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2005-20062005-2006
CALIFORNIA END 2005CALIFORNIA END 2005
SELL WHEN?SELL WHEN?
2006-2009 A Bonanza 4 Signs2006-2009 A Bonanza 4 Signs
2004 2004 Los AngelesLos Angeles
TimesTimesOwners areOwners are
taking ataking aProfit &Profit &
Moving outMoving outof California!of California!
“Hello, my name is Charles Ponzi and I approve of the Housing Bubble.”
Face it, the Housing Face it, the Housing Bust is here!Bust is here!
NASDAQ SELL @ TOP 2000?NASDAQ SELL @ TOP 2000?
"We've had a real bubble to some
degree. I would be surprised if there
aren't some significant downward
adjustments..."
DEAL OR NO DEAL??DEAL OR NO DEAL??
Take A Profit?Take A Profit?
Sell=RedSell=Red Buy=BlueBuy=Blue
2003 Where are the 2003 Where are the Bubbles?Bubbles?
2006=Buyers Market? 2006=Buyers Market? My estimation is 2009-11My estimation is 2009-11
Recession=Car Sales DownRecession=Car Sales Down
Housing = Consumer Housing = Consumer (Sell into Greed/Buy into Fear)(Sell into Greed/Buy into Fear)
Bargains Ahead?
Projected declines in median existing home prices for
selected metopolitan areas.
SOURCEMOODY’SECONOMY
GUIDE
3 Sell
Peaks
2004
1979
1989
Market Momentum San DiegoMarket Momentum San Diego
Existing Home Sales
-60
-40
-20
20
40
60
80
100
120
Jan-88
Jan-89
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06M
arke
t Mom
entu
m R
eadi
ng
Above "0" line, the trend is up
Below "0" line, the trend is downJuly 31, 2006 = -20
COST OF OIL = RECESSIONCOST OF OIL = RECESSION
ARE WE LIKE JAPAN?ARE WE LIKE JAPAN?
Although the Fed raised interest rates during Although the Fed raised interest rates during 2004-2006 & only recently stopped doing so 2004-2006 & only recently stopped doing so during their last three meetings, in order to during their last three meetings, in order to
continue the previous trend of rising home prices, continue the previous trend of rising home prices, the Fed would now need to lower rates to less the Fed would now need to lower rates to less
than 0%, much like Japan had to during the than 0%, much like Japan had to during the 1990’s when its real estate bust collapsed 1990’s when its real estate bust collapsed
property values by more than 50%. America is property values by more than 50%. America is about to experience the same economic impact about to experience the same economic impact as Japan. At one point, Japanese banks were as Japan. At one point, Japanese banks were
actually paying people to borrow money resulting actually paying people to borrow money resulting in a negative interest rate. The Fed, three or four in a negative interest rate. The Fed, three or four years from now may find it in a similar position.years from now may find it in a similar position.
Housing Index vs. S&P 500Housing Index vs. S&P 500
RECESSIONS IN REDRECESSIONS IN RED
-50-40-30-20-10
01020304050
Jan-
89
Jan-
90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Above "0" line: Market forces are friendly.SoCal housing prices are likely to rise.
July 31, 2006Crash Index = -48
Below "0" line: Market forces are unfriendly.SoCal housing prices are likely to fall.
CRASH INDEX =1991=2006CRASH INDEX =1991=2006
Market Momentum San DiegoMarket Momentum San Diego
Existing Home Sales
-60
-40
-20
20
40
60
80
100
120
Jan-88
Jan-89
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06M
arke
t Mom
entu
m R
eadi
ng
Above "0" line, the trend is up
Below "0" line, the trend is downJuly 31, 2006 = -20
San Diego Building Permits TrendSan Diego Building Permits Trend
New Home Building Permits
-60
-40
-20
20
40
60
80
Jan-89
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06M
arke
t Mom
entu
m R
eadi
ng
Above "0" line, the trend is up.
Below "0" line, the trend is down.
July 31, 2006 = -28
Nods=Up=More Foreclosures!!Nods=Up=More Foreclosures!!
Notice of Defaults
-30
-20-10
10
20
3040
5060
70
Jan-84
Jan-86
Jan-88
Jan-90
Jan-92
Jan-94
Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06M
arke
t Mom
entu
m R
eadi
ng
Above "0" line, the trend is up
Below "0" line, the trend is down
July 31, 2006 = 60
Foreclosures=Recession StartForeclosures=Recession Start
Foreclosure Sales
-100
-50
50
100
150
200
Jan-84
Jan-86
Jan-88
Jan-90
Jan-92
Jan-94
Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06M
arke
t Mom
entu
m R
eadi
ng Above "0" line, the trend is up
Below "0" line, the trend is down
July 31, 2006 = 156
Readers @ Patrick.netReaders @ Patrick.net
Market Timing is Everything!!Market Timing is Everything!!
80-95% of Owners80-95% of OwnersMissed the sale Missed the sale
period period of 2001 to 2006of 2001 to 2006
Signals are sell from 2002-2006Signals are sell from 2002-2006