“I say that with absolutely no conviction.”

(2 pm. – promoted by ek hornbeck)

Real estate agent Steve Thoele is “curious” about the continuing decline in housing prices:

“You do kind of wonder where the bottom is,” said Mr. Thoele. “Sellers know in the back of their mind that their home is worth less than at the peak, but they’re still a little surprised when you tell them their $400,000 house is now worth $300,000.”

I kind of wonder, too.  Uh-huh.  If only there were data on home prices spanning back, say, a hundred years or so, that might indicate a somewhat stable historical mean house price.  Oh, wait a minizzle…what’s this?

This graph of the Case-Shiller index over the past hunnert-twenty years, or so, (last updated to 2010) shows that homes began outrageously over-shooting their historical value starting in about 1996-97.  The plot thickens.  It was a dark and stormy night.  A shot rang out!  Where could that housing bottom (and those weapons of mass destruction) possibly be?

I thought I recently heard Herr Doktor Shiller suggesting a further 15% to 20% to 25% drop in prices.  Or was that my national psychosis talking?

Wait.  What’s this visual hallucination irrupting into my consciousness?  Another update on current real house prices?  

Shazzam!  It looks like prices have to drop another 20% to 25% from peak before they regress to the historical mean!  Herr Doktor Shiller, who coulda know’d?  

Karl Case:

“The spring market could have some good surprises,” said Mr. Case, the economist.

“I say that with absolutely no conviction.”

I mean, you only helped create the friggin’ index, chappie.  

As a person who has zero-fucking-intrinsic-interest in real estate, but having some minimal courage of convictions, I’m predicting at least a 20% to 25% further drop from peak, to the historical mean. Fuck 15%.  Fifteen percent is for pussies.

As for the over-shoot in prices regressing only to the historical mean, which will be plenty damaging enough, considering we never reformed the banks and threw their executives in jail…where’s the bottom during wars and depressions?  Again, refer to “1917” on the Case-Shiller chart.  Let’s not get hysterical, but can anyone say “undershoot?”  

And having bankrupted the global economy and passed carrying capacity, can anyone say, “permanent undershoot,” “demand destruction,” or more simply, “die-off?”