Here's recent history of the Fed’s policy committee and its Fed Funds rate. Next Fed decision is June 24/25.
O.C. home prices to fall 50%? Insider Q&A hears it, again!
March 22nd, 2008, 12:00 am · 110 Comments · posted by Jon Lansner/O.C. Register columnist
Investment adviser Peter Schiff caused quite a stir last year when he predicted in this blog (READ HERE) that O.C. home prices could fall by half in a downturn. Schiff, president of Euro Pacific Capital and author of the hot-selling “Crash Proof: How to Profit from the Coming Economic Collapse,” returns to O.C. — where he worked before moving back east — on Monday to talk to an oversubscribed seminar audience. We figured we’d say “Hi!” again …
Us: O.C. prices are off 20% from the peak. You still sticking to 50%?
Peter: Yes, given the completely nonsensical increases that Orange County experienced between 1998 and 2006, a 50% peak-to-trough drop is likely the best-case scenario. However, if prices ultimately decline by less than that it will only be the result of substantial inflation, which will buoy the nominal price. Under such a scenario, while home price declines would be less pronounced, price increases for consumer goods, such as food, energy, clothing, etc will be that much greater. In other words home prices will decline in real terms … that is relative to everything else. As a result, even as home values decline, the costs associated with owning them, such as mortgage interest rates, maintenance, insurance, utilities, etc, would soar.
Us: Don’t you think the Fed and other federal boosts will slow down the economic/real estate slump?
Peter: Sure, they will slow it down, which is part of the problem. By slowing down the adjustment process they only exacerbate the underlying problems and lengthen the time it will take to resolve the imbalances.
Us: Considering your bearish views, what should a person do with their spare cash in these trying times??
Peter: Americans need to realize that their spare cash is also at risk. The Fed is debasing the value of the dollar in an effort to prop up real estate prices and the U.S. economy. The result is a big increase in the cost of living and lower living standards for most Americans. Therefore, those wishing not to share this fate need to get rid of their dollars now before they lose any more of their value. My advice is to buy precious metals, commodities, as well as non-U.S. stocks and bonds denominated in foreign currencies.
Us: What would signal we’ve hit a bottom in this cycle? Do you think there are things the government or other institutions should be doing to right the ship?
Peter: Currently the bottom is nowhere in sight. When it finally is, things will be so bad that few will be looking for one, let alone be able to spot it. What the government needs to do is to stop making the situation worse under the pretense of trying to help. The Government should be primarily concerned with restoring strength and confidence in the dollar. Unfortunately, that can’t be achieved by simply mouthing the “strong dollar mantra.” Instead real policies that will involve austerity and sacrifice need to be implemented. Although these policies will cause a severe recession, at least it will prevent America from going down the road towards hyper-inflation and financial ruin.
Us: What factors, indexes, trends, etc. might get you to change your outlook?
Peter: What we need is a return to sound money, less consumer spending, less borrowing, more savings, much-higher interest rates, huge reductions in government spending and regulations. We could also use a complete overhaul of our tax system so that it no longer punishes saving and producing and encourages borrowing and spending. If we move in this direction, my outlook will be less dire. However, nothing can stop real home prices from collapsing and the fantasy of wealth accumulation though home ownership from fading away.
March 22nd, 2008 at 12:15 am
What a blowhard! This is the guy who called the bubble to burst in 2000. ( About 150% too early!!!!!!! ) And people make fun of Gary Watts.
March 22nd, 2008 at 12:22 am
Here’s the latest from Steven Thomas, of Remax - THE most relevant real estate news for Orange County:
“Market Time Report: Demand Up 121% Since January 1st
March 20, 2008
Good Afternoon!
Since the beginning of the year, the market has dramatically improved: demand is up, the active inventory is not growing uncontrollably and expected market time has dropped substantially. Let’s dive right into the numbers for further explanation. At the beginning of the year, demand, a snapshot of the last 30 days of escrow activity, was at 944 escrows. Today, demand has increased by an additional 1,139 escrows to 2,083. The change in demand is like being stuck in bumper to bumper traffic and then suddenly, without explanation, everybody is moving at the speed limit. Demand is the real story here. Even with the liquidity issues, buyers are starting to pour back into the market, especially in the lower ranges where buyers are not affected by the financial crunch. It is still really challenging and more expensive to obtain a loan above the $417,000 conventional limit; BUT, that is changing right NOW. Lenders are scrambling in preparation for the new conventional and the FHA loan limits of $729,750, which are just beginning to hit the market. The new loan limits will have a profound impact on demand. At 10% down, the old $417,000 limit only covers 37% of the current active inventory. The new limits now encompass a staggering 75% of the inventory. And, for those consumers with some credit blemishes and/or a small down payment, the FHA allows 3% down, all of which can be a gift. It is important to clarify that the FHA is NOT subprime and has been around for years. The only reason it was not in vogue before is because the Federal Housing Administration refused to adjust the limit beyond its $367,000 level for high cost areas. At that level, only 23% of the current inventory could be purchased with an FHA loan. It took a crisis for everybody to see the light. A lot of this mess could have been avoided with higher FHA loan limits all along. Needless to say, there will be reverberations in the local housing market, which translates to increased demand.
So, how do the numbers look right now? Demand increased by from 1,893 escrows just two weeks ago to 2,083 today. We have not seen demand like this since the beginning of April in 2007. The active inventory increased in two weeks by 205 to 15,617 homes. Expected market time improved from 8.14 months to 7.50 months. It is still a buyer’s market, just not nearly as deep as the 15.60 month market at the beginning of the year. Current demand at 2,083 escrows is just 112 fewer compared to just one year ago. The inventory last year was at 13,373 homes and market time was at 6.09 months. But, the difference is that last year demand was dropping and both the inventory and market time were rapidly climbing due to the subprime meltdown. On the other hand, this year the market has been improving incrementally every day with increased demand and not as many homeowners placing their homes on the market for the first time. It will not be long before year over year comparisons in demand will be better this year. Bank owned foreclosures and short sales, homeowners that owe more on their home than the current value, now account for 33.4% of the active inventory. Lenders remain in the driver’s seat with a 2.11 month market. For buyers looking for a “deal” in purchasing a foreclosure, be prepared to compete with other buyers. Many foreclosures are being sold for their full prices. I just heard from an associate who wrote two offers for one buyer this week and they lost out on both of them because the buyer was unwilling to pay the full asking price. Statistically, short sales have an expected market time of 12.05 months. HOWEVER, I must warn everybody that this figure is grossly understated. The standard practice for Realtors® out in the field is to keep a home on the market as an active listing even though they have an offer that has been accepted by the seller until they have formal lender approval of the deal. Because the lender must take less than what is owed, short sales are “subject to lender approval.” So, when a buyer climbs into a car and finds a short sale home that they want to write an offer on, chances are that the home already has an accepted offer that is somewhere in the “lender approval” process. This process can take anywhere from a couple of weeks to months. These homes are not placed into the Multiple Listing Service as a Pending Sale because the agent and seller are willing to take a look at additional offers that may be more acceptable to a lender, typically a higher offer price.
What’s the difference between the condominium market and the detached home market? The detached home market continues to fare better than the condominium market with a 7.23 month inventory. For condominiums, there is a 7.98 month inventory, the first time below the eight month mark since April of 2007. 31% of the detached home inventory and 38% of the condominium inventory is either a foreclosure or short sale. 67% of all detached homes below $500,000 are either a foreclosure or short sale. For condominiums, 47% below $250,000 are distressed and 43% between $250,000 and $500,000 are distressed.
Buyers, what to do? According to a CNN Money article titled “Housing: Best Time to Buy in Four Years,” housing has nearly returned to “long-term norms” and that by the end of 2008 “housing markets could be broadly undervalued.” Slowly but surely, more and more headlines and articles are touching upon the fact that values have come down so rapidly that they are creating excellent buying opportunities not seen in years. Increasing demand in Orange County can definitely be attributed to value. The good news is conditions are perfect to purchase: motivated sellers, a lot of inventory, rates are low, new loan programs are available and there are great values out there right now. Buyers need to understand the local conditions and the price range that they are looking at prior to writing their first offer. In more and more areas, certain price ranges and individual homes can and will attract multiple offers and above asking price offers. Understanding the market conditions is fundamental to isolating a home. Everybody is so focused on price and value that changes in interest rates are almost completely ignored. Buyers rarely focus on a difference in interest rates. Buyers can ask for a seller to pay a point of their loan and their monthly mortgage payment drops for the life of the loan. Also, rates will inevitably increase to stave off inflation. Just as Bernanke and the Federal Reserve are doing everything in their power to increase liquidity in the financial markets, they will just as swiftly and methodically increase rates. Although we have all grown accustomed to rates staying so low, like gasoline, we will get used to rates increased to 7% or 8% or more when the time comes. In 2000, conventional rates were 8% and in 1990 they were at 10%. 71% of distressed properties are below $500,000 and 92% are below $750,000.
Sellers, what to do? So far I am pleased that most homeowners have not been fooled into placing their homes on the market with the anticipation that it is the Spring market. Here’s a dose of perspective, given current demand, there are still 13,534 sellers who will not be successful in selling their homes over the course of the next month. With only 2,083 successes over the past month, that leaves the vast majority waiting another month or months. So, if you do not have to sell your home, DON’T. Placing your home on the market takes a ton of patience, a lot of elbow grease, a very good price, and tip top condition. The more upgrades, the better condition and the better the location, the higher a seller’s chances of successfully selling. If a home does not have the upgrades or is in need of work or does not show well, it must be reflected in the price. With the market flooded with so many foreclosures and short sales, a homeowner can compete and achieve a better price by having the best home in the best condition with upgrades that show beautifully. Be prepared on day 90 with the lights on, music playing in the background and the faint smell of cinnamon cookies in the air. You never know when the buyer that falls in love with your home is going to walk through the door.” ( end of report.)
Now doesn’t THAT sound better than NationalBubble’s hourly posts of doom & gloom? It sure does to me - happy Easter, everyone.
March 22nd, 2008 at 1:08 am
I believe schiff correctly called the dot-com bubble in 2000. He’s been spot-on regarding real estate over the last 3 years. If that is a blowhard, then we need more blowhards.
March 22nd, 2008 at 1:10 am
If you want to come back to fundamentals, i think this would be an accurate view of what it would take to get there.
Someone please explain to me why we have some sort of obsessive need to help\assist homeowners after they make poor choices in buying\investing property. i remember the .com days when i am sure a lot of us lost money, how come we are not getting bailed out from those losses, they were equally irrational, buying ipos of companies with no revenue, etc.
i think all the losers who bought homes they couldnt afford or those that used all the equity to finance their lives rather then working towards building their traditional income deserve to lose their homes, its not like they are going to be on the street, you can rent. From a pure money growth perspective renting the last couple years and investing in foreign markets would have given you a much better return then owning a house anywhere in the US. After all the maintenance expenses, taxes, etc owning a home is not the greatest investment, its a place to live but not something that i would count on making me rich or retire. not even sure why its called the american dream, is a neg am loan really considered owning?? my definition of the american dream is millions in the bank and not having to worry about the basic expenses. maybe i am ignorant, who knows.
March 22nd, 2008 at 1:11 am
Sorry to disappoint you but this man has been pretty consistent in his predictions on the economy and the different markets. Some came to light later than he may have said but you can’t argue that he was way ahead in seeing this trainwreck coming. “Blowhard” , hardly! He calls it as he sees it and lately hes seeing it very clearly.
March 22nd, 2008 at 5:06 am
Score one for Chicken Little. If you keep screaming that the sky is falling, you are bound to get it right at least once. The truth is that people like Peter are benefiting from the fear mongering. Speculators are making a mint beating the drum of financial collapse. The historical truth is that real estate in California is an awesome investment. It runs in cycles and we are in a down cycle. No reason for panic - keep paying the mortgage and relax. Don’t let smucks like our friend Chicken Little force anyone into fear. They aren’t building more land in Southern California, so relax. As for Peter, how about a financial disclosure showing us your investment strategies and current financial holdings - I bet our listners would be surprised….
March 22nd, 2008 at 6:30 am
Some info on Schiff.;
He is known for his extremely bearish views on the United States stock market, bond market, the US dollar, and the United States economy in general for which he has earned the nickname “Dr. Doom.” He is currently an economic adviser for the Ron Paul presidential campaign. He graduated from UC Berkley in 1987. His father is tax protester Irwin Schiff. Schiff also hosts a live internet radio show called “Wall Street Unspun.
OK, no agenda there. Now, Jon, in the interest of fair journalism, please find the most radical bull in the country and publish an extensive interview.
Again, predicting the RE slowdown was a no brainer. Nobody can claim mystical qualities for that one. So take that out of the equation and what do you have?
March 22nd, 2008 at 7:09 am
I am pretty bearish, but this interview of a bearish commentator has no value.
If you meant to plug his financial consulting business, then mission accomplished.
Otherwise, no new information was shared, much like many interviews in the paper (bullish or bearish).
March 22nd, 2008 at 7:19 am
Some of the crap perma-bulls posted in April 2007 (see link above in Jon’s post) is really funny to look back on………….
Here is a little snippet from DonS - Trump wannabe:
“The “perfect storm” of financial problems that caused the 20% drop in OC real estate prices in the early 90’s had at least 4 legs.
1. Closing the defense industry. So CA actually lost population.
2. Bankruptcy of S&L’s, mostly those created in the late 80’s, because of bad lending practices. I remember that appraisals were not necessary to get a loan. “If it sold for that, it must be worth it, and we will make the loan”.
3. A national recession. A bad one that our democratic state govt saw fit to raise taxes right in the middle. Adam Smith would not have approved. I am convinced CA’s recession was extended because of this political move.
4. The end of an “over development” boom caused by changes in Fed tax depreciation deductations from 15 to 27.5 years, grandfathered in, for all property “started” after a late 80’s date. An amazing amount of “new” real estate came on the block in the early 90’s. A flood that saw a deminishing population in the middle of a recession.
Today’s situation, even with the sub prime exposure, is nothing compared to the situation that arose in the early 90’s. And, the loss in value of real estate then was only around 20%. Not 50%.”
LOL@ribsplitter….. you are right DonS it’s nothing like it….. IT’S FAR WORSE !!!
Rants,
OMG, your comment the other day:
“did you know california is a high risk loan state? hell yeah it is”
OMG, ROTFL, LOL@ribsplitter
March 22nd, 2008 at 7:22 am
He’s the best. He has the calls to prove it. Check his videos on youtube. Clearly was way ahead of everyone on this. I’ve made quite a score financially following his no-nonsense advice. To you naysayers here, you’ll get whats coming and you’ll live to learn with it.
March 22nd, 2008 at 7:52 am
Even a broken clock is right twice a day. The stock mkt. made a bottom last week, and gold and oil have started to fall. When the sellers of homes bite the bullet,and accept profits which are good, but not obscene,the housing mkt. will begin to recover. Prices won’t go up, but inventory will begin to clear. Don’t fight the fed.
March 22nd, 2008 at 8:31 am
mav…
I have to compliment you on the accuracy of my previous quote. It must have made an impression on you because you saved it until now.
Don’t forget my latest. “We are at or near the bottom. So CA home prices will bottom around June and turn up by the end of ‘08.”
Copy this one down so you can confirm it happened just like I said.
March 22nd, 2008 at 8:34 am
I recommend Peter’s book. It is very good. Peter has been bearish for a while, but then the stock market has been dead money for eight years, having gone down 15% in real terms and 35% in real terms. That is a negative 5% return each year for nearly a decade. Ouch!!
The call on real estate is just as easy. Look for a decade or more of negative 5% real returns as we get back to the long term values. Sure we could have a median price of $500,000 in 2017, but a gallon of gas will be $7 and the minimum wage will be $15 an hour.
The boom is over and as with all booms, there will be a decade or two of “recovery.” Sideways movement with inflation is the easiest was to accomplish this as it results in fewer bankruptcies.
The question is can the Fed inflate fast enough. They need to be sending a check for $500,000 to every household in the country. That would solve the problem. Otherwise, tough sledding ahead.
March 22nd, 2008 at 8:37 am
Don S has no shame. The guy was very wrong almost a year ago keeps posting predictions.
Ha, we’ll save that one again and try to humiliate you again, but it won’t work since Don S has no scruples and cannot be shamed.
March 22nd, 2008 at 8:38 am
DonS,
Actually, all I had to do was click on Jon’s link above to the April 2007 post.
I give you a lot of credit in that you keep the same name….. unlike most of the perma-bulls.
June 2008 Bottom…. turning up by December 2008….. that’s a good one.
Do you think California is a high risk loan state? It doesn’t really matter, because those that matter do………
March 22nd, 2008 at 9:09 am
2008? Try 2012 and that if we are lucky. If the dollar keeps falling, oil could easily go to $200. Then we are looking at $5.50 gasoline and this could really get ugly. Maybe a 75% drop in home prices.
The median earner takes home $2,500. Subtract another $300 in gas and people are going to have real problems making rent or paying the mortgage.
The vicious cycle continues, lower dollar, higher oil prices, trade deficit remains the same. Dollar goes even lower. Where is the equilibrium? When you don’t export anything, you have to live on the charity or loans of others. As some point, the benefactors stop giving and the lenders stop lending.
March 22nd, 2008 at 9:12 am
Garbage. He should move to Singapore to be with his soulmate, Jim Rogers.
March 22nd, 2008 at 9:33 am
ocregister:
this guy is over the top. register prints this bunk to try to scare us that depression is here. this is not professional reporting. please get this bunk off. you are causing people to put cash in home. this is dangerous.
March 22nd, 2008 at 9:39 am
I wonder how the permabulls feel about articles like this one
http://www.ocregister.com/articles/jobs-february-percent-2003821-state-county
this can be the final nail in the coffin to the OC housing market.
We all know that is all about consumer confidence and that is going to be the problem here.
March 22nd, 2008 at 9:41 am
“Americans confident in 2009 turnaround”
http://money.cnn.com/2008/03/21/news/economy/cnn_poll/index.htm?postversion=2008032112
March 22nd, 2008 at 9:43 am
“Of the more than 1,000 American adults surveyed in the poll, conducted March 14-16, 83% said they are “confident” that they will be able to maintain their standards of living next year, and 85% are “confident” they will keep their jobs over the next six months.”
“Americans also showed faith that they would be able to pay off their future debts, with 90% of respondents demonstrating confidence they would be able to meet their monthly mortgage payments for the duration of the mortgage.”
“Nearly as many Americans - 83% - said they could pay off college loans, car payments, and credit cards in the future. The average amount of credit card debt of those polled was $4,000.”
March 22nd, 2008 at 9:52 am
VOR: “Again, predicting the RE slowdown was a no brainer. Nobody can claim mystical qualities for that one.”
Then why did Gary Watts not lay down such a prediction? Last time I checked, you gave Gary props or at least used his prior correct (and no-brainer) predictions as a reason for “turning the other cheek” on his more recent false claims.
It goes both ways. I agree, this guy sounds a bit radical on the bearish side for me. I’d be surprised to see that kind of drop - especially given the fact we already have had enough inflationary push on pricing in all areas to prevent such a drop - in my opinion.
But let’s be real. I run a professional services corporation - I know what it takes for these young professionals to live a life they worked so hard to achieve. It is very hard in the OC simply due to the cost of housing. Renting is just over half of what it takes to own the same place. Throw in the tax benefit, and you get maybe 7%-15% closer to being equal, depending on how much they earn annually. We’ve LOST more educated professionals - by the tune of over 13%!!! That fact is in the record books, reported several times by this paper. It is not easy to hire and retain when you have to compete nationally. Competing globally means paying 25%- 30% higher wages and asking worker s to work overtime every week. Those buying right now either have the income to ignore any price depreciation, especially if they’re renting, or choose to ignore or deny it, or simply enjoy risk taking. I’m sure there are others that choose not to do any research and simply rely on what they’re being told by RE professionals - many of which will wrongly tell you with a straight face that we have DEFINITIVELY (not maybe) hit bottom and they had better get in before its too late. Yeah - use up those short term rate programs and watch what happens when the rates are reigned in. Look at history - when in the past has an inflationary period not been met with higher interest rates? (if you only look at CPI - then you are an even bigger idiot than these predictors) Now consider the fact that these recent events are coupled with one of the worse illiquid credit marekts in history - investors won’t touch this paper. A month of closed sales that have, what? - a couple hundred more homes sold (if that) is nowhere near the definition of a bottom. Job numbers are bad, they are not even close to average and cannot be ignored. Losing more jobs than gaining is not good. If you think its something that can be overlooked than you need to get your head examined. As long as sales remain below 2500 per month - you will never see an end to this carnage. Given current inventory and population - we should be closer to 4K per month sometime in the spring to see bottom. 1500 sales in one month is sad - plain sad.
When these folks predicting the future of our local economy become directly responsible for siging the paychecks of over 70 people, then maybe, just maybe, I’ll start to listen. Until then, they have no credibility with me. Just my long 2 cents to get my morning started. Time to go for a drive. No replacement for the feel of 550HP and the sun in your face. Later…
March 22nd, 2008 at 10:00 am
Just saw this when I was about to leave — Thoughtful: THOSE METRICS STINK!!! 85% is hideously bad!!!
That means 15% of the US thinks there is a chance may lose their jobs. And how many of that 85% may have no idea how to read the signs that their jobs are in trouble?
How many people do you know ever been layed off and wee surprised about it? I’m sure at least one. If not, then you are truly a liar.
And 10% admit they may not be able to pay off the house they bought. And you think that’s good? You must have smoked some crack this AM. Come on man - read the frickin’ numbers.
And less than 30% is saving satisfactorily for retirement!!!
This survey shows a few things: consumers will consume like crack addicts. Consumers really don’t put their families’ financial well being as first priority before everything else. And only the rich and intelligent will be going to college. There’s a few more conclusions that can be drawn - but be real, man. Go get a job and put some money in other peoples’ pockets.
NBI: out!!
March 22nd, 2008 at 10:11 am
first off schiff has had his clients in gold -commodities-
and foriegn stocks with high paying dividends since
02- yes he said the real estate market was over bought
in 02 guess what— it was— who the hell knew that the
mortgage industry was gonna keep blowin up the bubble
with all the liar loans- arms and no docs loans that are
just now coming back to bite us- this guy has been right
on the money with his calls since the dot com bubble- his website
has videos from cnbc from as far back as 05- they coined the
term dr doom- now his predictions are there for all to see-
and these idiots still try to mock him clueless dweebs-
heres another doom and gloomer- his name is mort zuckerman
and hes a real estate and investment billionaire please feel
free to mock him too
http://www.nationalbubble.com/biggest-downturn-since-depression/
March 22nd, 2008 at 10:17 am
Yes, it’s very fashionable to ridicule Americans as out of touch lowlifes. I don’t “buy” what you are proselitizing. When 90% of people express confidence they will be able to payoff their mortgage, I find that an enormous number. The question is forward looking by quite a lot and to see 10% admit not knowing the future is quite low in my opinion. You are entitled to your glass is empty mindset.
March 22nd, 2008 at 10:23 am
THE SAD NEW OUT OUR COUNTRY AND OUR COUNTY IS THAT SO MANY SELFISH PEOPLE AROUND.
THEY ARE GOOD AT PRETENDING FOR THEIR OWN SELFISH
MONEY AND SELFISH EVERYTHING….
THEY WROTE UP SOMETHING TALKING DOWN THE HOUSING
MARKET “BY SAYING IT WILL BE 50%OFF” YOU MUST UNDERSTAND HIS EVIL INTENTIONS
“HE SOLD HIS HOUSES MANY HOUSES - NOW HE LIES TO GET PEOPLE PANIC AND CAUSE THE HOUSES DROP SO HE CAN BUY AGAIN!!!!!!” THE AUTHOUR OF THE Q&A AND MANY PEOPLE LIKE HIM AROUND CAUSES THE OC MARKET CRASH
March 22nd, 2008 at 10:56 am
Home prices need to come down to affordability levels. Will it be 20% or 0%, I don’t know. Median income levels are not good predictors because we live in a society that has multiple income earners in every household.
No one has a clue where rates are going. I think they will still go down.
The economy is tanking. Jobs are being lost, the financial system is in chaos, and we are following the same course as 1925.
As far as inflation, the commodities are unwinding and will do so as margin calls hit oil, gold, silver, and the grains. Supply/demand economics do NOT fully explain the steep rise in Commodity prices. Did you watch gold this week? Down 7.5% It is another bubble waiting to blowup. Do you know that hedge funds bid them up and they will come back down as margin calls get them unwound also. Real wages, which is 75% of the cost of anything, are still in check. Food and gas prices will go down as gas prices retreat. IMHO, rates will still go down.
But what do I know? If this expert, or myself, really knew where rates are going, we would be in the caribbean drinking MaiTais.
As Bill Gross said in an interview Friday, we should be worried about deflation. Huh? Yeah our home equity is deflating before our eyes, a thousandfold more than the gas and food prices. Think about it.
March 22nd, 2008 at 11:10 am
Rants and Bubble…I am curious: Do you wish for the US economy to falter? Do you relish foreclosures? Layoffs? You seem to post with such glee with respect to negative information. LIke the media, blood sells…as I always say: nobody will pay to see a kissing contest…but an ultimate fighting championship? Well, they will pack Staples twice on Sunday. It is clear to me: the left and media in this country are dieing for a democrat to hold office. They will stop at nothing to do their best to ensure that happens.
March 22nd, 2008 at 11:18 am
Garry Watts is the epitome of a clock being right twicw a day. I do not know whether Schiff has an agenda or not, but I do know these facts:
Unemployment and underemployment is an ongoing problem in OC (Remember, a lot of real estate professionals were technically self employed, and are not eligible to be reported in the unemployment figures.)
Foreclosures and NOD’s are increasing.
Inventory is not abating
Affordability is still an issue. Most residents of OC cann not afford to own without the assistance of some risky, exotic program (which, ironically, they can not afford upon reset).
Right now we are about 22% off (peak to trough). Given the above problems, I think that I can safely project another 15-20%, which would put us around 40% loss trough to peak. Now, I happen to think that these are conservative numbers.
If the economy truly goes bad (say a couple more runs on banks, followed by a true credit freeze), then we could be looking at another 20%.
March 22nd, 2008 at 11:23 am
Peter Schiff stood by his beliefs when everyone else was joining the bandwagon. I give Schiff a lot of respect not only for his correct market calls, but his ability to go onto CNBS and tell it like it is. He put his firm at risk if he was wrong. He told everyone about our problems in 2002 and if idiots like Bush, Bernanke, Paulson, the entire US Congress would have listened we wouldn’t be facing complete economic collapse. Good job Mr. Schiff, I understand and admire your courage.
March 22nd, 2008 at 11:34 am
It will be interesting to see what the summer brings. more declines? I think the inventory and sales volume should help show us the direction of the market looking forward.
20% is a heavy hit. And 50% is starting to look more like a possibility.
Predictions and projections are fine. Buffet bet the dollar would crash. He was right, but at the wrong time, and he lost. The lesson here is, make your bet, and buy if you feel this is the bottom. But DO NOT go “all in” like many bag holders have done. Be diversified. If you loose your bet, you will still have cash to re-enter the market at a better time.
Here’s the Peter Schiff tribute video, just in case you guys missed it last time around.
http://www.youtube.com/watch?v=AXGOq-ys9Js