This weekend’s Barron’s cover story was on Housing: Bottom’s Up: This Real-Estate Rout May Be Short-Lived.
It was a surprisingly weak case for a Barron’s cover, overlooking many key facts, and relying on some rather sketchy arguments and less-than-reliable pundits.
In case you missed it, I had a few words to say about it over the weekend:
Why Barron’s Housing Cover Is So Terribly Wrong
Bottom’s Up: This Real-Estate Rout May Be Short-Lived
JONATHAN R. LAING
BARRON’S COVER JULY 14, 2008
Jerk off Barron’s cover story from March 28, 2008 was about this being a low for the banks. Little early then, still early now. Part of the propaganda machine IMO
Anyone else watching Jim Rogers on Bloomberg?
Brilliant, brilliant man… I guess at least someone is telling the truth… Unfortunately, most people perceive those who are presently negative (Rogers, Roubini, Kass, Shilling, etc.) as nuts. Boy are they are in for a rude awakening….
Baron’s is every bit as credible as Kudlow or Fox News.
I have this picture of “dubya” opening an A-Trade account today and buying FRE and FNM stock..
“I like those names…..sounds like BBQ or ‘sumthin”
I thought the FHLMC/FNMA assessment by JL was weak as well. Flawed analysis and lack of understanding rarely make for a cogent article. Unexpected for Barrons.
Lawrence Yun Watch – Follow the NAR’s hack as he denies the housing bubble and crash
Housing Bubble? Housing Crash? Nah! Party On! It’s different this time!
Need I say more?
The price of houses will continue to fall, especially with such excess supply. But, if interest rates remain this low; taking out a mortgage will begin to look relatively more attractive, unless renting becomes much cheaper as well.
I noticed several very pro RE articles in the last week both local and national. I think the local realtor associations are leaning on the media very hard. Probably bullying with advertising dollars.
I used to look forward to waking up Saturday morning to read Barron’s. No longer, the magazine just isn’t the same. The content is drab, the analsyis is spotty and the editing is infuriating.
Its now Monday and they STILL have the piece “Bountiful Barrels: Where to Find $140 Trillion” subtitled “Dow Chemicals overpaid for Rohm & Haas — but it’s not all bad news”, a different column and I believe a different author as well.
Its bad enough that I send them so much money on an annual basis for a subscription, but now I do so and the entire site is covered with ads.
I doubt I will put up with it much longer.
Actually, house prices in the Oakland/Hayward/Fremont MSA are now at or below the 30 year average price/rent ratio. Not quite there yet on the price/income ratio, however. Is it the bottom here? Probably not, but we’re a LOT closer than we were a year ago. I bought a house here last month because it was the same cost as renting, after taxes (about 24% less than the 30 year historical average price/rent ratio).
As for the bottom, I think Barron’s is closer than you think for “healthy” metropolitan areas, i.e., those that are undergoing just a standard recession, like the Bay Area, or Boston or NYC or whatnot. Areas that were completely dependent on housing for their economies (suburban SoCal, Florida) or of course, Detroit, etc, have not seen the bottom yet.
Basically, healthy cities and inner-ring ‘burbs have probably worked through >80% of the froth from a 30 year historical standpoint. Ex-urbs and housing-dependent regions (again, Florida, Riverside county, etc) are likely not going to see 2005 prices for just about ever. You might see “average rents” for, say, the Bay Area or Chicago or whatever fall, but again, it will be because the exurbs have been averaged in. I’m seeing rising rents for well-placed housing (close to amenities and mass transit) as ex-homeowners from the far-flung burbs give up and fight for better rentals. Combining the rising rents for these locations with the pressure on pricing, and again, prices aren’t that out-of-line from historical averages.
Anyway. that’s my $0.05 (inflation), and for those who are looking to invest in R.E., I’d take advantage of the bust to buy into better locations near mass transit & shopping, and sit back collecting fattening rents.
Finally seeing some homes sell around here Bellevue/Redmond, WA at prices that are not so much off asking. There are a lot of distressed properties for sure. But some signs of stabilization.
A large two-tower mixed office/condo/retail project was just delayed until 2010 in Bellevue. But Paccar just paid a very dear price to add to their land holdings in downtown Bellevue right next door to that delayed project.
Ahhh! Can I please get to waterboard everyone pundit, analyst or politician who calls a housing bottom without using facts!!! (note the Mogambo-esque use of exclamation points).
Housing will bottom when it is below the long-term price-income ratio, unemployment is declining, inventories are normal AND lending is available.
For starters, the median house price needs to drop to about $125k. Then we’ll be near a bottom assuming the other factors kick in.
Not once have I heard anyone on tv or in Washington mention that freakin’ houses are UNAFFORDABLE and will drop in price until they are. It’s not a housing collapse; it’s a bursting bubble.
Burn, baby, burn.