charles hugh smith-Why a 50% Drop in Housing Is Not the Bottom

La subida de 10 años



El ciclo completo



La explicacion del ciclo (en mi opinion aun no hemos visto el false bottom en españa, en usa empiezan ahora



Why a 50% Drop in Housing Is Not the Bottom (April 16, 2009)


The psychology behind the idea that a 50% reduction in bubble-era housing prices constitutes a "bargain" is flawed for a number of reasons.

I recently saw a few minutes of a Nightly Business Report program on PBS in which a Florida broker was observing that homes which once commanded $350,000 at the bubble top were selling briskly now at $169,000 to investors from every part of the globe.

In other words: "These homes are half off! They're screaming bargains! They can't get any cheaper than this!"

The psychology behind this euphoria is accessible to us all. It's easy to forget where housing prices were before the bubble and focus instead on how much they've dropped from the bubble peak. The same is true in any bubble, be it collectables, real estate, stocks, or tulip bulbs.

But valuation realities have no relation to bubble top pricing. Thus we should ground our analysis of housing valuations and what constitutes a "bottom" in metrics other than "it's 50% off it's top price."

Let's start by considering just how high the bubble took housing valuations:

This chart reveals that housing in California more than tripled at the bubble top. A fall of 50% from that peak (i.e. $275,000) is still 60% above the starting point.


No model can predict the timing, highs or lows of any bubble, but bubbles tend to follow a pattern traced in human psychology:

1. As euphoria grabs hold, prices rise in a steep ascent to a point at which "everyone" believes there is no end to the trend.

2. The initial descent from the bubble peak is a "shock" which leaves the bubble mentality intact, i.e. the Bull Market in tulip bulbs, real estate, tech stocks, etc. is only suffering a standard retracement/indigestion; the trend higher is still in place.

3. In housing, this psychology is embedded in such chestnuts as "they're not making any more land," "real estate always rises over time," "population growth means demand for housing will always rise," "the house is the foundation of middle class wealth appreciation," and so on.

4. At some point speculators who were left out of the initial explosive rise jump in because "prices are a real bargain now."

5. This buying pushes demand above supply briefly, and prices start rising again.

6. But the realities beneath price action have changed, and this bargain-hunting burst soon fades as demand falters, supply rises and prices renew their descent.

7. Speculators and investors' memory of the tremendous profits made on the way up remain firmly embedded, forming an "investment memory" which locks them into the view that the upward trend will resume at some point. This drives wave after wave of bottom fishing in which speculators buy into an apparent bottom only to be disappointed/ wiped out by a renewal of the downtrend.

8. At some point, all the bottom fishers have expended their capital and prices retrace to the pre-bubble levels, or even lower. This is what can be called "the real bottom."

9. But the memory of past glories still remains in the minds of speculators/investors, and so a subdued uptrend starts as "hope springs eternal" buying kicks in.

10. Eventually this institutional/cultural "memory of an uptrend" fades as the "recovery" in prices fails. The truisms which fed the brief bubble and long post-bubble decline and recovery--that tech stocks were the future, real estate only goes up, the South Seas is the epic investment of all time, etc. are repudiated and lose favor. This is the ultimate bottom.

Can a 10-year bubble reach this "ultimate bottom" in a mere two years? History suggests not.



Continua en el link... muy bueno

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El artículo es bastante bueno, pero simplemente basándome en él:

- El crack dibuja una forma de L. Es decir, la vivienda NO estará bajando 10 años, como insinúa tu título. El artículo no dice eso.

- Y siguiendo lo anterior, el suelo llega relativamente pronto. Tarda unos 3 años en llegar y no 10, ¿me equivoco? Y es precisamente el tiempo que lleva petada la burbuja yanqui. Y luego le siguen unos 6 años de subidas no burbujeadas hasta llegar a otra caída.

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Que bueno

CULTURETA DE LA OPORTUNIDAD (VPO via rectal mediante)

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