Monday, March 06, 2006

AP: 'Housing Slowdown Ripples Through Economy'

The Associated Press reports that 'Housing Slowdown Ripples Through Economy.' It is more then just a 'housing slowdown' it is a declining market.

Who are the 'experts' that the AP quote?

  • William Mack, a housing analyst for Standard & Poor's, predicted "a soft landing. The overall market is just taking a step back."

  • "We started to see the strain in July and August, and by the fourth quarter the market definitely had slowed," said Layne Marceau, president of the Northern California region for Shea Homes, one of the nation's largest private builders.
  • David Seiders, chief economist for the National Association of Home Builders, said California, Las Vegas, Florida and the Washington, D.C., area "have the largest potential for a price slowdown." ... The rising prices in those markets were fed by speculators who bought homes intending to "flip" or sell them for a quick profit, Seiders said. "The biggest fear I have is investor-owned units coming back on the market in large numbers," he said.

  • I've never seen a market as good as this," Mike Mishler said as he took a break from making finishing touches on a $1.6 million lakeside home near Dallas. "Maybe it will slow down in a couple years, but right now we have lots of California folks coming in, and empty-nest people looking for new homes." .... Mishler, president of the local builders association, says Texas markets are holding up because they are affordable _ the median price in Dallas is $145,000 compared to the national average of $213,000. But even in Dallas, the inventory of unsold homes rose to a record in the fourth quarter.

  • Asha Bangalore, an economist for The Northern Trust Co. in Chicago, estimates housing created 43 percent of all new jobs from late 2001 until mid-2005. That included the obvious, such as jobs in construction and mortgage services, but also retail and service jobs that were created because consumers tapped their rising home equity to buy more things. "The housing slowdown that we are seeing is very modest, not alarming, but I think the ripple effects are going to be enormous because of the employment factor," she said.

  • "This will either be our most profitable or our second-most profitable year in the company's history," Joel Rassman, chief financial officer of Horsham, Penn.-based Toll Brothers, told investors this week. Its profits rose about 50 percent in 2004 and nearly doubled last year.

  • Alex Barron, an analyst in San Francisco for JMP Securities, said builder stocks have been trading at relatively low multiples of their earnings since the late 1990s because investors always believed the strong housing market was too good to last.
    "Investors kept saying, 'Next year housing will go down,'" Barron said. "I guess they're finally right."
Thus, 4 out of the 7 'experts' salaries are paid by those who have directly benefited tremendously from the housing bubble. Where are the independent economic voices like Robert Schiller or Paul Krugman?

Then there are two links in the article at the bottom:

On the Net:
National Association of Realtors:
National Association of Home Builders:

How about some independent sources for information? The article does a poor job of presenting the reality of the declining housing market.


  1. Oh Really ...Here's some MORE BAD NEWS you Folks...This SPRING'S CROP of NEXT BIGGER FOOLS DOESN'T APPEAR to be BLOOMING this YEAR!

  2. Oh please not Paul Krugman. That clown is as big a hack as they come. He was completely wrong about free trade back in the 90s (he was a huge champion of free trade). Then, after trumpeting the great stock market of the late 90s and how it shoed how great Clinton was (gag), he points to a few slightly more sane comments he made as evidence he told people the stock bubble would pop. Yeah, right.

    Krugman has been better about criticizing Bush and the housing bubble, but overall, he is not correct enough to justify as being worth my time.

    Shiller is the man, though. You might also check out Bill Fleckenstein at CNBC's website. He called the 90s bubble (when Krugman was giving a Lewinsky to the Clinton administration) and has been tough on housing all along as well.

  3. I completely agree that Schiller is much better then Krugman. My point is that Krugman is an independent voice and not some housing industrial complex economic cheerleader.

  4. Krugman has a liberal bias, which is just as dangerous as a conservative bias. Economists need to be objective. The truth is not political. Anyone with a political agenda cannot be objective.

  5. Ok but 3 of the 7 'experts' who's salaries are not paid by those who have an interest in high prices argue in favor of a soft landing.

    this story is a broad take on the national scene. to get down into the weeds AP would have to survey many local markets. they dont have time.

    that's where the blogs truly help.

  6. This article is so biased it's just funny. Oh, and by the by, what are people from CA doing buying RE in Texas??

    -Bubbletrack crew

  7. I have heard the soft landing BS time and time again- Gary Stern of the FED in the north central region' that the housing problem is 'overstated'-oh yeah Gary- get off the zoloft. Now Mr Mack the so called 'housing analyst' from S & P gives his worthless opinion. With a massive inventory of unsold SFH and condos; what info does Mr. Mack have that suggests his rosey outlook?

    Frankly all of this sounds eerily like the same prograstications before the bottom fell out in late 1929. These pompous oafs better hope this huge and growing inventory is reduced in the next 4 months- if not their soft landing scenario will ring as hollow as 'The market has reached permanently high plateau'.........

  8. Schiller and Krugman as "independent economic voices"?? Puh-fickin'-leeze! Those two guys are hacks, plain and simple.

    What sort of economists would have been useful in this story? Names and occupations, please.

  9. All the analysts are focusing on the wrong thing, EPS. The real issue which is emerging is liquidity. The homebuilders are running out of cash and credit as their massive land holdings burn up all available cash and credit.
    Contact for a complete story