Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (37960)	8/15/2005 8:19:17 PM
From: SouthFloridaGuy	Read Replies (1) \| Respond to of 306849

Since housing is such an illiquid investment, and even in this day and age information is sparse (relative to stock markets), tracking it becomes quite an onerous affair. It's hard enough to figure out if a trend is over with stocks, and 10x more difficult to understand when the fat lady sings with housing. Nevertheless, certain pieces of evidence indicate that bubbles are potentially over in a handful of markets. This evidence comes chiefly in the form of 1) Year over Year (and in some instances, Year over Year over Year) inventory 3) anecdotal evidence of price reductions 3) clear evidence of "arbitrage" opportunities between rent vs. buy and a corrolary 3b) competitive price reductions from the buy to let crowd. Now a number of people will disagree with my thoughts. Indeed, I am the first to admit that none of the above is conclusive. Once again, we're not talking exchanged traded instruments which are marked to market at the end of the day. However, I think now more than ever these are the times to err more on the side of caution, given that we have a Fed which is attempting to steer a super tanker through the Panama Canal, effectively without radar and maps. It's hard enough for those of us obsessing on this subject for 3 years to figure out if the end is near, I can't imagine what it must be for the Fed if they are indeed concerned about "froth" which I think they are. The only logical conclusion is that the Fed will continue to raise interest rates until something breaks. Unlike the stock market in which it was duly recognized that we were in a bear market by 2001, after a 50% drop in Nasdaq and 20%+ decline in the S&P500, this will be much harder due once again to the illiquidity and lack of information concerning the housing market. The Fed will not "react" 6 months after the bust. By the time the Fed recognizes the housing pain and cuts rates, it will be 2 years into a housing bust, IMO, and by that point it will probably be too late and it will be questionable whether the Fed has the ammunition or motivation to save housing should it not manifest itself in deflation and/or unemployment - particularly in my line of work.