How we will know when real estate has truly bottomed

The National Association of Realtors issued another upbeat forecast this morning, prompting Barry Ritholtz to assemble, with help from InvesTech, a nice list of similar (and wrong) pronouncements going back to 2005. Which led me to daydream:

WASHINGTON, January 08, 2009 – Over the next few months, existing-home sales are expected to decline as indicated by pending sales activity, then plummet later in the year and continue to tank in 2010, according to the latest forecast by the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said that nobody really wants to buy houses anymore. “On the one hand, we have a declining demand because unemployment has been rising,” he said. “On the other, consumers continue to wait for any sign of market stabilization. There are fewer people with financial capacity now than in 2005, plus those who do have the wherewithal are trying to market-time their purchase. As a result, we’re toast. And so I’ve accepted a job as Bob Shiller’s research assistant.”

When you read that, buy, buy, buy!

Apple CEO Cook Gives Up $75M in Stock Dividends

NEW YORK — Apple CEO Tim Cook is giving up $75 million in dividends on restricted stock that the company is awarding to all of its employees.

In a filing with the Securities and Exchange Commission on Thursday, Apple Inc. said that Cook requested that his restricted stock units not receive dividends. The dividends that Apple workers are getting amount to $2.65 per quarter for each restricted stock unit held. The shares are not normally eligible to receive dividends, so Apple’s decision is a perk for its employees.

p_lukasiak

actually, if I didn’t already own my own home right now, I’d be looking to buy — and anyone who doesn’t own, and can get financing, should do so too.

Because right now, there are some desperate sellers out there who will take just about any offer. And while there is a real good chance that if you wait, you could get the house you want for a lower price, when you add in the cost of renting while you wait to that lower price, you’ll probably do no worse than break even.

Just go around and make what, in normal circumstances, would be ridiculously low offers on homes you want. (if the owner refuses or gives a counter offer, say “no thanks, but if you change your mind, feel free to get back to me.”) In a month or two, someone will take one of those offers….
http://bigpicture.typepad.com/ Barry Ritholtz

Hysterical!
http://www.4uestate.com RealestateMaster

The majority of the industrial market remains steady in either
the recovery or expansion phase. Top markets include Los
Angeles and Orange County, Calif., Sarasota, Fla., and San
Francisco. One trend to watch: the development of intermodal
facilities–where shipping containers are transferred between
rail and truck. Container shipments have increased 37 percent
in the last five years, and now represent the largest revenue
source for railroads. This trend is expected to continue as
manufacturing of consumer goods continues to shift to Asia.

– The aging baby boomer population and the rise in the Hispanic
population are two trends driving a national shift to southern
and western regions. Affluent boomers are retiring to more
temperate climates in the South and West, such as Riverside,
Calif., Las Vegas, and Phoenix, Ariz. Spanish-speaking
communities are growing fastest in the South and West regions
of the United States too, with half of all Hispanics residing
in California and Texas.
Crust

p_lukasiak, I never thought of you as a Pollyanna. Have you seen the long term rent / price charts? (See e.g. Krugman’s blog.) There’s plenty of room for things to get worse before they get better. That doesn’t necessarily mean people shouldn’t buy, especially from distressed sellers. But people should be careful to only buy what they can definitely afford, IMHO.
http://www.confusedcapitalist.blogspot.com/ Jay Walker

You’ve got to wait until the foreclosures are a significant part of the sales volumes – when they reach 5% to 10% of that, the market bottom is at hand.

Jay Walker
Confused Capitalist
p_lukasiak

p_lukasiak, I never thought of you as a Pollyanna. Have you seen the long term rent / price charts? (See e.g. Krugman’s blog.) There’s plenty of room for things to get worse before they get better. That doesn’t necessarily mean people shouldn’t buy, especially from distressed sellers. But people should be careful to only buy what they can definitely afford, IMHO.

oh, well it goes without saying that you should only buy what you can afford. In fact, I say you should decide how much you want to spend, and pre-qualify for a mortgage for that amount — if for not other reason than having prequalified for a mortgage, you’re less likely to tell yourself that its okay to pay more than you earlier decided you can afford. Plus, the words “pre-qualified for the mortgage” are music to the ears of any seller — and in this market, will be doubly sweet.

As to timing… everybody knows that real estate prices are going to go down more, so nobody in their right mind would go looking to buy a house unless they absolutely have to. IMHO, the minute “everybody knows” something is the minute that you start to act contrary to conventional wisdom. See practically NOBODY has to buy at house at any given point in time — but people get sick and move into nursing homes, or die, or get divorced, or relocate and HAVE TO put their house on the market. So if you go looking for a house to buy, you ARE the market/

hell, not only can you probably buy at a ridiculously low price, but you can tell the real estate agents to cut their commissions if they want to be YOUR agent, or if they want to sell the house they have listed.

There is no better time to buy a house than when everyone else thinks its a bad time to buy a house. At least, that’s my opinion
jmickers

Hmm. Just found this post and based on what i’m seeing in the market right now real estate is still a risky investment. Although I’m not adverse to risk, I personally like to hedge my bets. That’s why I’m looking into REITs to spread the risk. I’m even considering Canada’s Mortgage Investment Corporations as another vehicle to invest into real estate. Especially since their market seems more stable. But overall, it’s a scary real estate market in the US.