David Merkel is an investment professional, and like every investment professional, he makes mistakes. David encourages you to do your own independent "due diligence" on any idea that he talks about, because he could be wrong. Nothing written here, at RealMoney, Wall Street All-Stars, or anywhere else David may write is an invitation to buy or sell any particular security; at most, David is handing out educated guesses as to what the markets may do. David is fond of saying, "The markets always find a new way to make a fool out of you," and so he encourages caution in investing. Risk control wins the game in the long run, not bold moves. Even the best strategies of the past fail, sometimes spectacularly, when you least expect it. David is not immune to that, so please understand that any past success of his will be probably be followed by failures. Also, though David runs Aleph Investments, LLC, this blog is not a part of that business. This blog exists to educate investors, and give something back. It is not intended as advertisement for Aleph Investments; David is not soliciting business through it. When David, or a client of David's has an interest in a security mentioned, full disclosure will be given, as has been past practice for all that David does on the web. Disclosure is the breakfast of champions. Additionally, David may occasionally write about accounting, actuarial, insurance, and tax topics, but nothing written here, at RealMoney, or anywhere else is meant to be formal "advice" in those areas. Consult a reputable professional in those areas to get personal, tailored advice that meets the specialized needs that David can have no knowledge of.
OK, let’s agree that the current real estate listings do not show the entire supply curve. I’ve pointed that out a few times.
I usually do this in conjunction with a comment about our lack of knowledge concerning the demand curve. Don’t you think that there are plenty of potential and qualified buyers who have been unable to get mortgages?
Much depends on when and how mortgage lending is restored — what our public policy is and how securitization is resumed.
Jeff (“Don?t you think that there are plenty of potential and qualified buyers who have been unable to get mortgages?”):
No one with a good income who can put 20% down is getting denied anywhere. The problem is that most people don’t have that 20% to put down (unqualified). We’ll have to wait for a confluence of dropping prices and increasing savings to create restorative conditions in the mortgage market.
Even then, it’s unlikely that people will be levering their entire retirements on second vacation homes (because they always go up) again.
As a current renter, I think housing prices need to decline a lot more before it would be worthwhile to buy. Property taxes, HOA fees, Insurance, Maintenance, and a big Mortgage: the American dream has turned into a nightmare for many. With prices declining and lots of inventory to be worked off, I agree a V shaped bottom is not to be. The bottoming process could indeed take years as it did in the 1990’s.
I would call it a “U” but I have the value of 11 months since these posts. We expect that the influx of engineers and administrative personnel for the “third lane” locks will give the high end of the market a boost.
Where? In Panama? Or the US?