November 8th, 2008 at 11:44 am
From Wikipedia:

“Biggs is author of the 2008 book Wealth, War and Wisdom (358 pages; Wiley; January 2008; ISBN: 978-0-470-22307-9). In this book, Biggs has a gloomy outlook for the economic future, and suggests that investors take survivalist measures such as looking into “polar cities” as safe refuges for future survivors of global warming. In the book, Biggs recommends that his readers should “assume the possibility of a breakdown of the civilized infrastructure.” He goes so far as to recommend planning adaptation strategies now and setting up survival retreats: “Your safe haven must be self-sufficient and capable of growing some kind of food,” Mr. Biggs writes. “It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. Think Swiss Family Robinson. Even in America and Europe there could be moments of riot and rebellion when law and order temporarily completely breaks down.””

needs to be understood. That, by Biggs, and, even, Barron’s’ coverage of ‘Home Compounds’, received little, to no attention. Both pieces were, well, previous to the recent the waterfall toward ‘003 lows..

Spot on! With future ARMs resetting and all the forthcoming layoffs producing more foreclosures how can anyone with half a brain declare the “housing crisis over”. Oh, we’re talking about Biggs. Isn’t he in his 80s? Must be the onset of Alzheimer’s.

(BTW – In a given market we track single family home issues by a variety of metrics, and agree with those who have opined in this blog and other places that use of median market home prices can be very, very misleading.)

That said, we track single family home prices by price bands, and can identify markets for our investor above where homes in the bands from median to median -30% are now increasing in price – when that happens we’d consider those valuations to have “bottomed”. In that same west coast market, however, homes above median price are still dropping in value, and homes at 2-3x median are dropping at even more significant rates.

Has the overall housing market in that community “bottomed”? – No. Can prices still fall in that market and things get worse? – Yes, for homes priced at 2x or more above the median there are likely some very ugly days ahead. Can the increasing prices / valuations in the median to median -30% price bands be derailed by credit issues / other future factors? – Sure they can, but that’s part of what makes the game interesting, isn’t it?

From our somewhat concrete perspective – you really can’t call “the bottom” until you see consistent upticks in housing unit valuation in a particular target price band. When I used the term “turning” in my post above, I was referencing the beginning of price stabilization / increases in some price bands (and did not explain that at all in my post).

What we’re seeing in many communities with more healthy housing markets is that the stabilization in price / valuation typically (not always) starts in price bands near the median and below, and then moves upward into more expensive price bands. That premise hasn’t held as well in some Texas markets (Houston and Fort Worth in particular), though they didn’t “bubble” near as impressively as many other markets around the country.

Finally – housing market recovery will be dependent upon much, much more than price alone. We’re trying to address that by measuring a host of factors for individual markets – including key demographics, job growth and unemployment, economic development measures, as well as rental market and single family metrics. We have a free index (the Homeowners’ Market Fundamentals Index) ranking markets for homeowners available at http://redfishemergingmarkets.com/pages/hmfi.html.

How wrong he was.

AP
Rich Poor Gap Widens

http://www.philly.com/dailynews/national/20081022_Rich_poor_gap_widens_in_U_S_.html

Is it a coincidence that this study is of the last 20 years, about the same timeframe the U.S. evolved from a manufacturing-based economy into a service-based FIRE economy?

http://www.nber.org/cycles.html
http://www.nber.org/new.html