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  • From: Clansgian AT wmconnect.com
  • To: homestead AT lists.ibiblio.org
  • Subject: [Homestead] The Sound of One Bubble Bursting
  • Date: Tue, 15 Aug 2006 12:55:07 EDT

Like the Zen koan of 'one hand clapping' the main stream media have been
reporting housing data from basically only one source, the NAR. While you'll
not
find anything in the NAR reports that is out and out mendacity, they do put a
spin on things. For instance:

"The slowdown in the once-sizzling housing market is spreading, with 28
states and the District of Columbia reporting spring sales declines, led by
big
drops in former boom areas of Arizona, Florida and California.
-----------
The five biggest declines this spring compared to the April-June period of
2005 were Arizona, down 26.9 percent; Florida, down 26.7 percent; California,
down 25.3 percent; Virginia, down 23.9 percent, and Nevada, down 23.5
percent."

http://news.yahoo.com/s/ap/20060815/ap_on_bi_ge/home_sales

That's not so bad, eh? 28 states with declining sales. No bubble. Just
location, yeah, that's the ticket.

My 'one hand' comment comes from this. Note that the data compares
April-June with April-June a year ago. BUT if you compare July with January
of this
year, it's quite a different tale. Almost ALL markets are showing a decline
and
some are showing ruinous decines, although I don't know how much more ruinous
it has to get than Arizona's 26.9% decline.

When looking at the inevitable bursting of the bubble, I had allowed for
prices to level out and sales to decline as has happened in many real estate
cycles in the past. That's enough for major mayhem since most speculators
and
investors and those borrowing on their equity depend on ever increasing
prices
and ever increasing rates of sale. But similar six month data shows a great
number of areas where housing values are dropping. Not a great deal now, no
where more than 10% or so at present it seems. But that is changing.

Where am I getting all this? Blogs. See for example:

http://thehousingbubbleblog.com/
http://bubbletrack.blogspot.com/
http://calculatedrisk.blogspot.com/
http://housingpanic.blogspot.com/
http://bubblemeter.blogspot.com/
http://patrick.net/wp/

The first one in the list is the most serious treatment and the last one the
most entertaining and irreverend. Now, to be sure, take anything you read on
the internet with a small Siberian salt mine, and on blogs doubly so. But
with open comments, it isn't possible to say anything the figures don't back
up,
you'd be eaten alive by the readers.

The 'whistle past the graveyard' reporting by the NAR is shredded in the
blogs, although the NAR itself is beginning to admit something more momentous
than
a correction or 'soft landing' is taking place, and not just in a few areas,
it's everywhere.

Along with the cold figures and charts plotting trends, the bloggers are
highly entertaining calling Miami, San Diego, Washington, Phoenix and such
cities
as "Bubblopolis". The quotes from frustrated real estate agencies, while
pathetic, are none the less funny so long as you are by yourself in the night
and
no one can see you laughing, the likes of "I told my clients they have no
reason to complain. You've always said you dream was to downsize from a
$1,000,000 house to a $500,000 house. Now you are realizing that dream and
you won't
even have to go to the bother of moving!"

My favorite one comes from here:

http://thehousingbubbleblog.com/index.php?s=box+of+stupid

In explaining how *asking* prices can remain so high in some areas, the
comment was that the seller was hoping someone "'with a bucket of money and
a box
of stupid’ will show up to pay too much.”
































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