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I ‘geeked’ you all out (MSAs, MatLab, SAS) as that is my day + night job, looking at aggregrate credit risk of various asset classes — HELOCs, HELOANs, Whatever — for various, say, ‘participants’ in the credit market. To this end, we employ a variety modeling strategies and these modeling strategies require both analytic frameworks and calibrations/inputs of various critical variables. Sure, I’d love 7% yoy gains in a decade for my real estate asset class … but its not going to happen. Period. The sooner we all accept this, the better it will be. Appreciation is OVER, DONE, FINISHED for at least the next 5-10 years.
Instead, the topic du jour — since at least Q2 2006 — is “how bad can it get”, eg, what would happen if the 91-95 ca housing recession happened again OR if Japan’s 14 year long housing slide happened to america OR if credit spreads widened. No answer, in public , but for each of these and other scenarios, HP calcs don’t cut it …
RE your paper on housing as an asset — sure, housing is forced savings and sure if i bought in palo alto in the 70s, i’d be rich (people win the lottery every day!) — but other studies, schiller comes to mind, state the opposite - in real inflation adjusted terms, the net amount of REAL housing appreciation in america for the past 100 years is basically 0. 0% after inflation.
Don’t fight the tide (per Buffett), don’t pick up dimes in front of an oncoming freight train (per me) , POWERFUL forces are pushing the real estate asset class back to historical appreciation norms and, doing the math ON MY HP, this would mean that housing prices are going to slide hard in the short term OR just stall at flat prices (as japan did for 14 years) for at least the NEXT 10 to 15 YEARS
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I ‘geeked’ you all out (MSAs, MatLab, SAS) as that is my day + night job, looking at aggregrate credit risk of various asset classes — HELOCs, HELOANs, Whatever — for various, say, ‘participants’ in the credit market. To this end, we employ a variety modeling strategies and these modeling strategies require both analytic frameworks and calibrations/inputs of various critical variables. Sure, I’d love 7% yoy gains in a decade for my real estate asset class … but its not going to happen. Period. The sooner we all accept this, the better it will be. Appreciation is OVER, DONE, FINISHED for at least the next 5-10 years.
Instead, the topic du jour — since at least Q2 2006 — is “how bad can it get”, eg, what would happen if the 91-95 ca housing recession happened again OR if Japan’s 14 year long housing slide happened to america OR if credit spreads widened. No answer, in public , but for each of these and other scenarios, HP calcs don’t cut it …
RE your paper on housing as an asset — sure, housing is forced savings and sure if i bought in palo alto in the 70s, i’d be rich (people win the lottery every day!) — but other studies, schiller comes to mind, state the opposite - in real inflation adjusted terms, the net amount of REAL housing appreciation in america for the past 100 years is basically 0. 0% after inflation.
Don’t fight the tide (per Buffett), don’t pick up dimes in front of an oncoming freight train (per me) , POWERFUL forces are pushing the real estate asset class back to historical appreciation norms and, doing the math ON MY HP, this would mean that housing prices are going to slide hard in the short term OR just stall at flat prices (as japan did for 14 years) for at least the NEXT 10 to 15 YEARS
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