like "DOW 36,000". The money is out there, and they can still get it really easily. Too many are very accustom to living on lg amts of debt, for long periods, and believe the housing market never ever goes down. Look even the Trumpter got a raise to $1.5M to promote real estate investment at a wealth expo in 3 different cities and 10's of thousands showed up. Where compensation goes, so will real estate. The big problem now is the wealth gap. If you pay $1M for a house today, who will buy it tomorrow - seniors, Walmart employees? But even a fixer upper doesn't come cheap these days, and you have to add in there the price of materials and labor for a new roof, furnace/air, paint, flooring, water heater...
Kinda like the dot com bubble will never burst.... oh crap
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