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A True Bullish Property Trend Awakens

January 21, 2011

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Michael David White, a contributor to Business Insider and Seeking Alpha, is chief executive of New Mortgage Direct. For my long-trend forecast on real estate please see 10 Key Charts.

10 Comments
  1. Mike permalink
    February 17, 2011 9:03 pm

    I have to say, your title startled me also. I’ve been reading your articles and graphs for months. But in contrast to James, I’m not impressed. You took a specific stance and with the smallest bump up, you write an article with a title to grab attention that looks like you’re doing a 180. So either you’re out for the attention or else you’re flip flopping. Either way, how can you expect people to trust your stance when a breeze flutters the leaves of the tree and you’re already calling it a Bull Market. The bull going on here doesn’t seem to be the market… and as James Tetreault noticed, the third graph, if the numbers are correct, completely obliterates the title of your article. I read your article a few weeks ago and came back to take a look and see how many people caught this talking out of both sides of your mouth. I can just say, “You lost me at Bull Market.” I read all sort of opinions, but when a writer takes a stance on long-term trends, I expect that to be backed up and I expect them to stick with their hypothesis. I guess this is what I could have expected from a mortgage broker…

    • February 17, 2011 9:22 pm

      Hi Mike, My obligation is to the data. You will find if you go back in time that my headlines reflect an honest call on the data. I don’t make the call. The data does. If the data changes, the headline must match what I see. Part of the problem is that you believe this headline refers to “long-term trends”. I mean it only to refer to a single point in time. Thus the headline “A true bullish property trend awakens.” The key description is “awakens”. It’s only a start. It was also wrong for me to use the word trend. I did include other charts counter to the headline and especially on delinquent mortgages and why the up news may be a false start.
      My long-term view and outlook on the market derives from a complete housing-chart collection at 10-key-charts-to-see-before-you-buy-a-home There you will find more arguments for bearishness in one place than you are likely to find anywhere. The final chart is my rating of residential real estate (“Sell”) and reflects my long-term position.
      All of this factual evidence is a counter-weight to your personal attack which says that I am “flip flopping” or “talking out of both sides of your mouth” or that my position was not “backed up”. Evidence guides judgment here. Thank you for your comment. Michael

  2. January 27, 2011 5:50 pm

    Here in Chicago we’re seeing more traffic- more inquiries.
    Prices for properties in many areas are now near 2001 levels.
    High end properties seem to be moving again.
    Estimate that 35% of recent sales are distressed properties.

  3. LJP permalink
    January 24, 2011 7:34 pm

    I just closed on a house on January 19th. In my opinion real estate is still overvalued in REAL terms and will fall lower vs. the price of commodities such as gold, oil or wheat. However, the rates are still surprisingly low (a condition that definitely won’t last for much longer) and Ben Bernanke’s QE2 has proven that he will inflate the money supply ’till the bitter end. I would advise anyone reading this to purchase a house after carefully examining your local housing market, with as little money down as possible, and with a 30-year mortgage (FHAs are the best due to their transferability) with a fixed rate. While I expect the housing prices to continue deflating, eventually Bernanke’s QE5 or QE6 will push the NOMINAL prices up and thus effectively inflate away your debt.

    • January 24, 2011 8:56 pm

      Hi LJP, I’m not expert on inflation, but, while I understand inflation has been used to cure credit bubbles past, it’s also my understanding that there is no guarantee of creating inflation. This is apparently true even when it is sought by the Fed and by the persons who run the printing presses. Inflation may be stopped, for example, in an environment of credit losses — with the money supply being reduced by the amount of the credit write offs. I believe your confidence in inflation is misplaced. I don’t say it’s not going to happen. I do say that the stats on foreclosures suggest that we could have another huge loss in residential property prices and a new round of huge mortgage credit losses. If we have a catastrophe on top of a disaster in residential property, then the route you suggest for investment will create substantial losses for the buyer following your method. Thanks for your comment. Michael

  4. James Tetreault permalink
    January 23, 2011 1:37 pm

    I don’t understand how the third graph does not obliterate any purported meaning to the first graph. There’s still a massive shadow inventory out there. As shown by Dr. Housing Bubble and other web sites the official MLS listings of homes available for sale in many cities and towns is but a fraction of the combined inventory when the homes in various state of foreclosure and bank takeover are included.

    If the current supply of homes for sale is approximately 8 months, as the first graph indicates but the actual supply of homes including shadow inventory is approximately three times greater than the number of those officially for sale, as the third graph indicates, then the current supply of homes is actually around 24 months.

    And that *is* quite terrible. And that’s not bullish at all.

    • January 23, 2011 3:17 pm

      HI James, the implications of paragraph three (comparing mortgage delinquencies and inventory and closed units) are exactly as you state: the listing of shadow inventory can wreck current prices. thanks for your comment. Mike

  5. January 22, 2011 10:43 am

    I have to say that getting a “bullish” signal from you startled me. I guess it’s time to start looking.

    • January 22, 2011 4:24 pm

      Hi James, the bullish trend is real but please remember the trend can fall down. make sure you drive a hard bargain. thanks for your comment. Mike

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