The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Travis_Bickle who wrote (68131)	12/6/2006 10:39:52 AM
From: tdl4138	Read Replies (2) of 306849

Just a thought for the board... Everyone here has seen the same breakdown in HB fundamentals over the past year. We watched the stock prices reflect the collapse in the industry. Then, right when it appeared capitulation was in sight....the glass was suddenly half full and not half empty. Bad news became bullish and deteriorating fundamentals were to be ignored. The emphasis changed from "next quarter" to "next year" or maybe even the year after. The mantra now is buy, buy, buy or you'll miss the big move up. Take a moment and think what would have happened if the street's sentiment for the HB's as a sector would have continued unabated from the lows this summer. Back then, bad news was actually bad. CNBC was calling the housing market a "bubble" in the process of bursting. Now the media labels the collapse with new terminology like "soft landing". If you take the time and look back at the HB's for the last year one can easily see what has changed. Certainly, fundamentals haven't. The housing market is just as slow and dead in the water as it was months ago. The only difference is the media and how Wallstreet is treating the entire sector. What would have happened to the sector if the declining fundamentals were reported accurately each and every day? If we were still hearing descriptive terminology like "collapse" and bubble" every hour. How did Bob Toll go from describing last quarter as a "death spiral" to being "optimistic"? Remember, a quarter is only 90 days...What has changed is how the sector is perceived and how that reflects on the whole economy. If the media was portraying reality each and every day, how strong would the consumer be right now? Foreclosures are ramping exponentially higher yet it's not really "news". How do you maintain "a strong economy" stance if one of the largest sectors is totally mired in it's own excessive success and subsequent correction? For better or for worse, the RE in this country is readily associated with the national homebuilders. As is the overall health of the consumer as a major part of the economy. If you scare Joe6pk with the notion that his castle may not be worth what he paid last year and will be worth even less next month, how do you maintain the perception that everything is just fine and the economy is rumbling right along? Think that the "spin" can't be manipulated? Take a look at GM over the past year. Here was a huge major company being mentioned as a potential BK candidate. Didn't exactly instill too much consumer confidence. Along comes Kerkorian and since he saw all this "value", the BK chatter ceased immediately. Now he's gone, considerably wealthier and the BK talk went with him. But what has really changed at GM? Absolutely nothing. It's all about perception.

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