“Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

[nero3]

http://finance.yahoo.com/tech-ticker...Robert-Shiller

An interesting interview. It's certainly bullish that house prices in the US some places (like Boston) are going up. Here in Norway, they have been up now 6 months in a row. Our prices rose around 230, on the scale with median of 100, around the same as in the US. Maybe a new bubble in housing certainly could happen. Sort of like the seventies, where you had the early, and the late seventies bubble.

[santafe2]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

http://finance.yahoo.com/tech-ticker...Robert-Shiller

An interesting interview. It's certainly bullish that house prices in the US some places (like Boston) are going up. Here in Norway, they have been up now 6 months in a row. Our prices rose around 230, on the scale with median of 100, around the same as in the US. Maybe a new bubble in housing certainly could happen. Sort of like the seventies, where you had the early, and the late seventies bubble.

Here's another, more in-depth look at Shiller and his ideas from a CCN Money story from yesterday.

Shiller's professional ambitions are so big because his fears are even larger. He worries that decades of a get-rich-quick ethos have eroded the work ethic that has been a cornerstone of U.S. economic and social stability.

"A reasonable case could be made," he says, "that even though past depression scares have proven to be unwarranted, this time it might be different."

http://money.cnn.com/2009/07/06/real...ion=2009070711

[xyzzy]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

What he actually seemed to be saying was, "Anything could happen, another bubble is possible but it's more likely prices will go down over the next five years".

I'll repost this graph I posted in another thread, updated to the most recent figures. What you can see here is that U.S. housing prices always go up in the first half of the year, every single year, even during overall down years. Housing sales are highly seasonal, peaking in the summer, bottoming out in December, and prices reflect this.
So the fact that housing prices have gone up over the past 5 months of reported data is strong evidence that those 5 months were, in fact, January through May, just as we had all suspected. It is not evidence of a housing recovery.

[nero3]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

The commercial real estate bubble, I am not sure if it exist. That seems to be connected to the export sector from the US, that already is in a structural bull. The import sector, that residential is connected to, have been much more a bubble sector. If that starts to reverse, and house prices rise, then I assume commercial will recover, not lag.

In comparison to gold, house prices are not more expensive than in 2000. Gold rose, house prices rose. (I think a part of the confusion stems from the fact that house prices first gained as a soft asset on the mid-late 90-s move in interest rates, and then after 2000, even rose as a hard asset, while actually in real terms deflating the mid-late 90-s gain.) This transformation from a soft to a hard asset with no correction in between is very interesting.-

If gold is set to rise, I think it's possible house prices will rise with gold. As in the two periods gold gained in the seventies.

[rabot10]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

Please >>>>>>>>>

[santafe2]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

What he actually seemed to be saying was, "Anything could happen, another bubble is possible but it's more likely prices will go down over the next five years".

I'll repost this graph I posted in another thread, updated to the most recent figures. What you can see here is that U.S. housing prices always go up in the first half of the year, every single year, even during overall down years. Housing sales are highly seasonal, peaking in the summer, bottoming out in December, and prices reflect this.
So the fact that housing prices have gone up over the past 5 months of reported data is strong evidence that those 5 months were, in fact, January through May, just as we had all suspected. It is not evidence of a housing recovery.

Thanks for the chart. Is this publicly available? This is quite timely as I just sold a condo in Orange County CA this morning. We listed 2 weeks ago and after looking at the comps the realtor came up with a price about 15% higher than any others had sold for in the last 6 months. This was based on comparable current listing prices and not comparable sales prices.

I asked the realtor where they thought prices would be in 6 months, (iTulip hat tip), and they said their research showed it would be lower than today. Then I asked why we were going to list at a price higher than comparable condos had sold for in the last 6 months and they said, because home owners in this environment are never realistic and all other things being equal, tend to go with the realtor with the higher listing price.

We talked a bit more about how favorable the environment was in mid-June for selling homes and I asked the realtor to lower the asking price by 10% to give a potential buyer room to negotiate but make sure everyone who looked at the property knew it was a fair value.

In two weeks we got 2 offers and heard about 2 others that were coming in this week. The 2nd signed offer was very clean so we took it. Selling real estate should be a simple process as long as the home is in good shape and the sales comps are followed. This is how most items are sold. People compare pricing and quality and make a decision.

We went through this downward spiral scenario in LA in the early 90s. After the first year when prices fell off a cliff, housing prices would rise during the first 6 months and fall to a new low in December. This went on until about 1996.

[cjppjc]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

IThen I asked why we were going to list at a price higher than comparable condos had sold for in the last 6 months and they said, because home owners in this environment are never realistic and all other things being equal, tend to go with the realtor with the higher listing price.

Ya think:cool:

[santafe2]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

Ya think:cool:

We sell a house about every 2 years, spec builds and remodels so we have a good sense of how to prepare, stage and price a home to sell. Most people do it so seldom that realtors learn to play to ego instead of practicality to land a listing. After all, if you can't get the listing you'll never have a chance to talk some sense into your client and make a sale.

And this method proved to be a wise one during 2002-2006 while housing was moving up to met your too high price. So even though all realtors know it's a losing proposition now, they still do it because they know most people have in their head a number that is much higher than the real world will bear.

And there's the optimism of the sales person to contend with. All sales people are optimistic. Too optimistic largely so that has to be tempered. EJ posted a great piece here a year or so ago that made the point that a good CEO worries. They are always digging into details and never expecting to find something heartening.

In a real estate transaction, the seller has to act as the CEO. You have to ask hard questions about pricing about the sales plan, about the contingent plan, about the buyers and other realtors reactions, etc. Because so few homes are prepared with care and priced correctly, buyers and buyers agents get excited when one is, (and are ruthless when one is not).

I think in 2 weeks, 30 potential buyers came through and less than 10% of them were prepared to make an offer although everyone commented on what a good deal it was, etc. etc. This points out another large hurdle in real estate transactions. Most buyers are only talking the talk and even a good deal won't elicit an offer.

And one last comment. Multiple offers even in a down market does not mean you've priced your home too low. It means you've priced your home correctly and the buyers for your type and size of home are confirming it.

[cjppjc]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

I think in 2 weeks, 30 potential buyers came through and less than 10% of them were prepared to make an offer although everyone commented on what a good deal it was, etc. etc. This points out another large hurdle in real estate transactions. Most buyers are only talking the talk and even a good deal won't elicit an offer.

.

Yes this is thing that doesn't change in any market. Some people are just starting to look, and even if they bid on their first day out, the odds on them closing are worse than someone who has been looking for a while.

[Spartacus]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

I've posted this several times before, I think

http://www.gold-eagle.com/gold_diges...oso060198.html

how big can a bubble get, and the experience of one bubble that was re-inflated several times.

the last paragraph:

The Souk al Manakh was the greatest speculative mania of all time. One could not even speak of valuation. Margin financing reached unimaginable extremes; one speculator, who had been a customs clerk two years earlier, had at the peak $14 billion in stocks financed with $14 billion of margin debt. The people involved believed that the oil rich Gulf was truly a "New Era". It did not take a trigger to burst this bubble; it simply crested sometime in the dreadful heat of the Middle East's summer. Its decline was so discontinuous it cannot be called a crash. There were simply no bids.

[xyzzy]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

Thanks for the chart. Is this publicly available?

The data I used to make the chart came from the National Association of Realtors. I emailed them and received the last 20 years of monthly sales and median price figures.

Much of this is online, though, see the following links:

http://www.huduser.org/Periodicals/ushmc/ushmc.html

http://www.realtor.org/research/research/ehsdata

[GRG55]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

The data I used to make the chart came from the National Association of Realtors. I emailed them and received the last 20 years of monthly sales and median price figures.

Much of this is online, though, see the following links:

http://www.huduser.org/Periodicals/ushmc/ushmc.html

http://www.realtor.org/research/research/ehsdata

Even Vancouver is GoinUp!

Hope springs eternal...:rolleyes:

[Old habits die hard. Are we seeing a real estate "echo boom"?]

Housing sales bounce back nationwide

Mike Stewart has never been busier. After a brutally slow winter, the real estate agent has signed a string of deals and in May had his best-ever month, notching 10 sales in downtown Vancouver, adding another seven in June.

The renewal of good fortunes for Mr. Stewart is seen across Canada and is the best signal yet that the country's real estate market is well on its way to recovery.

Amid the month-to-month torrent of real estate statistics, economists pegged particular significance on new numbers because they reveal widespread strength at strong prices and showed mounting momentum over a three-month span, carried by what had been the weakest region – the West...

...In Canada, buyers are back, sales are surging, and prices are edging up...

[jk]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

Even Vancouver is GoinUp!

Hope springs eternal...:rolleyes:

[Old habits die hard. Are we seeing a real estate "echo boom"?]

Housing sales bounce back nationwide

Mike Stewart has never been busier. After a brutally slow winter, the real estate agent has signed a string of deals and in May had his best-ever month, notching 10 sales in downtown Vancouver, adding another seven in June.

The renewal of good fortunes for Mr. Stewart is seen across Canada and is the best signal yet that the country's real estate market is well on its way to recovery.

Amid the month-to-month torrent of real estate statistics, economists pegged particular significance on new numbers because they reveal widespread strength at strong prices and showed mounting momentum over a three-month span, carried by what had been the weakest region – the West...

...In Canada, buyers are back, sales are surging, and prices are edging up...

dead cat bounce. real estate prices have come down enough for people conditioned by the bubble to think they can pick up "bargains." if they've gone down enough to generate positive cash flow as rentals, that's a different story, but i don't think we're there yet. either incomes have to rise [don't hold your breath], or housing prices have to return to affordability. then there's the downward overshoot....

[metalman]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

http://finance.yahoo.com/tech-ticker...Robert-Shiller

An interesting interview. It's certainly bullish that house prices in the US some places (like Boston) are going up. Here in Norway, they have been up now 6 months in a row. Our prices rose around 230, on the scale with median of 100, around the same as in the US. Maybe a new bubble in housing certainly could happen. Sort of like the seventies, where you had the early, and the late seventies bubble.

i'll stick with ej's bubble price 'reversion to the mean' theory... it's been correct since 1998.

over and over...

again in 2006...



again in 2007 with debt deflation bear market theory...

Original chart from Dec. 27, 2007 iTulip Select article notifying subscribers of the start of Debt Deflation Bear Market in 2008 comparable to the Nikkei 40% decline in the first year of the Japanese debt deflation in 1990.

Here is the chart updated as of November 19, 2008.

here's an independent assessment...

Janszen (2007) in December he warned subscribers to his investment advice that US stock markets were likely to begin in 2008 to experience a “Debt Deflation Bear Market” market that would more or less track the Nikkei during the first year of the Japanese debt deflation, when it lost 40 % from December 1989 to December 1990. The Dow Jones then declined from 13,365 points in December 2007 to 7,880 points in December 2008, losing 42 % of its value.

from jk's thread "who saw it coming": ej gets a mention...
Quote:

"Only analysts were included who provide some account on how they arrived at their conclusions. Second, the analysts included went beyond predicting a real estate crisis, also making the link to real-sector recessionary implications, including an analytical account of those links. Third, the actual prediction must have been made by the analyst and available in the public domain, rather than being asserted by others. Finally, the prediction had to have some timing attached to it." On the basis of Bezemer's four selection criteria, he found only a dozen analysts qualified, includes Janszen's forecast in 2006 and 2007: "In distinguishing the lucky shots from insightful predictions, the randomness of guesses is a feature to be exploited. Random guesses are supported by all sorts of reasoning (if at all), and will have little theory in common. Conversely, for a set of correct predictions to attain ex post credibility, it is additionally required that they are supported by a common theoretical framework." In Bezemer's study, he "looks to identify a set of predictions which are not only ex post correct but also rest on a common theoretical understanding. This will help identify the elements of a valid analytical approach to financial stability, and get into focus the contrast with conventional models."

i have a pm from you... in it you tell me you think the debt deflation bear market analysis is 'stupid'. still think so?

[SuitablyIronic]

Re: “Another Bubble” In Housing? It Could Happen, Says Yale’s Robert Shiller

i'll stick with ej's bubble price 'reversion to the mean' theory... it's been correct since 1998.

In the long run, the average always wins. Probably why it's called the average. :p