I read an article today on MarketWatch from an economist who makes a reasonable case that our housing market is nearing it’s bottom point. However, the article itself isn’t really what this is about: I’d like to point out the response to the article.
For a moment, take a step back and disregard whether you agree with the idea that our housing market may be near it’s bottom.
The comments left to this article were almost universally negative, with many of the commenters aggressively mocking the economist and questioning his honesty, intelligence and motivation.
That’s all well and good, but the real question is this: Could this intense negativity be a contrarian indicator that maybe the bottom is near?
After all – it’s widely believed in financial circles that intense public euphoria for a particular financial asset generally precedes large declines, and intense public negativity for a financial asset generally precedes significant asset value growth.
In other words, the more fervently the public tends to believe something about a financial asset, the more likely it is to be fundamentally untrue.
What do you think? Let us know in this anonymous poll:
[poll id="7"]
Also, I welcome (and encourage) your thoughts about this issue in the comments area below. Thank you for reading RealEstate.BryanEllis.com!
I think Warren Buffet said it best, “When everyone is greedy be afraid, and when everyone is afraid, be greedy”! Kind of sums up the last 10 years or so…
They write these articles to try to help keep the market going. If everything written was bad less people would buy and bigger problems would exist.
But for the real story just look at all the companies closing or laying off people. Microsoft laying off 5,000 people etc.. Someone wrote that if we counted unemployment the same way we did during the great depression we would actually be at 16% unemployment.
I think certain articles are written to test that very matter(just to see where peoples heads are). The contrarian is a very strong indicator in some investors eyes(stocks or real estate or what-ever).
They also say once you take emotions out of your decision making the signs are easier to read.
Articles or no articles if a person just looks at the world economy and where it is heading, the number of layoffs taking place and the intent of congress to raise taxes soon, it paints a pretty dim picture. If you add this into the fact that the number of loans being offered by the banks isn’t squat. Most so called new loans are not for new housing purchase but for refi’s instead, just try to get any kind of business loan. The credit market will take another tanking soon because of credit card defaults.
This all adds up to not looking so good. Maybe the worst is behind us but nothing indicates this yet. The trends are all still heading down and the government is mostly fiddling while Rome burns. The so called stimulus package is a red herring with almost no potential for stimulus and the banks are not open to doing anything except buying each other with the money they are receiving from the feds.
If I am wrong we only have about another three months to wait and see what happens. If things are going to get better some signs will show by then. If I am right in three months we will start to see very dire signs and we can look to at least the end of 2010 before there is any up tick for our economy.
Some of the most accurate information is being overlooked by both the press and the public because people want to hope.
If a person has access to money at this time it is a great time to make money no question about it. Problem is having some kind of access and making the right choices. Personally I would say the best thing to invest in right now is stocks if you know how to pick the good ones or maybe like some say just buy gold.
Don’t have the best answer but with no emotions and just looking at what is happening it doesn’t look too good for the near term or even the middle term for our economy.
Here is one really troubling non-emotional problem that isn’t being talked about.
Where is our government going to borrow the money from? China is the biggest lender of money to the USA at this time and there are signs they may not be willing or possibly able to lend more money to our government. What will happen then?
Chris B
The majority of loans issued is refi loans. New loans are very limited and business loans are non-existant.
A score of 680 won’t get you very far today, even though it is stated as a critical number.
Just because they have a lot of applications doesn’t mean they are being issued.
My wife works for one of the major banks and what they are being told to do and what they are doing is most likely illegal or at the least unethical.
Most loans being offered are not very friendly to the consumer.
If you have hard numbers I am interested but I am told the new low number is really 720 FICO.
This downward cycle of housing is far from over. The Alt-A mortgages are going to begin keeping us on the downside of this mess for a much longer period of time.
As an investment professional in stocks, I have seen the boom and bust of various global markets and their products.The extreme negativity as we see today in real estate is I believe, a contrary indicator.In view of the various fixes sponsored by the government and the extent of the decline the real estate prices have already suffered, I hope that before the close of the this year some triggering event will happen and that will spur the buying of real estate by those who are on the sidelines. Even now savvy investors with funds are loading up their truck in the hope of a turnaround but due to the enormous supply of houses already and due also to the ongoing foreclosures, this is not showing up in the statistics.I believe that during 2009, we will see the peak in price declines and a sort of bottom to arrive.Once a feeling of bottom is felt,the bargains will start to disappear and a turn around happens.