Posted by: stockscooter | February 28, 2012

Real Estate – Load Up or Keep Your Powder Dry?

Real Estate – Load Up or Keep Your Powder Dry?

In 2007, Case Shiller made a name for themselves, with their data analysis of the real estate markets.  It was with their data that I first saw the true picture of the real estate turn.  That turn was off of a bubble mania in asset prices.  Combining their analysis with other inter-market analysis, I warned friends and associates of the upcoming crash.  Many would tell me boldly that it was the time to buy.  Either they were amateur investors or they were trying to convince themselves their real estate flipping would always work, in order to help them sleep at night.  Either way, they may still be hoping for a rebound in the real estate market, so they can cash out.  Robert Shiller says otherwise.  The chart below shows the talking heads on TV are trying to sucker more people to buy into an ailing market, because their opinion doesn’t fit with Shiller’s data.  What’s most notable to me in this data, is that it refutes the ‘good news’ that real estate is turning back up, which was all over the broadcast networks, this month.   Obviously, the line on the chart, home prices, has not turned back up.  The part that is most concerning to me is that it’s breaking to new lows.  April ’09 was a major low and a retest of that low occurred about 2 years later in about March ’11.  Since then we have broken to new lows.  There is nothing comforting yet, about this data.  New low pricing is not a sign of a turn around for a market like real estate.  Real estate is an illiquid market and quick decisions are not needed to make a good deal.  Quick decisions are needed in frothy, bubble manias like that which real estate WAS in, in order to beat the competition to the punch.  Now is time for patience.  The real deals are yet to hit the market.  It’s time to keep your powder dry.  Always remember the old saying, “Watch what they do, not what they say.”  Keep an eye on the charts!

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