Housing Forecast, August 2005

Thursday, August 21, 2008 | 10:00 AM

Sifting thru some material for Bailout Nation, I came across this video interview -- recorded exactly 3 years ago today!

This was a pretty contrarian stuff back in 2005 -- although now its become a lot more common place -- but I recall it generated surprisingly little email.  I always find the nasty emailers comforting from a cognitive perspective -- it means you are challenging a deeply held emotional viewpoint.

I suspect that, at the time, this broad discussion about Housing and Financials was perceived as merely that of a crank. Three years later, it turned out to be rather prescient:

• Housing Tops out in in 05/06 after a 6 year bull move; Condo Sales, rising interest rates, are all weighing.

• Percentage of asking price, length of time on the market, inventory for sale, and  Home affordability are all negative;

• Look for real estate prices to fall to 15-25% (even 30%) from the peak; 

• Avoid Home Builders, Money Center Banks, Financials and REITs, avoid Home Depot and Lowes; In these sectors, get defensive in 2006.

• If the Yield Curve gets Inverted, it is broad negative for the economy

• Look for a possible recession in 2006/07


click for video


A pretty contrarian call, with a lot more right than wrong at the time. The institutional clients that followed this advice -- especially about the Home Builders and Banks -- made a lot of money . . .

The recession call was a bit early, but overall, I'd give this a A-.


Awaiting Housing's Big Chill 
Maxim Group's Chief Market Strategist Barry Ritholtz predicts doom after the boom.

Thursday, August 21, 2008 | 10:00 AM | Permalink | Comments (20) | TrackBack (0)
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Solid A-

Posted by: Penguin | Aug 21, 2008 10:14:38 AM

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