Thursday, December 15, 2005

Clowns over at the California Association of Realtors

In an article in the San Diego Union-Tribune "Despite rising interest rates, a growing for-sale inventory and a slowing sales pace, the county's shortage of housing will prevent prices from dropping steeply, speakers asserted. 'It's Economics 101,' said Leslie Appleton-Young, chief economist for the California Association of Realtors. 'It's demand and supply.'

Demand and Supply? It's Supply and Demand. These clowns at the California Association of Realtors should not be taken seriously.

Looks at the above slide from the California Association of Realtors' 2006 Economic Forecast.

What is odd?

Notice the question mark next to the word speculation. They can't even admit that speculation is driving rising home prices. They need to say its a 'mere' possibility.



  1. My experience is that when someone says "economics 101," they are about to say something stupid.

    Look at their reasons there. Low mortgage long will that last? Baby boomers... start retiring soon. Constraints on construction... where? What about all these condos? Low inventory... not so low anymore.

    I guess that leaves... SPECULATION!

  2. My major in Sociology and minor in geography where worthwhile after all
    too bad the realtor's in San Diego do not have the modest abiltity I have- and to realize their housing market is about to implode.

  3. I have a greography background also.

  4. "Constraints on new construction" as evidenced by record numbers of housing starts over each of the last several years?

  5. David

    geographers are weird birds

    in any case remember; physical geography, or climatoglogy, Urban/rural land use and planning Western Europe, and US and Canada?
    oh well those where the days- I went to Central Connecticut State University- which had a really good geography department.

  6. "geographers are weird birds"


  7. Some of the realtors I know in DC admit glumly that its slow. Though most think it will pick up next year. I'm hoping it picks up so we can avoid da bubble.

  8. I have a hunch that things 'will not pick up in the spring' I see it as economist Ian Shepherdson of High Frquency Economics said yesterday of a 'huge housing crunch in mid 2006 . Two of Merrill Lynch's highly esteemed economists said today in a report today.......

    With Merrill Lynch, however, the key remains housing, the strongest-performing industry of the consumer discretionary sector this year. "From our lens, the U.S. housing market has become seriously overextended and a correction looms, posing the largest risk to 2006 consumer spending," Bernstein wrote in a research note, co-authored with Dave Rosenberg, Merrill's chief economist.

    As proof, they cite that the backlog of unsold homes has risen to a nine-year high while the number of unsold newly built single-family homes is up 20% from a year ago. "Many speculative periods end when inventories uncontrollably rise, and that may be commencing with the housing market," the Merrill analysts write.

  9. Don't forget for the Bay area - that one of the largest employers, SBC, will be laying people by the thousands in this area following the merger with AT&T. Many of the employees are highly levereged homedebtors. What will many of them do when they can't afford their I/O, Neg Amort, big car payments for SUVs, etc. I should know. I have been working there and am always asked when I am going to buy a house, and get a new car. The difference between me and many of my colleagues is that I believe in savings and refuse to go into debt for something that I think will decline. I actually have a savings account and no debt. I guess that makes the minority. I make about the same amount as me, and I don't picture making a payment on any McMansion in the Bay area. Any comments?

  10. I am also a East Bay resident, the SBC layoff potential in San Ramon is news to me. There was an article in this mornings Valley Times that while sales volume has dropped for the 8th month in a row prices are still going up. I have a hard time with this notion because there is a 3 bedroom duet in Pleasanton which has been on the market for almost 3 months with 3 price reductions and still no buyer.

    I find the "we're different" so the rules don't apply to us mentallity of the Bay Area confusing. Especially when it was just reported the average mortgage in the Bay Area is now $2,934 a month.

    Hmmmmmm, will it end? I am starting to wonder but think it will end when rates hit 7%.

  11. When the baby boomers retire, they are counting on their home equity as their 1st or 2nd nest egg. My dad is counting on it. At least for him it will be his 3rd egg, but if he got yesterday's prices, it would be the highest priced egg. Right now he'll be lucky if it matches another egg.

    He's got 16 months to go until he can retire. Too bad by that time, prices will be down 25% with more to go. Since he has 12-16hrs put into his garden each week, I'm sure he's also really attached to the place.

  12. As far as work place mentality, there is always a new vehicle in the parking lot every two weeks (200 employees). I'm guilty on that account too (in 2004).

    However, the house buying mentality has changed. There were a few people who just bought their house while a few coworkers and I sold ours (and rent). The buyers are now questioning if they did the right thing and are nervous. I think if I sent one guy links to all these housing bubble blogs, he would literally have a heart attack.