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Posted by on Jan 18, 2012 in Blog Talk Radio, Market Conditions | 5 comments | Print Print

Rich Toscano on Blog Talk Radio

We’re looking forward to the second talk radio event of the year on Monday, January 23rd at 8pm.

Rich Toscano of www.piggington.com will be our guest!

If you have questions or comments for Rich, leave them here in the comment section, and/or tune in on Monday and be a caller during the show.

Click here on Monday to listen to the show, or www.bubbleinfo.com.

Check out Rich’s latest full post here: http://piggington.com/december_2011_resale_data_rodeo

An excerpt from his article showing how inventory dropped off at the end of 2011:

Rich:  This stat above, which is very important because it combines supply and demand into one figure, was substantially lower than a year prior, by 22.2% to be exact.  So we enter 2012 with a fairly different setup, supply and demand wise, (and thus a more positive outlook for prices) than we entered 2011. 

On a gloomier note, that higher demand is taking place in an environment of lifetime-low mortgage rates… if (when, in my opinion) that prop is removed, the housing market will have to fend for itself a bit more.  Of course, that could be a way off.  In the meantime, those waiting for a big price decline are likely to be disappointed.

5 Comments

  1. JTR – FWIW, some anecdotal activity on this topic and one simple person’s view of the market conditions. I am focused on job creation trends (not to be confused with unemployment rates).

    At the request of some of our individual clients, we just formed a new REIT/Fund and started buying homes again (not in SD or you’d be getting our call). These investors are comfortable with the rent/return prospects over 7yr hold and 0%- 50% maximum debt (many are using their IRA/401k funds so we need to be hyper aware of the tax issues surrounding the use of debt/UBTI issues).

    Also just made a revolving loan facility of $5mm to a sophisticated flipper shop in SD/LA (not OC) at 50% LTV over a portfolio of $10mm.

    We are feeling much better able to quantify the downside risk in each of these different models today, vs a couple years ago.

  2. Jim, you are getting high quality guests. I don’t think Bill McBride has appeared for anyone else and Toscano is in the same league. I’ll be listening with real interest.

  3. I have followed Rich’s blog for sometime. Always good data. I too agree that 2012 will be a better year. We wont see any major price increases in most markets but we should see a bottom and a flattening and maybe some upticks once the new President is in office.

  4. oops typo on my name on the first post. sorry about that

  5. Question:
    Rich you state that in 1997 RE trough we overshot Price to Income by 21% decrease in price and today we are at a 10% decrease. How far down do you see prices falling after this bubble that was 2-3 times bigger than the last bubble?

    In Rich’s article he states that history has shown that prices have overshot on the downside on price to Income after the three last RE bubbles

    Rich states. “……….. We can see here that, despite the comparative vastness of the most recent boom, neither the price to income nor price to rent ratio has fallen as far below the median as they did in the two prior busts.  Of course, there is no guarantee that they will do so, especially since the government is supporting housing to an unprecedented degree.  But given the tendency for overshoot along with a raft of challenging economic considerations — shadow inventory, weak employment, and a potential interest rate shock spring to mind –

    I think the odds are fairly good that these price ratios will decline further still.”

    http://piggington.com/shambling_towards_affordability_november_2011

    TG

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