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gregpfielding says

The whole point of the The Fed's paper and my analysis of it is that number of Sellers (inventory) is down (6,000) from 2010-2011 (9,000), even though the price of homes has risen substantially since then.

We would expect MORE sellers to want to sell at higher prices, not fewer.

I agree, but I think we need to distinguish "normal" higher prices versus substantially higher, or bubbly prices. After all, in a normal market (say 1982 to 2000) it was normal to see higher prices year after year thanks to inflation. Yet no-one would argue that we should have seen substantially higher inventory all that time as prices rose. If we did, it was only because of new builds, becoming relisted as the exurbs and corresponding population grew - but that is not the sort of dynamic the fed is talking about.

Also, for what its worth, while it doesnt show up on that graph, I believe inventory was extremely low (under 4,000 units) for most of the red-hot 2001-2005 timeframe. Thus, there was at least a 4 year period of 20%+ price gains where inventory didnt increase in the slightest. Basically, inventory didnt really rise until we were at the apex of the bubble prices.

gregpfielding says

I'm not sure what it was like actually living in DC for all of that. Personally I believe that those were all made-up crises, exaggerated by politicians so they could all make their speeches, but there there was never any real threat of anything bad happening. I can't believe anyone in DC would have sold their home thinking that a potential government shutdown would cause their home to plummet in value.

Certainly there was some exaggeration, but this was and is the most serious threat this area faced. For starters, during the shutdown, No-One was paid - that is a fact. And for a long time, they werent sure if they were going to get paid. During the shutdown and sequester, Just about every federal agency was sending round memos planning for reduced schedules. Further, outside contractors actually did fire quite a few folks as that 6.2B federal contract they hired the people for has been delayed or scaled back, or cancelled. If you think I am exaggerating, check my posting record -- I am one of the more level-headed posters here. Yet, I can tell you, unequivocally, this was by far and away the scariest potential crisis this area faced.

And in any event, lets keep some context here. You are arguing that people are all going to "wake up" look around at the rising prices and collectively, "en masse" race for the exits. My counter example is (a) prices in DC have risen continuously for three years, and even if this was a sanguine stable time, at no time during those three years did they "rush" for the edits. Also, in case that isnt enough to persuade you (b) despite the fact that there were so many hyper-specific scary as shit reasons to cause them to "wake up" and list, take their huge profits and go home to Iowa, they just sat there, not moving inventory in the slightest.

So in sum, while I do think you will see some movement in the inventory one way or the other, I think its a big mistake to assume anything equating to a "rush to the exits" or an "en-masse" action will show up on the inventory rolls. This blog attracts some exciteable people who have a tendency to overstate what this or that is going to do to the population of would be sellers who otherwise dont give a shit. I personally think this is just another such occasion.

The Professor says

In spite of the "7.2% unemployment rate" there are millions that are not included because they have exhausted their unemployment benefits. They are not counted but they still want to work but can't find employment.

Hi Professor,
the ue rate is based on people looking for work, whether or not they are getting ue benefits. So someone whose benefits have expired, but is still looking, would be counted. This number is determined through surveys.
There are certainly discouraged workers who are not looking, but not everyone who is off of benefits is counted as discouraged worker.

The Professor says

I did not look very hard to find this. So if 41% of working age adults are not employed and 10 to 20% do not want to work that still leaves us with an unemployment rate of triple the official number. Is my math wrong?

Some percentage of those are in school.

Anyhow, I don't question the point that there are discouraged workers not counted in the official unemployment rate. My point is that this rate has nothing specific to do with the unemployment benefits or lack of same.

The Professor says

did leave out deadbeats. What percentage of the population does not want to
work even without government benefits?

Stay at home Moms?

tatupu70 says

The Professor says

did leave out deadbeats. What percentage of the population does not want to
work even without government benefits?

Stay at home Moms?

That demographic is the true bastion of backwardness, almost the same as muslim women wearing burkas in america, well maybe not quite but still....

The Professor says

Would you agree that the REAL unemployment rate (those that want to work full time but can't find a job or are under-employed) is well over the official rate of 7.2%?

Yes, I agree that there are many discouraged workers and under-employed.

egads101 says

In fact, their prior guess, that many owners are still underwater and hence can't sell at today's prices would be a hell of alot easier to investigate, and they didn't even bother to do that.

Because, if that were the reason, then we would be seeing more sellers as more of them are no longer underwater with rising prices. Instead we are seeing fewer. That may be a part of the reason for some people, but it cannot be the main reason.

egads101 says

Name ANY time in history when real estate markets changed quickly. I was the crash coming from 2005. Inventory built up spectacularly in 2006, but prices kept going up. It took a snails pace three more years to really crash prices.

Inventory began to start building in the Fall of 2005 and prices drifted higher for another 4 months or so, until roughly the Spring/Summer of 2006. Then they began to fall. The more they fell, the more sellers listed and the fall picked up steam.

I'm not sure how you define quickly... some parts of the Bay Area and central valley fall 40% in 2008 alone.

I do agree with you in that, even if this is the beginning of a change, we probably won't see prices really start to drop too much until next June or July, as Spring sellers start to give in and drop prices to compete for buyers.

I'm not predicting this... I am not saying that I have a crystal ball. However, I do believe there is more risk in the market than a lot of others here are giving credit.

egads101 says

NOWHERE in that paper does it even suggest any sudden rush to exit now or in the future. Either you can't read, or you just chose to make that title up yourself.

Further, "waiting, since prices are rising" was given as exactly one speculative guess to describe the situation: rising prices/falling inventory.

It was more than simply "one speculative guess," it was the conclusion they reached as the most likely reason. And, if everyone is simply holding on BECAUSE prices are rising, the implication is that they will no longer hold on when prices are no longer rising.

Clearly you believe that the market has shot up 30% in the last 18 months based on solid fundamentals and a booming economy. Clearly you believe the trend will continue.

I worry that we are nearly back to peak pricing (which most of us would regard as more than people can afford) and we've been buoyed by artificially-low interest rates and housing inventory - both things that are not going to last forever.

I live in Danviile where the inventory of homes for sale has been anywhere from 30-40% of where it should be for the last 18 months or so. Buyers wanting a certain neighborhood have no choice but to complete for the handful of available listings. Prices have skyrocketed.

If inventory would have been normal, I doubt prices would have risen much. When inventory normalizes, I expect that prices will trend to where they otherwise would have been.

I just want to say I think condescending behaviour on this site inhibits communication and the learning process
as well as creating a hostile, uncomfortable, fearful environment.

Mr. Fielding I believe is a Realtor. I personally do not expect him to communicate as a NASA Scientist.
Ok with me. I would think people come to this website in an attempt to make sense of this current,
complex, economic environment. Sure, 2005 was a 'no brainer', anyone with an IQ over 100 had the
thought the market would crash no matter what the media was telling us.

Over the years, I have thanked Patrick many times publicly for my good fortune 10 years ago.
However, at this moment, I will not disrespect myself to be cathartically shit on.
Whatever floats your boat, but for me, absolutely not.

As I have also mentioned publically, had my thinking been a little different, I would have played
this phase of the game differently. I would have saw the opportunity. Didn't happen.
Please see paragraph one and two.

egads101 says

3 years ago, you didn't expect them to rise...In fact, you posted on here that you expected them to go down 100,00s of K further...

I did. I expected the bubbly to fully-deflate and prices here in the Bay Area to return to 1998 levels or lower. I was selling foreclosures for banks and had intimate knowledge of the pipeline.

I did not expect government interference to be so effective. With moratoriums and FASB accounting changes, they essentially shut down the foreclosure pipeline. Then Supply began to fall and prices start to rise again.

I also am not claiming to be an oracle.

gregpfielding says

I did not expect government interference to be so effective. With moratoriums
and FASB accounting changes, they essentially shut down the foreclosure
pipeline. Then Supply began to fall and prices start to rise again.

Except that's not true. The foreclosure pipeline has been very much depleted and in CA isn't that far above norms now.

David9 says

Mr. Fielding I believe is a Realtor. I personally do not expect him to communicate as a NASA Scientist.

Ok with me. I would think people come to this website in an attempt to make sense of this current,

complex, economic environment.

Trying.

David9 says

I just want to say I think condescending behaviour on this site inhibits communication and the learning process

as well as creating a hostile, uncomfortable, fearful environment.

I've been on here for years and Patrick has regularly shared links to articles I've written. I can take the heat.

You are absolutely correct that there are probably dozens of lurkers here who would like to contribute but don't want to deal with potential attacks.

tatupu70 says

Except that's not true. The foreclosure pipeline has been very much depleted and in CA isn't that far above norms now.

Not sure what you mean? I said the foreclosure pipeline was depleted. Do you mean not that far above normal foreclosure numbers?

gregpfielding says

You are absolutely correct that there are probably dozens of lurkers here who
would like to contribute but don't want to deal with potential attacks.

Yes! And that is lost knowledge.

"Information is not knowledge"
Albert Einstein

gregpfielding says

Not sure what you mean? I said the foreclosure pipeline was depleted. Do you
mean not that far above normal foreclosure numbers?

I think I misunderstood you. I was thinking you were implying that there were properties remaining to be foreclosed. Now I think you meant that people refinanced so they won't need to be foreclosed.

Is that correct?

egads101 says

I find giving my excellent advice out for free, plus calling lots of people fucktards and nitwits on here quite cathartic;

Can't really do either during the day gig :-)

Isn't that the archetypical job description of a college instructor?