Comments on: If Americans don't read beyond the headlines, we deserve the information we get

By: jasaz98

jasaz98 — Fri, 21 Mar 2008 17:00:03 +0000

AZSALUKI -
You made my point, “any type of profit” is exactly that, given BS being sold for 90% of its value post 2 hedge funds collapsing last year. The ability to even turn a paltry positive out of this mess is a HUGE sign and a sigh! Also, I will take the 1.8 billion write down as well as the 2.13 over the ~93 Billion that has been written down in the last quarter of 2007. Just the shear dynamics of that kind of loss boggles the mind, so in contrast 3 vs. 93 is a much more appealing number, one that I would call stablizing given that the 93 was a couple of short months ago.

By: inqydesu

inqydesu — Fri, 21 Mar 2008 15:44:16 +0000

Sandman – as Jasaz pointed out – you cannot extrapolate out 12 months like that.

And it is aparant that you don’t know the meaning of statistically significant. That means, that in a survey, you have true responses and distortions. Randmom Variations in the market create the noise or distortions.

That is why I pointed out the difference of the two meanings of significance. Significance of importance, or value, and significance, meaning that it can be used to espouse a position. If a survey shows that the level is plus or minus 5% and you have a change of 2.6% – it is not statistically significant.

So after you annualized, based on 1 month sample, you then assert “it is safe to say” we have reached no decline. You said that stability is going to zero – if the decrease is decreaseing (the delta v of price drops is reducing), then we are going to zero.

Numbers are not meaningless, and statistics can be helpful,but you have to make sure you understand their basis, and the actual information upon which they are based.
Sandman’s point proved Twist’s rule.

By: AZSALUKI

AZSALUKI — Fri, 21 Mar 2008 15:01:51 +0000

jasaz98,

“Net income for the quarter ending Feb. 29 fell to $489 million, or 81 cents per share, compared with earnings of $1.15 billion, or $1.96 per share, during the same quarter last year. Lehman’s revenue fell 31 percent to $3.5 billion during the first quarter.

Lehman Brothers took a $1.8 billion write-down during the first quarter because of deterioration in the credit markets. It had taken about $2.13 billion in write-downs in the previous two quarters combined, while financial services firms have taken about $160 billion in write-downs since the credit markets began to tighten.” from cnbc.com

I guess this is “any type of profit” but in my opinion (and it aint worth much) it does NOT signify a stabalizing environment??

By: AZSALUKI

AZSALUKI — Fri, 21 Mar 2008 14:40:48 +0000

We need to keep in mind that these “statistics” don’t always mean anything. Everyone uses the median prices of homes for these articles. Here’s the problem with these numbers today; WE ARE DEALING WITH A MUCH SMALLER SAMPLE SIZE. I know that we must use something to try to figure out where the market stands. However, using the median in today’s market is less useful than the median 2 years ago simply because sales are so much fewer. It’s kinda like the old accountant joke: “Sir, what does 2+3 equal?” The accountant replies’ “What do you need it to equal?”

If you look at a particular zip code where there were only 6 sales for the year thus far, and they happen to be more expensive homes, it sounds great when your realtor says “yeah, but in this zip code the median price has actually gone up!!”

Also, if your looking at an area where the population of your sample is an even number (lets say 20) there is no true median. Some will take sample 10 and 11 and use the average of the two. Others may just take number 11. If 11 sold for $20K more than 10 (lets say on a $300K home), your median price just became about 3-5% on the high side. Being the skeptic that I am, I feel many of these numbers are useless (especially in the studies done by ANY group with an interest in real estate).

Sorry to bore you with math on a friday….and I don’t even think our poor kids are in school today!!

By: jasaz98

jasaz98 — Fri, 21 Mar 2008 14:20:30 +0000

Seems like we have a lot of wanna be economists on this thread. Sandman – To annualize a linear 2.6% drop across an the entire period is not only not feasible but ridiculous, especially since we are somewhere in the middle of this thing. It doesn’t even follow true for the first year of it, it doesn’t even translate for the 2 years since the peak, so maybe an economics 101 course is needed indeed. As far as the drop, it is reality here, my home is around 23.6% off its peak, the drop is much quicker in reality versus the shame numbers being fed to the public in the media. But if that is news to ANYONE, they haven’t been paying attention.
There is one point I would like to speculate on though and that is the earnings of Goldman, Lehman and other financials recently. If you equate their ability to pull ANY type of profit in this market, especially financials, doesn’t this signify a stabalizing environment. This is speculation only, and given the wild swings in the market anything is possible. The point is that the housing market will lag the Street. So when the street settles its business and cleanses itself then we can start to see the housing sector begin to normalize. And by the way did you all happen to catch the FACT that Maricopa County is the fastest growing metro in the country. That is to mean that we will work that excess inventory off WAY before the rust belt or other parts of the country do. Good sign that our area just might recover in 2 to 3 years, since we have already experienced 1 year of it. What do you think Twist, sound more reasonable now, since my previous post on that topic?

By: twist

twist — Fri, 21 Mar 2008 13:45:38 +0000

TC-

Thanks TC. That was my point. MOM can vary significantly, so that’s not a number I’d care to prove much with, other than if you are using it to show “stability”, a number of 2.6% isn’t going to do it.

By: tc

tc — Fri, 21 Mar 2008 03:38:03 +0000

I’d say a 23% drop from the peak with roughly one 12th of that drop in the last 30 days sounds pretty significant. Maybe in the right context the numbers might not be as terrible as they suggest. But there is nothing in that information that even remotely suggests stability. Twist’s exact point was that we can’t expect enough context from the press when many readers can’t even begin to digest the simple numbers.

By: sandman

sandman — Fri, 21 Mar 2008 03:22:53 +0000

I am not sure a 2.6 % drop is “significant”.

I’m very sure that it’s “significant”.

Annualized, that’s a 31% drop. You talk about finding trends in the annual price drop, well, if we’re down 23% in the past 12 months and we’re currently dropping at a 31% per year pace, it’s safe to say that price declines are generally picking up. Certainly there’s no hint of stability in those figures, as “stable” would be zero percent (or at least trending towards zero, not away from it).

2.3 percent could very well be the normal variation, that makes it statistically insignificnat.

Not to pick on you, but if -2.3% is normal (which I disagree with – declines are not considered “normal”), that would be a 13% difference from 2.6%. That’s certainly statistically significant.

By: the kid

the kid — Fri, 21 Mar 2008 01:48:57 +0000

a wonderful cure for a midlife crisis would seem to be an economics class.

By: inqydesu

inqydesu — Thu, 20 Mar 2008 23:45:20 +0000

it cuts both ways. I am not sure a 2.6 % drop is “significant”. Do you mean significant, as important? or statistically significant? 2.3 percent could very well be the normal variation, that makes it statistically insignificnat.

Further a 23% drop off the peak could very well mean stability. What is that in comparision to? If you had 15 % drop one month, 10% the next, 5% the next and 2% the next, that would indicate stability to me? you have to put it in perspective.
In practice, 23% means that a 20% down buyer would be slightly upside down, if you bought at the peak. That affects things.

Further median price is deceptive. it was deceptive on the upswing, as people bought more and more expensive homes. You have to compare like to like, and look at the issues.

Which just means that your site and the Arizona Republic combine to prove the point you made in the post.

By: surak

surak — Thu, 20 Mar 2008 23:11:30 +0000

Twist basically pegged the overall problem on a previous post (stated to the effect that the government needs to set their priorities straight and do something about unemployment/jobs). The current govenment/cartel are going to strip everything they can out of this country regardless of the outcome or damage to this generation or subsequent generations.

By: Hutch

Hutch — Thu, 20 Mar 2008 22:51:50 +0000

I am not sure it is deliberate spin. Belief always finds evidence to support itself and ignores as much as possible any negative evidence. A lot of people are desperately clinging to the belief that housing will spring back soon.

Igor says blame

By: Keith

Keith — Thu, 20 Mar 2008 18:23:51 +0000

Yeah, now that you mention it, it does sound like more spin, doesn’t it? It sure doesn’t ease my concerns over buying another home.

By: Josiphos

Josiphos — Thu, 20 Mar 2008 15:34:53 +0000

Not many people make rational decisions period, Keith

Let them spin all they want. We’re a long way from done

By: Keith

Keith — Thu, 20 Mar 2008 15:22:54 +0000

“…not how they wished it was.”

So maybe the builders are now accepting reality and adjusting home prices to where people will buy again. But are they really there yet? Is it enough? It seems to me that they’ll still face stiff competition from banks needing to unload forclosures, which will go at firesale prices.

Now we need to ask how long will it take John Q Homeowner to lower his asking price for the house he needs to sell? It seems to me that the individual homeowner will be much more stubborn, since so much personal wealth is tied to the value of your home. Not many folks can make a rational ‘business’ decision regarding the value of their home.