patrick.net

every week a new problem arises

jack abramoff, scott mclellan, wolfy -> world bank, etc...

Will anyone be able to fill Scotty's shoes? Who can master the art of "we don't comment on ongoing investigations?" Who has the stamina to repeat day after day, week after week, that Saddam "was a grave threat"? Who has the skill to weave the words "terrorists flew planes into buildings" into at least one question per briefing? The nomination floor is open.

Buh-bye, Scotty.

All I know is that when I mention the fact that RE has slowed, or that it could potentially even go down signifigantly in the BA to anyone that has bought, especially in the last few years, I get some very nasty looks, and even nasty replies. The common reply is that at least in the BA, there has never been a signifigant drop in RE ever. They are partially right to an extent, but I can't help but wonder what the implications of a runup in prices never before seen in BA history will do to those historical "facts".

the new press secretary

who's the new guy, someone even worse?

i saw Mary Matalin in person on a newscast the other day, it's frightening how the irish have been denatured into something truly horrible, eveything that is sweet and good and feminine has been stripped away...

George,

As I understood it, much of Florida's speculation (as was the case in AZ and CA's central valley) was on pre-construction contracts. It seems to me that the home builders will be hit very hard by cancellations and back-on-market houses.

Is this bubble going to be less “sticky” on the way down because the average homebuyer will have quicker access to all the relevant data?

I'm not so sure. It will be very interesting to see if available, immediate access to information changes the stickiness at all.

One one hand, it certainly affects buyer sentiment. Sites like Zillow, blogs like this and all the other bubble-blogs, and the ability to self-research probably will have a big affect on buyer psychology. As the bubble bursting comes on the radar of more and more people, the volume of Googling will increase, and I'd suspect housing demand will cool. This will probably be a faster cooling than previous episodes.

But as for sellers, I'm not so sure they are forced down the price curve any faster. There are significant fundamentals that cause seller price stickiness, not the least of which is pure and simple timing. Not all sellers are looking to sell at any one time. Some have flexibility, others just ignore the market and sell purely for life-event reasons. I'd suspect that new-home sales may be less sticky by a bit, but existing home sales will be just as sticky as they always have been. In fact, there's a good argument that the internet and blogs could makes sellers behave even _more_ stickily (is that a word?).

If I'm a seller in a down market I can use the internet, monitor blogs, get a pulse of market sentiment which I couldn't do before. Before, I had to rely upon my agent, who would do anything to get me to sell for their commission. Now, I can monitor this blog and get a better feeling for the "real" market; that is, the people to whom I want to sell. I might well be inclined to not sell until I perceive some change in sentiment, if at all possible. If I'm a FB, then likewise I'll just try to ride it out with some other exotic refi, or leave the keys on the counter top and head back East.

People are very lazy as a whole regarding current events.

I think for the astute observers (presumably us), near perfect, real-time information will serve us well and allow us to make better financial decisions

Yes. Technology can be a wonderful, useful tool in the right hands, but in the hands of a complete idiot...?

In the years leading up to the bubble's peak, I saw no evidence of people becoming any better informed, or improvements to their critical thinking ability (being able to USE information better). Whenever I would try to politely/meekly "educate" my perma-bull family members and friends about evidence of the bubble, typically one of two things would happen: (a) their eyes would glaze over, or (b) they would vehemently deny it and cite selective "evidence" --usually from MSM or industry articles-- justifying/rationalizing their own personal bias. Rare was the case when I won over any "converts".

Information may travel faster for those who know WHAT to look for and HOW to use it, yes. Unfortunately, the Internet has also enabled crap to travel much faster too. There is still no technological substitute for critical thinking ability.

Apologies in advance if this sounds elitist, but giving internet access to sheeple is like giving a blind man glasses.

I already forgot his name, but someone from Fox News.

you ARE joking, aren't you?

no surprise fox cover rising fuel prices, you can't blame the govt for that -- at least not directly...

-internet
+anarchy

Randy,

I don't know about communications. I simply see the fundamental numbers creating a lot more foreclosures this time around. Compared to the early 90s, the price to wage ratio is higher, the interest rates are trending up, there's a lot more risky loans and a lot more speculative activities at all levels of society. If prices even dip 10-20% for a few quarters, these people will be forced into foreclosure.

Just as online resources can be readily available to those who are pro-housing, so too is it for people like us. I suspect that as soon as the first big, red warning signs start popping up, the myriads of those on the fence, whom I think are a broad range if people will garner info from sites such as CL, this site, and others,stop buying cold turkey thus causing a dramatic halt to home buying faster than it would've been prior to online resources. The result could be a very rapid decline, causing a hard crash.

newsfreak,

I see a lot of people voluntarily quitting their jobs and go live with family/work under the table, just to get over the bankruptcy issue.

Could it be that “getting the word out” on the bubble from blogs

yes, patrick.net has saved the world... once again...

skibum,

Good point! It's hard to be a bear alone in a sea of bulls, but with easily available online information and informed communities of bears, it is psychologically easier to resist the temptation of buying in and becoming the last fool.

Wow, slvr already up 6%

DS,

Come on, please do not play Robert Cote of the left!

newsfreak,

You can catch most of his segments here

http://tinyurl.com/mlcqy

you need a high speed connection though

I think the increased access to informaiton will affect buyers and sellers differnetly.

Information re: the burst should have a strong affect on buyers; it will cause them to sit the market out. It will also disabuse them of any notions that buying a house is a good way to make easy money. This will make them less likely to speculate and/or take on enormous, risky debt loads. Moreover, it costs buyers little to sit the market out. They can always rent for another year.

Sellers, on the other hand, will be affected by information quite differnetly. A lot of them have a huge emotional investment in the price of their home. They simply will not want to admit that they are now half as "rich" as they were two years ago. Similarly, those who are leveraged to the hilt will not want to admit it to themselves, and they certainly won't want to publicly "admit defeat" by moving to a cheaper place. Very few people are emotionally cold-blooded enough to dump the family home on a moment's notice, especially when they have spent the past several years believing it was the "smartest decision they ever made," that their miserable tract home was the ticket to wealth, etc.

If both sellers and buyers were equally open-minded, the bubble would burst overnight. But since buyers are more open-minded than sellers, it will probably take a while longer. The Internet will almost certainly speed the crash, though, IMO. It'll happen fast anyway thanks to the leverage that people have been taking on, but the Internet will speed the process up even more.

skibum,

I miss my boyfriend's DV-R a lot...

Joe Schmoe,

I don't think it'll matter. Those mortgaged to the hilt will be foreclosure meat. They won't even be in a position to be a seller. The real sellers on the market will be the low basis homeowners and the builders/banks. Those guys will not have their head stuck in the sand.

So skibum,

Is the Daily Show your primary source of news? :P

HARM says:

"(G)iving interenet access to sheeple is like giving a blind man glasses..."

Yeah, and giving internet access to ignorant people is like giving condoms to bunnies!

-communting
+commuting

-nextr
+next

In Vancouver it's called a monster home. Stucco in Vancouver, particularly on condos, usually equals "leaky".

In California, from reading this blog, I detect an association between stucco and cr*p... ;)

Or as surfer-x says, stucco = sh*tbox...

Personally, I dream only of timbers and bricks....

Or that vinyl siding stuff, that's cool.... ;)

The Internet will almost certainly speed the crash, though, IMO. It’ll happen fast anyway thanks to the leverage that people have been taking on, but the Internet will speed the process up even more.

I must disagree for the following reasons:

1. Common sheeple's inability to filter useful information from industry propaganda, spam & biased crap. (see my above post)

2. Sheeple's general lack of critical thinking ability. (ditto)

3. The polls --up until very recently-- showed that most people had never even HEARD of the possibility of a housing bubble, much less believed we were in one. (I.e., most people are not Patrick.net regulars.)

4. Joe, you yourself made an excellent point contradicting this assertion:
the human ego/cognitive dissonance factor.
Similarly, those who are leveraged to the hilt will not want to admit it to themselves, and they certainly won’t want to publicly “admit defeat” by moving to a cheaper place. Very few people are emotionally cold-blooded enough to dump the family home on a moment’s notice, especially when they have spent the past several years believing it was the “smartest decision they ever made,” that their miserable tract home was the ticket to wealth, etc.

I suspect this bubble will pop pretty much the same way as those which preceded it: gradually in waves over several years, as interest rates on IOs/NAAVLPs reset, then amortize --depending on WHEN they bought. no one wants to even ADMIT they've made a million dollar mistake, much less ACT on this knowledge. Most sheeple will bury their collective heads in the sand until they are FORCED to deal with it (by Mr. Repo).

Well, don't forget how much the pressure for young people to buy come from their elders.

@SQT,

Yes, I saw that 70% figure quoted as well (might be on Patrick's links page). The thing is, there has already been plenty of MSM and local/anecdotal evidence of a bursting bubble in most parts of the country now. It always seems "obvious" to everyone AFTER the pop has started.

I didn't follow the RE news back in the last cycle ( I was fresh out of college), but I'd bet that there was also a fairly rapid shift in consumer sentiment back then as well. the Internet will speed up the news for some, but for most? I doubt it.

@SQT,

Btw, thanks for correcting my bad spelling.

You guys will crucify me for saying this, but I never forgave the Economist for it's infamous $10/barrel oil prediction and its support of BushCo in 2000 and 2004.

I think the internet has changed things in much the same way. Now I can not only have easy access to news from across the globe, but I can talk to people from all over the world and exchange information. I’m not even sure we’ve really grasped how much that has changed our world.

No arguing with that. I think where we differ is mostly in terms of degree of macro impact, not that the internet has had an impact. I still see the human factor as one that significantly limits any socio-economic benefits that most new technologies can have. Human beings are still have the same frailties and flaws they had 10,000 years ago. No matter how "smart' the tool, its impact is still limited by the tool-user. We live longer & better, have public education, yes. But still basically the same animal.

OTH, biotechnology/advanced genetic engineering may change this one day...

-are still
+still

Must start using Yahoo spellcheck, must start using Yahoo spellcheck...

astrid,

You are basing a lot of your interpretation of fundamentals on foreclosure rates. Foreclosure actions are very sticky, and will be even more so if there are record foreclosures. There is a capacity issue: legal and administrative systems are not staffed to handle massive foreclosure volumes. In fact, they probably only have skeleton crews now, because of record low foreclosure rates in recent years. It takes time to scale up operations. Also, if there are too many foreclosures in too short a time there might well be the intervention of political or legal action to stem the tide. I foresee class action lawsuits and political "temporary moratoriums" on foreclosures if it becomes an all out fire sale. The politicians will claim "stability" as justification; the lawyers will claim "liability" as a justification.

In either case, I see foreclosures increasing stickiness, not decreasing it. The least sticky scenario is an orderly "brisk" walk to the door, not a panic. There's another related problem. If it becomes a hard-landing, crash, Torschlusspanik, then it will be exceedingly difficult to get credit on reasonable terms. So, most people won't be able to buy anyway. This will be called a "credit crunch" and the various apparatus of government will creak into action (and inevitably make the problem worse). Again, it's a factor increasing stickiness. The best way for a frictionless market is for the market to be frictionless. Foreclosures are full of frictions.

HARM,

People come with filters and the internet is full of websites that will cater to their reexisting prejudices. The existence of the internet only increases their myopia.

I still maintain that it doesn't matter, the people with low equity in their homes will be wiped out, in 1 or 2 years' time, they will be in no position to be buyers or sellers.

SQT,

Though a fat lot of good that’s done………….

It's done very well by some interests. (And that's about as political as I'll get. They're all crooks and cranks.)

SQT,

I think the Economist made it's $10/barrel oil prediction in 1999 or 2000. I remember that a few months afterwards, oil started climbing upwards. I thought that was a rather amusing outcome for people who are so sure about themselves.

As for BushCo...I have a rather complicated relationship with the Economist. On one hand, I got most of my informal education re: business and economist from the Economist. On the other hand, the Economic have a schizophrenic approach about democracy in the OECD v. democracy in the 3rd world. I just can't bear to read it anymore.

-economist
+economics
:oops:

While it is obvious that all the people that post here are very well informed, most of those around us don't take advantage of the many new sources of information available on the Internet and feel "well informed" if they know who made the cut on the last American Idol...

P.S. to newsfreak, I don't see how looking for an attractive spouse shows lack of character. Unlike most of the women I know most of my male friends would rather die single than marry someone they didn't find attractive…

P.P.S. Despite my "lack of character" I'm volunteering to work all weekend on a Rebuilding Together project http://www.rebuildingtogethersf.org/ (one of the many SF charities I support with time and money)...

Come on, please do not play Robert Cote of the left!

i thought robert cote was hard left! :o

why didn't they just offer scott mclellan's job to bill o'reilly? that would make for some really interesting press conferences...

Apologies in advance if this sounds elitist, but giving internet access to sheeple is like giving a blind man glasses.

The answer is compulsory sociology training in schools...

I think the Economist made it’s $10/barrel oil prediction in 1999 or 2000. I remember that a few months afterwards, oil started climbing upwards. I thought that was a rather amusing outcome for people who are so sure about themselves.

they should swap jobs with the meteorologists and see if their hit rate goes up...