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Housing evangelist back to Scary Gary
July 1st, 2009, 12:03 am · 110 Comments · posted by Jeff Collins
Watts
(Update: Post revised to explain further the circumstances of the short sale of a rental property Gary Watts owned.)
Real estate prognosticator Gary Watts, who earned a reputation in recent years for making rosy forecasts, is now delivering his gloomiest outlook since Realtors called him “Scary Gary” because of his dire predictions two decades ago.
In a recent address to members of the Orange County Association of Realtors, Watts said:
“The recession has gone on so long and has been so crippling that any small piece of economic data that comes out favorably leads one to think that things are finally going to get better. Unfortunately, this is not so!
“Housing has low prices and extremely low mortgage rates. This should have been enough to turn us around. However, when you balance this against shrinking access to credit, instability of American workers to receive higher wages and crippling unemployment, the outlook is not good.”
Watts earned the nickname “Scary Gary” when he forecast the housing slump of the early 1990s.
In recent years, however, he called himself an evangelist of real estate optimism, forecasting rising prices long after the market had tipped into a steep slump. After three years of predicting price gains that never materialized, Watts had issued an apology.
Now, he told local Realtors:
- “This year is the 20th anniversary of my Dr. Doom and Gloom talk. Unfortunately, the (down) cycle’s back, and we’re going to be in it for awhile.”
- Since 2008, the U.S. government has engaged in a series of “botched” efforts to rescue the housing market.
- The core problem in local real estate is a lack of move-up buyers.
- While demand for homes selling for under $500,000 is hot, sellers of those homes no longer have any equity. They end up with nothing to invest in a bigger house. As a result, sales of homes for more than $500,000 are “dead in the water.”
- Foreclosures and “short sales” — sales of homes for less than is owed on the mortgage — continue to dominate. Other homes must compete with those properties by lowering their prices.
- High unemployment, tight credit and a new wave of foreclosures on Option ARMs and other creative loans likewise are combining to depress the market.
Watts has seen his own share of bad luck this year. The Mission Viejo broker was required to default on a loan for a rental home he owned as a condition for selling the home as a short sale. In his latest outlook, he said:
“To add to the housing woes, the Treasury is issuing a lot of money. The market is beginning to wonder who is going to buy all these notes and bonds. This will force interest rates upwards, putting more pressure on our already weak housing market.”
Other trends …
New real estate sales efforts …
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Better late than never Mr. Watts.
well, it looks like Watts is finally making some sense. I’m glad to see that he is finally being honest with the public. Unfortunately, it took me 3 years to see what I’ve been warning people about since 2005.
I meant to say “it took Gary Watts 3 years to see what I’ve been warning people about since 2005.”
They can not longer hide the truth
It shows that Mr. Watts is now reading irvinehousingblog.
NB, I think you’re being harsh on poor old Scary Gary. He wasn’t dishonest in his bubbleliscious prognostications, just clueless.
He’s addressing the Orange County Association of Realtors, I wonder how many of the realtors in attendance are busy reading their lastest issues of Archie and Friends? Most likey the majority since this guy is talking over their heads.
Now if only Dealeohole can grasp this… and her side-kick Dummer.
elementary dear watson, elementary
He’s been so wrong in the past why would anyone listen to him now? It seems like the market always does the opposite of what he predicts. So, I guess we have hit the bottom. Thanks Gary.
This man has no credibility. He is a day late, and a dollar short.
For the record, Gary’s record:
10/23/2005 ~ “I only forecast off the numbers … It’s all based on pure economics.” ~ Orange County Register
02/13/2006 ~ “Fifteen percent is pretty much in the bag for Orange County in 2006 … It’s impossible for prices to go down this year.” ~ Fortune Magazine
07/21/2006 ~ “I think we probably are not going to see 15 (percent), but I think 11 or 12 (percent) is still realistic.” ~ Orange County Register
07/22/2006 ~ “”August ought to be the last month of weak appreciation numbers.” ~ Orange County Register
07/22/2006 ~ “I really think that we are pretty close to the bottom of our real estate prices … August ought to be the last month of weak appreciation numbers.” ~ Orange County Register
12/31/2006 ~ “If the un-motivated sellers stay out of the market, we could be in for a very big surprise.” ~ Orange County Register
01/01/2008 ~ “Cyclical housing downturns have always occurred. The good news is these situations do not last forever. The cycles tend to run approximately 27 to 36 months, so this cyclical downturn should run its course by summer.” ~ Impact Real Estate Jan 2008 Housing & Economic Forecast
06/23/2008 ~ “I apologize for not knowing what Wall Street did to our mortgages” … “I had no idea how Wall Street restructured these loans.” ~ Orange County Register
I guess since your predictions of future median sale prices (which you no longer offer up) were proven wrong, you have no credabiility either.
He is posting Facts, and He is credible.
Lee, so many quotes you have cut and pasted…..do you have any other hobbies? Doesn’t mom make you cut the lawn or something to take up some of that free time?
Man, you must be his goffer to stick up for him like that!
Now that is funny…truly.
Oh my, what a dilemma to be a bear and read this! While you bears were saying what a dummy this guy was a few years ago, now are you going to change your opinion because he is inline with your predictions?
Oh my, what a dilemma to for those so reliant on RE to hear one of their own say things will not get better anytime soon…
I didn’t believe him when he said things will be fine in 06 and I certainly don’t believe him now. GW just does not have the courage to spot the bottom. He just sees where the trend is headed and uses the most recent historical data to support it continuing that way.
Look to Gary Watts as the perfect contrarian signal. Back in 2006, when Gary Watts was featured as a permabull for housing, the market was about to crash. Now, that he has turned into a permabear, it is time to buy! One cannot argue with the data. The MLS data shows that the current market condition in Irvine and surrounding areas are phenomenal. Prices are climbing dramatically, with sales $50,000 to $100,000 over last recorded close. This represents a premium of +10-15% for the homes just sold. With the threat of inflation around the horizon, there is no better place to park your hard earned fiat currency, than in a piece of real estate in practically the best area to live. Comeon Gary Watts! Even a broken clock is twice right. You should have stuck to your guns and not chicken out. You lose, but current homeowners and recent buyers are winning.
Oh Please … will you stop the nonsense!
Since inflation is ‘around the horizon’ = high rates = falling asset values. Yeah, sure, RE is a great place to park your cash lolllllll. No doubt your call in 2005.
You’re no harvard teacher. Check that, maybe you are.
Never happened in the past, but whatthehell.
Did you know that real estate is the best place to park your money long term in times of high inflation?
You are 100% correct.
Especially this:
“The MLS data shows that the current market condition in Irvine and surrounding areas are phenomenal.”
Yes, it sure does.
They say people in Irvine are being offered job at traffic lights. With all these new jobs prices can only go up.
What exactly does the data show, do tell!
Well, we have done it. We have broken through 9,100 active listings. Active inventory is 9,072. This is a shortage of epic proportions. Next stop: 9,000. Look NBI!
Plenty of homes for sale in OC. For example:
Laguna Beach …500+ units
NB…1200+ units
Irvine…900+ units
Coto..200+ units
CM…300+ units
RSM…280+ units
Anaheim..1000+ units
SA…800+ units
Tustin…300+ units
WHERE IS THE SUMMER SALES SURGE? lolllllllllllllll
MBA says: Mortgage loan application volume fell 18.9% in the week ending June 26 and sits 7.4% below its year-ago level, even with falling rates.
In your dreams. You need to upgrade from the sh*t services you use.
impressive rebuttal
what a hack
Hey, you leave Mrs.Doubbtfire/Big Bertha alone. She’s having issues…being no sales…lol
Next week she’ll become known as the Big Thumper…lol
Is 9100 the total amount of jobs in Orange County? Oh that’s right you don’t need a job to buy, or do you?
Maybe 9100 is the total amount of jobs that had to take a 5% cut in salary like the employees of the Register?
Job losses were factored in by 2007.
Was the “Real Men of Genius” theme song from the beer commercials playing in the background during the speech?
A little late to the rodeo, perhaps?
Harvard teacher..did you issue the “Harvard report”. It was as bad the past few years has as this doofus Watts.
By the way National Bubble: “I’m glad to see that he is finally being honest with the public.” Well maybe not totally honest. If I remember he said that he could afford to make the payments but he is choosing not to. Stick it to the taxpayers Gary. Thanks
Gary is truly a moron. He knows nothing about the finance side of housing. Doofus even thinks there are $1.5T in option arms outstanding. That’s 300%-400% of what is really out there. He knew nothing before. He knows nothing now.
I agree completely. In fact, virtually no one in the real estate industry knows squat. Realtors are the worst! And their hack economists are no better.
As I’ve written here before, people in OC are jumping on the bandwagon too soon. Saw it happen here in the Inland Empire during the buying frenzy of early 2008. Now many of these homes are 20% below 2008 values and are back on the market for a loss.
Unless you folks in OC are going to hang onto these newly purchased properties for a LONG WHILE, you will lose. Expect to see the value drop another 15% by this time next year. The market fundamentals aren’t there to sustain these prices you are paying!
“The market fundamentals aren’t there to sustain these prices you are paying!”
hey coco, I agree 100%.
I call those people “knife catchers”. They think they are getting a great deal because they are paying 25% less than the peak prices. They don’t realize that those peak prices were a fantasy.
Watts is no more full of it than anyone who thinks they can predict the future. In the best case scenario, it is informed guesswork. I do think he raises a good point about move up buyers. Many of the current sales aren’t producing a pool of cash to be used as a down payment for a new home. Then again, you also have lower prices in the move up market, which makes buying these homes easier.
oh yeah, I’m sure it was very hard to predict that houses in Santa Ana selling for 700K would have to come down in price.
Only YOU didn’t see that coming.
Bubble, you have no idea what I saw or didn’t see coming. Why don’t you inform us all with your median price predictions for the next 6 months or year? (I won’t hold my breath) Better yet, why don’t you post the business plan for your marvelous web site and compare predicted to actual results so we can all get a giggle.
hey Balls, last time I checked, I’m the one who lives 4 blocks to the beach in Newport so I must be doing something right. I’ve heard it is going to be really hot inland this holiday weekend. Please tell us next week.
Bubble, you live in Newport Beach? Wow? I never would have guessed that. I don’t think you have ever mentioned it before. You remind me of the losers who go into bars with BMW key chain in hand to impress the women. As I said before Bubble, you may have some money, but I’d guess it was inherited. I do know is you are dishonest, stealing time from your employer. I also know you are disgustingly disingenous, posturing concern for those who are hurt while cheering the real estate market down. The fact that you think it gets you “points” to (inaccurately) claim I live in the Inland Empire, while you are from Newport Beach, tells us all you are an empty, worthless, arrogant jerk.
how did you know I own a BMW?
Now, I’m truly impressed.
Lets tell the truth, all of these realtors puts way too much faith into what the NAR spews out their mouths. They hold nothing but pep rallies telling all the realtors how great the RE market is and all the commisions to be made in the coming months. Suckers, the NAR is no different than unions. They’ll tell you anything to get you to pay your dues annually.
Sorry Bubbs, he beetchslapped you there. You do throw around Newport Beach like it is the pinnacle of Orange County, yet complain all at the same time about oil wells and other facets of life there. The innuendos that those of us that do not reside in the hallowed ground of NB are less successful actually make you come across as a spoiled punk who possibly married into cash. For if you earned it, you would not be so quick to judge those who might be less fortunate than yourself and the rest of the Bubbles clan. The transparent “heartfelt” quips about those losing their homes which grace the pages here regularly, all the while cheering further price drops are “in the bag” just do not go together. You know it, I know it, and those on the rail know it too. My only question would be, if your children treated someone from the other side of the tracks as you do, would that be a proud parenting moment?
Anybody who brags they live in NB and drives a BMW usually doesn’t or is a renter (and leases the car). People with true success have the confidence not to tell the world.
National, maybe Im a little slow, but why would you wish or take joy in home prices going down if you live in Newport Beach? Wouldnt you want the market to stabilize to make sure your home has value for your kids. Im bearish on California as well but you seem to have a large stake in this mess if it does go south. Your thoughts do not reflect a person that owns a multi-million dollar home. Do you get a kick out of losing thousands? IMHO, You are a very confused person.
I guess all those big raises and bonuses people are getting will help them with their down payments.
Dealeo, what is the big deal about inventory dropping? There is a foreclosure moratorium in place. As soon as that is over, inventory will shoot back up and exceed last years numbers.
Foreclosures never stopped, you are mistaken. There is also no effective moratorium in place now, you are mistaken. What REO will happen will be quickly and efficiently absorbed at current price levels……or higher. Count on it.
Especially when short sales and REO are the market. Only a fool would try to sell an equity home in face of that. Remember loanowners are gamblers at heart, they’ll borrow and borrow and borrow, until at last they capitulate and take the loss.
Yes, foreclosures haven’t stopped in fact the rate of NOD and NTS are on par with last year or worse. But I’m sure the loan mods will take care of all of them or suddenly the market will shoot up to save them. No risk to the down side.
can i get a money back guarantee?
actually i can, just wait….. money in the bank….
I am not a supporter of Gary Watts but at least he is not hiding anonymously and taking shots at others. We know who he is and we know his track record.
On the other hand, we have all these posters changing their id every few months and hiding behind screen name. When Jon talked about getting together, no one was man enough to accept the invitation.
Why the fake name?
Fake names are a must. People stalk you otherwise.
I am using the same name for last 3 years unlike you who is changing id from provider/truthi/thoughtful/dealtracker to dealeo.
Jon, how about changing to real names. We will find out fakes here quickly.
Let go of being a control freak.
Don’t forget Olivas Salone,
just lump them all under DEALHOLEO!!!!!!!!!!
By the way, Dealeo, regarding your foreclosure related remark;
we can count on you for the baseless information and stupid logic.
I am 100% supported by verifiable facts. You? Not so much.
just like the world is flat camp…… 100% useless, and guaranteed to yield a bad decision
Give the facts, not childish accusations.
Deleo- please provide your data source for the <9100 inventory numbers. This site says theres just under 13k for inventory (with condos)
http://www.housingtracker.net/asking-prices/orange-county-california
MLS
Major Lying Sacks!
Just like Dealholeo!
You are the arogant, decietful, control freak that posts more that anyone.
Schizo-OCD-disorder!
all I can find is http://www.socalmls.com/Content/Content.aspx?ContentID=527326&CategoryID=596402 which I think is all of socal. ocmls.org doesnt seem to have anything.
is the data you have only available to realtors or something? or am I just not finding the right site for the data?
Can you post your Filters too? All of them? Thanks
Filters? That is all active inventory.
Go to calculated risk blog for your best, informative, fact-based, reality-based housing analyses. Don’t waste your time debating folks here who are clearly working for the collapsing industry. Choose facts not innuendos. Choose rational discussion not emotional rant. If you need to know any thing about housing loan and finance check out the late Tanta’s extremely informative writings on these topics in calculated risk’s archive.
What’s the fun in that?
Yeah, but they don’t know how ARMs work.
“They don’t know how ARMS work?”
You clearly don’t have a clue.
our government has just passed another assinine bill
which will allow underwater homedebtors to “borrow”
up to 125% of the value of their home that is already
upside down– guess who pays the loss when they
get foreclosed– you and me– if that doesnt piss you off
youre one of the leeches that is sucking money out of
my childs future- where is the friggin outrage at yet even
more government stupidity?
http://www.cnbc.com/id/31685244
I don’t see why news like this doesn’t piss off even the RE crowd.
people who decide to refinance at 125% of value are either
a. really stupid
or
b. outstanding citizens
Real Estate in the OC will experience a lost decade regardless…… and the debt is piled on the next generation regardless…
I read that, and I think it’s for those (Still-Current) about to default.
So for the rest, the situation remains as is.
Apparently you’re an expert at both national economics and…….smelly genitals!! llllllllllooooolllllllll!!!!!!!!!!
You don’t have more credibility here than the people call stupid.
Give it up. It’s over.
Stop the 125% nonsense with Congress. Write to your congressmen, senators, Obama. This is reckless stewardship of our economy.
I’m glad I can still come back to this blog and laugh at the rantings of dealeo. Lady, you are just too awesome.
I’m glad you choose to laugh when you really should be crying.
I’m crying why exactly? I haven’t lost 100K on a bad purchase nor am trolling websites in order to try and see if there’s any business out there. I should buy now or be priced out forever, I guess. But then again, if I bought when you said “bottom” in April of ‘08, that’d mean I’d be out a lot of $.
Out of pity?
What does Gary say about the attempts by the BIA “to get the economy going” with new permits? Dies this make any sense? I mean if there are too many widgets on the market, why would we need to make any more until that over-supply of widgets is gone. Anyone making more widgets, with say the help of government money, is makingthe widget market worse, correct?
this info would have been useful about a year ago. he’s a little late to the game. he’s just stating the obvious now.
i’m surprised he still gets invited to Realtor associations given his previous track record.
Does anyone think the realtards will tell their customers about GW’s current forecast? When I was thinking of moving up in late 2005 every realtard I talked to sent me an e-mail of GW’s latest forecasts, he was the messiah for many of them. The big thing I remember that the realtards pointed out was his theory that with low unemployment and good paying jobs in OC, real estate could do nothing but go up. Now that his forecast is not so rosey and unemployment is high I’m sure they will say he is someone who is out of touch. Too funny!
The following statement has several flaws:
“Since inflation is ‘around the horizon’ = high rates = falling asset values. Yeah, sure, RE is a great place to park your cash lolllllll. No doubt your call in 2005.”
1. You assume that the Feds will increase interest rates dramatically and quickly enough before the spike in housing prices occur. (It is already occuring)
2. You assume that higher inflation will cause falling asset value. While this may be true for the stock market which operates on profit margins, residential real estate is more immune to inflation. Even Dr. Gary Shiller admits that housing has more or less kept up with inflation.
3. You assume that the whole country is one homogenous real estate market. Witness the discrepancy between housing prices in Manhattan, NY vs. Jackson, Mississipi.
4. You assume that there is a better place to “park cash”, such as CDs, money market, gold or perhaps treasuries. However, gold is hard to store physically, and cannot benefit from leverage. You cannot live in CDs, money market, gold, treasuries, let alone raise your family there. Remember, “where your treasure is, there your heart will be”. Too bad that gold, cash, and other currencies cannot create the beautiful memories that comes from the bond of homeownership in a community. To rent is to be transient.
5. You assume that I did not predict the housing crisis. I did, and moved to cash. Now with the wholesale devaluation of our currency by the Fed and Treasury, real estate is again the best investment, at least in Irvine.
Halloween costume identity, circa 99 cents store!
“real estate is again the best investment, at least in Irvine.”
Am I the only person here who thinks that Irvine is one of the most boring places in the planet?
Who would want to live there?
not me
Not me either. Too hot with the hills blocking the ocean breeze.
Boring city, boring people. There are good schools in other places that are much more interesting and vibrant and provide a better cultural environment for children (to the extent that OC has any culture at all…). I am sure it is a good match for some people.
SC2, I would have to disagree, OC has great weather and offers a very decent public education. Most school HS teachers would prefer OC students over LA or SF or NY. Why? Because they are brought up more well behaved and have an inkling to learn, whereas in the culturally diverse cities, they do not have much family values. I wouldnt say OC has the best family values but they have more than most cities. OC, aside from the high price of home is a great place to live. I know this because Ive lived in almost every major city at least for 3 months due to my work. OC offers alot, sometimes you just dont realize it.
I would agree re: nice weather and, as noted in my post, I said there were good schools too. Nice weather and schools don’t change the fact that it is quite possibly the most boring place I have been to LA/OC. I have also lived in a number of the largest cities in the country, and much longer than three months at a time (so you actually get to know the city). Regardless, I wasn’t talking about other places,just OC - having lived here for many yrs, I know it quite well, but just my opinion.
We are facing wage deflation and your saying housing prices will go up. Where do you think the money will come from, will home buyers get 2nd jobs as prostitutes or pornostars?
If you think of going back to the “Flip-Flop” Game, think hard
what an idiot! he’s a guesser, like a coin flipper. got lucky and guessed right a few times in a row, many years ago. why does anyone even care what people like this have to say?
harvardteacher- lmao- your spiel is the same BS that
the realtors have been spouting since the bubble popped
get a new schtick
so a guy walks into a bank and says- I’d like to talk about a loan-
the banker says- sure how much can you lend us– llloollllllllllllllllll
Rants:
That joke is the funniest and most sensible thing you have ever posted here. Good job!
Pat-V how are you holding up in this category 5 ? Great to see you can laugh about it….
Harvard teacher please give your GED back and leave the island…. you have been voted off….. there are a few people here who can drop the H, you sir aint it….
Mav:
Holding up well, thanks. Category 5 is a good a reference. Looking for the eye so we can all take a breath before whatever comes next.
finally this guy is right….
ha ha…cannot wait to see these prices back where they were in the late 80’s….generational change in the way that we are going to be living our lives…
disregard bill gross- hes just another one of those bitter renters
http://www.cnbc.com/id/31707377
This must be his court-ordered community service for defrauding the public for so many years. How many families did he ruin by his rosy forecasts when he knew we were in the biggest real estate bubble in history?
SELLERS SELL NOW OR BE LOCKED OUT!
$600k+ home sellers drop your price now and sell during this high season or you will be locked out! You can read the news even
Gary Watts and the NAR says your home will drop in value 20% this year. So next year’s high season will be 20% lower than this year. Don’t make the mistake of trying to time the market to get top dollar. Drop your price and sell now before it is too late!
Gary Watts says:
While demand for homes selling for under $500,000 is hot, sellers of those homes no longer have any equity. They end up with nothing to invest in a bigger house. As a result, sales of homes for more than $500,000 are “dead in the water.” High unemployment, tight credit and a new wave of foreclosures on Option ARMs and other creative loans likewise are combining to depress the market.
http://lansner.freedomblogging.com/2009/07/01/housing-evangelist-back-to-scary-gary/28335/
Sellers drop your prices now and sell or be locked out!
Jake (psycho) nice scare tactics.