From the "The Scariest Jobs Chart Ever", the increase in employment on the 2007 red line might be a good sign but what could be more important is the wages now as compared to the peak. Lower wages= fewer consumer purchases?
People do read a little too much into the housing bottom though. He's talking a nationwide bottom which may be correct.
But massive portions of LA have to correct still. Thats no joke at all. People can't afford stuff as it is and well see that for certain in lower rents for 2013. Housing is still overpriced. I'd guess its the same thing for the Bay Area. However, people hoping for a huge crash in coveted micromarkets like South Pasadena in LA, and I'd guess places like Mountain View in SF, are going to be very disappointed. Its not going to work like that.
I'll also object to his comment on cars being replaced as well. Cars are made better, and that started in the mid 80's with Japanese cars, and in the mid to late 90's with domestics. I have a 2003 G35 Coupe with over 150,000 miles on it and it is amazing fantastic. I found a small shop where the owner used to be a Infiniti master mechanic and his pricing is 30-80% of what the dealership charges, largely dependant on if he can get a discount on OEM parts or get a very good third party part. His labor charge is the exact same, but he charges for the actual time spent doing the work whereas the stealership charges a set block of time depending on the type of job. Needless to say he has charged me $325 for a job that would have been over $1000 at the stealership.
Anyway, he says the car will do 300,000. I've been from to and from Vegas in the car twice in the past 3 months with zero issue, and in fact valets on both trips commenting on how "hot" the car is. I don't drive during the week at all...that cars gonna last me at least 5 more years if not ten.
So I really wouldn't count on an expanding auto industry. Todays cars run forever with minimal expense for repair.
roberto, what is your general feeling about the current recovery? Things are obviously turning around at the moment. Do you think that it is sustainable? Do you think that we can get back to an organic market where things are not being propped up by various Fed central planning measures? Do you think that we are in a genuine recovery, or in the early stages of what will become another bubble?
I'm genuinely curious. You seem to call things as you see them and are more of an industry insider than I am.
Thanks Roberto! I'm with you on the self-driving car thing. The improvements in efficiency are staggering, if we had a system where vehicular movement was managed and automated by set algorithms. When cars were invented there was no way to automate anything, but we easily have the technology now. A lot of people have sort of a negative reaction to the idea, but it is really not much different than stepping onto an airplane where you have no control over anything.
The practical benefits of autonomous cars are very far in the future.
The most likely short term benefits will be reducing the cost of transportation of goods (this will most likely also be a hit to employment for truck drivers).
Eventually the technology will be cheap / reliable enough to include as an upgrade feature in luxury cars. It will be fairly gimmicky.
Once the price comes down further, fewer and fewer people will see the need for cars at all, instead opting for some sort of rental / on demand service. That's when we'll see real change. Many fewer cars will be sold, but that won't matter much because the auto industry has had a long decline in employment anyway. Average people will have more money in their pockets because they won't need to have so many cars.
But that's 20-30 years off, minimum. It might never happen.
I wrote that a crash was coming in 2004, and sold my investment homes then.
So you probably missed out on 15-20% equity gain if you had held on until 2007.
Timing is everything.
Could it be he sold for other reasons than he though a crash was coming? One of the 5 D's perhaps? Where's the cash from those homes? Why did you need to finance your present investments? Is it all a house of cards?