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Buffet says real estate slump to end in about 2011, prices t

 
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news



Joined: 14 Jul 2007
Posts: 0
Location: Greater Boston
PostPosted: Mon Mar 01, 2010 2:27 pm GMT    Post subject: Buffet says real estate slump to end in about 2011, prices t Reply with quote
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Description: Buffet says real estate slump to end in about 2011, prices to remain "far below 'bubble' levels"
URL: http://www.boston.com/business/articles/2010/03/01/buffett_sees_end_to_housing_s ...truncated...
Info/Broken?: http://www.bostonbubble.com/link_info.php?id=2853

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balor123



Joined: 08 Mar 2008
Posts: 1204
PostPosted: Mon Mar 01, 2010 3:09 pm GMT    Post subject: Reply with quote
Um yeah. Like they are now.
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admin
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Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
PostPosted: Mon Mar 01, 2010 3:15 pm GMT    Post subject: Reply with quote
balor123 wrote:
Um yeah. Like they are now.


For many parts of the US, I think they are. Boston is not a representative sample, unfortunately.

- admin
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john p



Joined: 10 Mar 2006
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PostPosted: Mon Mar 01, 2010 4:06 pm GMT    Post subject: Reply with quote
Are you using the Case Shiller Composite as the basis of that statement?

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_072820.pdf
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admin
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Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
PostPosted: Mon Mar 01, 2010 5:42 pm GMT    Post subject: Reply with quote
john p wrote:
Are you using the Case Shiller Composite as the basis of that statement?

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_072820.pdf


Yes, that's what I had in mind, except inflation adjusted. Though now that I look at it, those prices are hardly below bubble levels yet either. See here:

http://www.irrationalexuberance.com/index.htm

http://www.econ.yale.edu/~shiller/data/Fig2-1.xls

Maybe Buffet was primarily referring to new homes, which I think is of most relevance to Berkshire. Maybe he was also factoring in additional declines expected in 2010 and part of 2011 and perhaps even further if he is talking about a recovery in volume rather than price.

- admin
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balor123



Joined: 08 Mar 2008
Posts: 1204
PostPosted: Tue Mar 02, 2010 4:21 am GMT    Post subject: Reply with quote
john p wrote:
Are you using the Case Shiller Composite as the basis of that statement?


Yup. Compare the area under the graph before and after the dip and tell if they are even remotely equal. Then overlay and income graph and show the difference.

I think admin is right though about Boston not being representative. Even Silicon Valley looks affordable now! The only other places that seem more messed up are parts of Canada (despite their higher lending standards) and NYC.
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