Bubble-backer changes tune..
A few days ago, I posted up a piece titled "Debunking another real estate puff piece". It was a pretty harsh criticism of a piece by Warren Boroson, especially critical of those he quoted. I sent an email to Mr. Boroson inviting him to the blog, and he did respond to my email with a few questions. I sent a rather lengthy reply to him, but had not yet heard back.
This afternoon, lo and behold, I came across a new piece by Mr. Boroson:
Housing bubble may be deflating just a bit, experts say
I wonder if we have actually gotten through to someone? I'd like to think that we had some role in changing his outlook. The tone of this article is signficantly different from his last piece. Thanks Mr. Boroson, this piece is much more neutral, and does carry some warnings..
Here are some notable paragraphs..
Maybe house prices finally are coming down.
Jean Gascoigne, an agent for 40 years and a broker for 38, reports that she has never seen as many price reductions as she has seen recently.
...
And it isn't just the highest-price houses that are taking a hit, she reports.
...
Might the price stabilization just be seasonal?
"The big offices don't want to admit that prices are leveling off and maybe going south," she said.
...
Some have made good money, he granted. Everything will be fine until the music stops and someone is left standing.
I'd like to send out special thanks to Jean Gascoigne, the broker quoted above, for her honesty in reporting the truth behind the current market.
Caveat Emptor,
Grim
This afternoon, lo and behold, I came across a new piece by Mr. Boroson:
Housing bubble may be deflating just a bit, experts say
I wonder if we have actually gotten through to someone? I'd like to think that we had some role in changing his outlook. The tone of this article is signficantly different from his last piece. Thanks Mr. Boroson, this piece is much more neutral, and does carry some warnings..
Here are some notable paragraphs..
Maybe house prices finally are coming down.
Jean Gascoigne, an agent for 40 years and a broker for 38, reports that she has never seen as many price reductions as she has seen recently.
...
And it isn't just the highest-price houses that are taking a hit, she reports.
...
Might the price stabilization just be seasonal?
"The big offices don't want to admit that prices are leveling off and maybe going south," she said.
...
Some have made good money, he granted. Everything will be fine until the music stops and someone is left standing.
I'd like to send out special thanks to Jean Gascoigne, the broker quoted above, for her honesty in reporting the truth behind the current market.
Caveat Emptor,
Grim
5 Comments:
I admit, I originally thought the same. However, I don't think so. Why? Greenspans conundrum. The fact that outside buyers were keeping the 10Y yield and mortgage low, irrespective of how much Al cranked up the short term rate. If those same buyers feel that Ben won't protect the currency (keeping short term rates high), they'll dump those securities, sending yields up, forcing mortgage rates very high.
So, there you have it. It's going to go from Greenspans conundrum to Bernankes Mexican Standoff. Ben is going to have to keep the scales balanced to keep our economy together. If he thinks all it takes is a tweak of a rate or an inflation target to keep the economy together, he's going to be in for a shock.
Lastly, should he manage to keep the balance, if the housing market does crash, he'll be unable to drop short term rates immediately. Why? He stated that it's not their place to deflate or protect asset prices, only the currency and economy. Thus, he'll be unable to drop rates until we see a real drop in consumer spending, etc etc. Which, IMHO, will be much too late to protect the bubble. I'm sure he'll quickly learn that dropping short term rates will only scare off the foreign buyers, further exacerbating the fall.
Ben didn't get a promotion, he got pushed into the line of fire.
-grim
Good job Mr. Boronson and Grim.
I congratulate you both for trying to inform/help those that are getting RIPPED OFF by the Real Estate Industry.
I like this RE agent's spin on increasing inventory.
"A good time to buy?...These days, prices are evening out and real estate supply is up more than 17% over this time last year. This means there's plenty of property to go around."
http://newjersey.craigslist.org/rfs/107135431.html
Thanks grim for starting this page and to all the users that post informative blogs. Seeing raw data and trends are a real eye opener and are a lot harder to spin than the word "bubble".
investordavid,
This link is for you..
http://www.lewrockwell.com/bonner/bonner161.html
Seems that there are many other people that think Bernanke is in a world of trouble. No matter how he cranks the rate, it won't matter, because the foreign bond market has got us by the..
grim
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