Tuesday, December 20, 2005

Fortune: Real Estate: Is the party over?

"To get a clearer picture of how things may play out, FORTUNE turned to Moody's economy.com and home property-valuation service Fiserv CSW." The article is republished on CNN.

In the report lists expected price changes in the top 100 metro areas for 2006 and 2007. For example. Of the these 100 cities, they expect only 16 to have nominal price declines in 2006. Then in 2007, 38 metro areas are expected to have price declines.

In Bakersfield, they expect the median price which currently stands at $286,300 to fall by 0.80% in 2006 and 3.00% in 2007. That's laughable. Price declines will be much greater in Bakersfield, CA. Most of these predicted price declines are minimal (especially for 2006) . Bubble Meter is more bearish.


  1. I'll bet with Bubble Meter, thank you. The chart in question predicts a 1.8% increase in our own Washington, DC, next year, followed by a 3% decline in '07.

    For God's sake, do any of these analysts read the newspapers? Or even look out their car windows on the way to work?

    How can you "predict" price growth, when the identified trend is currently DOWN??? "PRICE REDUCED!!" "SELLER WILL CONSIDER ALL REASONABLE OFFERS!"

    These are signes of price strength? Geez Louise. Sorry for ranting.

  2. Here's today's post for all you bubble-heads:

    Enron and Home Equity Wealth

    "Sometimes when a trend continues for a long enough period of time, people come to accept the trend as just another fact of life. Despite initial skepticism, if events continue to unfold in the same manner month after month, year after year, people tend to forget their initial misgivings.
    But what if it turns out that the real estate market of 2005 turns out to be a lot like the energy trading market of 2001?"

  3. Good article. Point is well taken, but Enron is a bit "different" than real estate in that its downfall, er, complete destruction, was directly related to criminal fraud, er, lying about income vs. liabilities.

    Seems to me though, that there are plenty of companies that are healthy, even thriving, with current stock prices that are WAY below where they were five years ago, like Microsoft, etc.

    I'll bet houses will retain value as shelter from the elements, er, places to live, but the collective "wake up and smell the coffee" scenario will knock prices way down, for a long time.

  4. But remember, the 'MEDIAN' price is the one they are taking the guess at (at least that's what I think).

    And most of the stuff now that is getting reduced in price is DEFINITELY not in the 'median' price range.

  5. Does it really matter what the analysts are saying? They also predicted DC will add 1.6 million new jobs by 2030!

    "The verdict is in. According to the Association of Foreign Investors in Real Estate (AFIRE), “Washington is the top urban real estate market in the world.” It is no wonder people want to move to the Washington area. Job creation is fueling the economy and in turn the need for additional housing, schools, office buildings and commercial facilities. The Metropolitan Washington Council of Governments projects that the region will add 2 million new residents and 1.6 million new jobs by 2030."

    I have serious doubt about the mental health of these folks...

    Here is a good blog on DC's housing bubble. I always like to post there. Check it out!


  6. over on http://housingpanic.blogspot.com we're discussing the same thing - their data is not only wrong, it is laughable

    even the median prices listed are incorrect