A couple of readers alerted me to an interesting feature that has been added sometime recently to Google’s financial tools, the Google Real Estate Index. Obviously like most of the statistics provided by Google, this index tracks searches. Here is their description:
The Google Real Estate Index tracks queries related to “real estate, mortgage, rent, apartments” and so forth. To see more details on the queries that make up this index, visit Google Insights for Search.
The index is set to 1.0 on January 1, 2004 and is calculated and displayed below as a 7-day moving average. The index is currently calculated only for US search traffic.
Since they provide the ability to download the underlying raw index data, I thought it might be interesting to compare this index with the Case-Shiller 20-city home price index. Here’s a plot of the two, both re-indexed to January 2005 = 100:
There definitely seems to be some similar behavior between the two there. This could be interesting, since the Google REI is updated every week, while we have to wait months for the Case-Shiller data. It is also worth noting that unlike some other measures of the real estate market, Google’s REI in 2009 did not manage to beat 2008, and continues to mark new seasonal lows as of the most recent data.
Here’s a look at the YOY change in both indices since 2005:
They both went firmly negative around the same time, in early 2007, and hit their lowest points in late 2008 / early 2009 at nearly -20%. Both have recovered somewhat, but the latest reading for the Google REI dropped back down to nearly =15% again.
Finally, here’s a look at the two indices again re-indexed to January 2005 = 100, but looking at the Google REI as a 12-month rolling average to smooth out the strong seasonal effects:
No sign there of a let-up yet in the decline. Based on Google’s measure of people’s interest, it would seem that the real estate market has yet to find a bottom. This data seems to square with a recent survey by The Conference Board that found that just 1.9% of Americans are currently in the market to buy a house, a 27-year low.
[Update] Commenter Rojo points out that using Google Insights for Search beta, you can look at a similar index specific to regional markets. Here’s their plot for Seattle-Tacoma along with the nationwide data. During much of the boom years, Seattle’s interest in real estate was higher than it was nationwide, but since 2008, we have been coming in 5-10 points lower.
Data Sources:
Terrific and original analysis Tim. What is particularly interesting about that first graph is the federal interventions causes an uptick in prices, but less so in homebuyer interest. This strongly suggests that these programs were stealing from future near-term demand.
Now this is completely stupid!! Because queries went down on google doesn’t mean that prices are going down in unison! Where did you make that connection!
I understand that while the market is down and there is uncertainty, people will keep coming back to this website but now you are just grasping at straws! Will tomorrow’s post be related to global warming and local real estate prices??
Also, the Google index is all of US or even the whole world. How do you connect that to the local real estate market?
Stop coloring the data with your bear attitude and stick to the basics!
Very impressive The Tim! Thank you.
RE: Rojo @ 2 –
Hi Rojo:
I imagine you’d consider going to the Post Intelligencer real estate news section for buying advice instead?
Ohhhhh…that’s right, they went bankrupt preaching elite attitudes, like “buy now before the price plummets”?
What better statistical or news source do you suggest Tim use over internet activity actuals? Crystal balls? LOL
By Rojo @ 2:
I am just presenting the data from two real-estate-related indices to see if there are similarities.
How about instead of blasting broad generalities and clichés like “grasping at straws,” you provide some actual criticism of the content of the post? Are you seriously suggesting that there is zero relationship between real estate prices and interest in real estate searches online? If so, why?
If you had bothered to actually read the post you would have seen that I quoted the text from Google that their index “is currently calculated only for US search traffic.” And had you bothered to read the legend on the charts, you would have seen that for the home price index I used Case-Shiller’s 20-city index, which is spread throughout the country.
This post is looking at broad, nation-wide data, not local data, and I was up front and plain about that in the content of the post.
RE: Rojo @ 2 – There is often correlation even if there is no causation. Causation implies correlation, but correlation does not imply causation.
Who knows if causation is present. Causation is often very difficult to prove. Correlation isn’t as difficult.
RE: Rojo @ 2 – From the Google Domestic Trends page:
“The indexes are currently calculated only for US search traffic. ”
Spending a day reading their Domestic Trends indexes, as well as searching the general trend topics, can be very disheartening. It seems as though everything is on the decline, even interest in computer languages and the like.
I wouldn’t discount Google and their wealth of data. They practically are, for all intents and purposes, the Internet. What passes through Google’s servers is the zeitgiest of the world. I bet a similar indexing at Bing would show similar results.
RE: softwarengineer @ 4 –
what do you get by posting 100s of comments on this blog?
Do you have a job? Don’t ask me the same question because I do and I only post here once in a while on very slow days!
Tim makes money (maybe enough to not care about his day job) off this website – what do you get?
Kary, Ira I am sure get clients.
David also might get free advertisement that works for him!
what do you get? You are just making more money for Tim.
RE: Rojo @ 2 – You have to admit that the correlation is extraordinarily close and therefore meaningful. Sure, the rate may have fallen because of other factors (Say – other search engines gaining on market share therefore taking away search queries). But the data this close should not be belittled or ignored.
By AMS @ 6:
sure, there is correlation or looks like there might be correlation but the problem is there are too many other factors.
The fact that queries went down doesn’t say anything if real estate has bottomed or not. Look the title of this post “Google Search Trends Suggest Real Estate Not Yet at Bottom.” Causation is implied here!
You can see patterns if you stare at anything too hard.
RE: Rojo @ 8 – I have never heard a real estate agent tell me anything other than “its a great time to buy”. Not to mention the newspapers and other Real Estate institutions almost always following the same advice. If The Tim is making money off the blog, it is because people like me finally have a place where an analysis on the local and national Real Estate market is honest, and more importantly, not insulting to our intelligence.
RE: Rojo @ 8 –
When Faced With No Blog Refuttal
They always go to defamation of character….LOL
If I make my million at work 10 times faster than perhaps you don’t be jealous….LOL
By Rojo @ 10:
“Correlation is not causation” is greatly misunderstood. Of course correlation is not causation, but scientists USE correlation to infer causation all the time. In more complex systems, controlled experiments are impossible. (1) there are statistical ways to isolate factors; and (2) statistical analyses must be accompanied by theoretical justification.
The data certainly SUGGEST that we are not yet at the bottom, though we would need more involved analyses to make a stronger statement on this relationship. We are not talking about publishing in Nature. But for a blog post, this is a nice analysis. Sorry if you are having a bad day or don’t want real estate prices to fall.
Since you seem intent upon personal attacks, let me provide my credentials: I am a PhD scientist with an MS in statistics.
RE: The Tim @ 5 –
The problem Tim is the you can’t be looking at broad data like this and make generalizations. I have valued this blog a lot too but sometime it just doesn’t make sense.
You are extremely bearish and it comes out too much.
Also, let us see another set of internet statistics – number of individual hits per day on this website. I would be very interested to see that. Guessing most of those hits are coming from the greater Seattle area, correlation might make a lot more sense than this US wide data.
Researchers are also finding a connection or correlation between Google searches for flu or other disease symptoms and actual outbreaks, so there is some precedent for this.
Woah Rojo! What’s with all the angst??
Tim may be bearish…but its not like there isn’t just cause. House prices are STILL falling in Seattle, just as he predicted years ago.
As far as the correlation…just look at it! Especially the rolling 1 year average. Its undeniable that general interest in real estate is highly correlated with house prices. Also logically, it makes sense, as the collective interest in real estate as an investment was one of the primary driving factors in creating the housing bubble in the first place.
Demand (interest) and speculation drives up prices in nearly any type of market.
I found another way to look at data based geographic location. Check out the following link
http://www.google.com/insights/search/#cat=29&geo=US-WA-819&cmpt=geo
What is even more facsinating is looking at this data for cities like Denver which have seen little drop to cities like Vegas, the trend is very similar.
Denver http://www.google.com/insights/search/#cat=29&geo=US-CO-751&cmpt=geo
Vegas http://www.google.com/insights/search/#cat=29&geo=US-NV-839&cmpt=geo
I can tell that Seattle has had a mini-RE bubble lately (courtesy of the Feds) because of all the fearful comments lately.
By PhinneyDawg @ 16:
That reminds me of Robert Shiller’s talk at SPU last year about the “animal spirits” that drive many markets. Google search trends may well be a pretty good way of measuring the elusive and nebulous “animal spirits.”
By The Tim @ 19:
Its simply the thought/myth that one can be priced out of buying a house, really. The market always finds its balance. Sometimes its instant and sometimes it takes years, like it will with this bubble.
Fed intervention has slowed this process down (for better or worse, depending on who you ask) but eventually the bottom/equilibrium will be found (much to the chagrin of anyone who bought a house in the last 4 years – like myself).
RE: Rojo @ 8 –
Actually none of us have real jobs. We are all either :
1. Currently gazing out the wall of windows on our waterfront homes while a bevy of minions type out our pontifications on a variety of blogs as we sip on 50 year old Glenfiddich and nibble on Chocopologie truffles, all the while flicking 3″ thick slabs of Kobe beef to our 150k cloned canines Mitzie and Rex as our 6 Ashera cats gorge themselves on Almas caviar (flown in twice daily).
2. None of these postings are real. We are all manifestations of a schizophrenic trolling autobot, responsible for 60% of all the posts and commentary on the internet. We are also responsible for a comparable amount of stock market activity and online transactions, and ALL Nigerian scams.
Perhaps the truth is somewhere in between; meanwhile I need to go take one of the jets out for a spin!
Ciao
RE: Rojo @ 14 –
Bearish?
There are less employed people in America now then there were at the end of 1999.
The average household income in America is $2000 less now, then it was at the end of 1999.
And if you want to get even more data, how about the % of Americans on food stamps, the Debt to GDP Ratio of the US, the value of the US dollar, the number of foreclosures, the insolvency of most US banks, unfunded liabilities, etc….
How can you not be bearish?
RE: Rojo @ 14 –
Really? You see the Tim as extremely bearish? What does that make Scotsman or Sniglet?
I’ve never thought of him as extremely bearish.
Certainly not a cheerleader for the real estate industry, and certainly some data is open to interpretation, but I think of the Tim as very logical with a slightly bearish tilt.
RE: softwarengineer @ 12 – softie I have been wanting to ask you this for sometime this is off subject for sure but you always bring up over population– which I agree with, but from what I have read you have children correct? So why is it that it is okay for you to populate but for others not to? I mean it is like the post I read from Scottsman when he mentioned how he was at church helping the needy but than judge what car they drove. I mean are you there to help or judge?
By softwarengineer @ 12:
I’ll worry about that when you do! time for software engineers making millions is long gone – this is if you are a software engineer.
brb, I need to go pop some more popcorn!
RE: what goes up must come down @ 24 –
The Per Family is a Moot Point
Focus on the national birthrate, for my generation, a baby boomer, its 1.7 [I had 2 kids and my sisters had 0, we averaged 0.7 as a family]. If we’d just left the country alone after the baby boomers [not insourced population density since 1990], we’d be using no Mid East oil right now.
Some of my best friends have 4-5 kids per family, so what…..again, its the national birthrate. Now, when you add to the baby boomers generation to increase population density and some of this by, i.e., ethnic group has an avg 5.0 birthrate, its hopeless for America, as a nation.
BTW, 2.1 kids per family is replacement level, so even my 2 is population density decrease.
You have to look at a nation as a whole to control population density.
RE: Groundhogday @ 13 –
I am not intent on getting personal – softwareengineer started it. All I am saying is this analysis doesn’t make sense.
I agree there is much to be said of using Google search data to determine future events. This is now done widely in the financial industry.
However, you do not have enough historical data to work with to draw a conclusion. Causation will take much time to prove.
Nor should you be using a 12-month moving average and comparing it to non-averaged data. A moving average creates a lagging indicator that does not represent the present moment. You would be better off using an average that smoothes less — such as Tillson’s or Jurik’s. Also, smooth the Case-Shiller data at the same rate if you are going to compare it with averaged data.
That said, I still feel the housing market will drop 10% this tear in Seattle, on average. And once the US dollar crashes 50% overnight, the housing market will drop again since no one will have stable employment in this country anymore.
A better analysis might be to take the highest and lowest city data (alternating months) from Case-Shiller to end up with a jagged metric instead of one already smoothed. Then smooth that using a 5-month moving average. Compare alongside the Google data smoothed at the same rate,
You may get more interesting results, IMO. Also note that the highest high is more predictive than the lowest low, in the Google data shown above.
By softwarengineer @ 27:
You just have a knack for sticking your foot inside your mouth not realizing what you are saying!!
It is the middle America with lower ethnic groups that has the higher birthrate – look at catholics, Mormons. Lot of ethnic imports are too busy working hard and taking jobs away from Americans to have 5 kids! Look at Idaho, South Dakota, Utah.
http://www.statehealthfacts.org/comparemaptable.jsp?cat=2&ind=35
By Enrique @ 29:
I realize it’s not a perfect comparison. However, FWIW, the Case-Shiller data is averaged already. They generate their index using a 3-month rolling average.
RE: softwarengineer @ 27 – I believe what you just wrote is justification not explaination (not a word I know but it rhymed)
Softie just to add if you believe so much in Pop control shouldn’t you had 0 kids?
BTW so some of your best friends who have 4-5 kids what do you say to them— “luckily those Mexicans down the street didn’t have kids — so it is okay that you had 5.”
Sometimes I wish this wasn’t a blog but was taking place in an arena of sorts.
Could you imagine the a$$kickings!
Pass the popcorn AMS!
Oh…and remember my old prediction of homedebtors getting angrier and angrier?
I wonder where RAL is?
RE: Enrique @ 29 –
– And once the US dollar crashes 50% overnight…
When will it be tactically most advantageous for the Fed to do this? Obviously we will not be notified in advance, what are the triggers in your opinion?
Taking a walk today I could smell the bears- I sensed their proximity, their aggression, and the overwhelming doom that they bring. The expectation of waves of price declines rolling over the cowering population filled my mind with visions of black clouds blotting out the horizon of hope…
(Scotsman channels Ardell, 2010 vrs, 2007)
By Scotsman @ 38:
LOL – you might be a nut job but you do have a good sense of humor!
RE: Scotsman @ 38 – I think I recognize a couple of the regulars here in this video:
http://www.youtube.com/watch?v=yTF-uZzOOpg
Hi. I just overlayed Case-Schiller data with a flattened bell curve centered at the peak and uhh… Things do not look good. Clearly there is a correlation (but not causation, sillies!). I’m afraid that by 2026 things will be as bad as in 1985 (was that bad? Sorry my case-schiller screenshot doesnt go that far) and things dont look to be coming back up.
Good thing I rent!
I found this in the morning from an article about inflation and how tame it has been:
One of the factors keeping core inflation under control is housing costs. They dropped 0.3 percent for the 12 months ending in December, the biggest annual decline on records dating to 1968. A glut of single-family homes on the market and record apartment vacancy rates have put pressure on housing prices.
RE: Willy Nilly @ 21 –
# spambots are easier in perl
if($homeowner) {
if(median_price(‘12-2009′) > median_price(‘01-2010′)) {
print “My neighborhood is still selling like hot cakes, nobody wants to live in ” . $replyto->{‘location’} . “\n”;
}
else {
print “you moron bubbleheads missed the bottom! I am going to buy a hottub with my refi cash\n”;
}
}
else {
print “but what about:\n”;
for my $metric (@macro_economic_metrics) {
print ” * $metric\n”;
}
}
RE: Scotsman @ 38 –
I think I saw that today. It was in Issaquah.
RE: softwarengineer @ 12 – fyi, Refuttal aint a word. As for defamation, your reputation has been irrevocably tarnished due to your posts here more than anything anyone could ever say here or anywhere. Not to mention you making fun of another poster’s handle here, that is a logical fallacy. Either you knew it and still do it, or maybe you really don’t know what you are talking about? Or maybe I am missing some other cause for your constant fallaciousness.
RE: corncob @ 43 – I’d love to see a contest on this.
A bit of modification from the link below:
double GetBankAccountBalance()
{
if (isOwner)
{
return 0.0;
}
else
{
return lifeSavings;
}
}
=========
owner++;
while (stillOwner)
{
bankBalance–;
}
http://stackoverflow.com/questions/686216/what-code-would-you-have-on-your-wedding-cake
What code best represents homeowners?
RE: softwarengineer @ 27 – reading between the lines, you don’t practice what you preach and you rationalize away your actions. Thanks for clearing things up.
RE: Rojo @ 8 –
Let me clear that up for you a little bit about this site. When people click on my name, above the comments I make it generates about 1600 hits to my site per month. That’s not a lot, but it is area specific.
If I were taking on clients right now, or was interested in clients for Real Estate, there is a high per cent age of people in the Real Estate market place, buyers mostly, who recognize my name.
The more outlandish the comment the more hits to my name.
People like Scotsman, Software Engineer, sniglet, or one eyed man make the site. Tim posts statistical data. Come on, who cares? It’s a statistical data web site concerning Real Estate. Who would read that? Why would people come back here day after day to click on my name for Statistical data.
So I don’t care what the guy says, he has more to say than you do. You can also click on his name to find out more about his message.
Who are you?
RE: The Tim @ 32 –
Thanks for your response. Could you by any chance create a graphy that compares the 3-month moving averages then? That would be far more accurate than a 12-month vs. 3-month on two difference data sets. You should only use different moving averages on the **same** data set when you need to get a trigger signal (buy vs. sell, for example) from the data.
Optimizing the signal is another matter — but that would be done by using a variety of moving averages against each other. That type of analysis would be useful if you find that the optimized signal performed very well in the past, as far as market timing. Then you could create buy and sell signals based on the market data you provide on this site.
RE: Willy Nilly @ 37 –
Sorry for this long boring and perhaps obvious response, but I’ve got nothing better to do and this might helpful. The short answer to your question is that there is a very important decision relevant to your question that is being played out behind the closed doors of the Fed right now. As I am not really much of a student of the Fed or fixed income markets, those with a better classical education in economics and/or the bond market (like Scotsman) may want to comment on anything they disagree with or feel to be less than entirely accurate in the following.
I would personally classify Enrique’s statement about a 50% overnight drop in the dollar as hyperbole. But it does have some basis in truth. When the Fed announced last winter that they were going to buy a total of about .3 trillion in Treasuries and 1.3 trillion in GSE’s over the next year, the dollar index dropped about 2% in literally about a minute or two. The market move out of the dollar was almost instantaneous.
Since last spring, the dollar index has generally dropped about 10%. Obviously the Fed has also kept short term rates low and our government has continued to spend money like a drunken sailor both of which have also hurt the dollar. But the dollar has to some degree probably been kept strong by the fact that many of the European countries are in the same boat we are and the Chinese currency is pegged to ours.
While increasing the amount (and perhaps velocity) of currency in circulation is the classic economic definition of inflation, and buying Treasuries (and now GSE’s) is one way the Fed does this, this methodology has it’s limits when it comes to causing inflation (and/or stopping deflation). It may cause the price of imported goods like oil to increase rapidly because they’re producers price them and pay their costs in a foreign currency. And it may cause commodities that are used around the world to move up in price as oil did since bottoming at about $37 last year. And it may make US exports more competitive in foreign markets because they are priced in dollars and the dollar will generally be cheaper when compared to foreign currencies. Although some say it should also make US interest rate rise because the dollar is no longer as competitive an investment when it shrinks in buying power, in the current market place it has probably helped keep interest rates low by increasing liquidity and absorbing what otherwise would have been an over supply of Treasuries and GSE debt in the fixed income market place.
But that flood of dollars hits a sticky point in the US economy when it comes to increasing the flow of commerce and general inflation in the US. The sticky point is a current over supply of labor in the US (our high unemployment rate). This slack in the labor market means US producers can probably increase production to meet any increased demand without having to increase salaries and wages, at least for a while. And even if US exports are made cheaper by a falling dollar, it takes time for this to translate into much of an increased demand for US goods and increased hiring by US companies.
That’s all just a long way of saying that printing money doesn’t immediately cause wages to rise in the US. And without any increase in wages, there isn’t any increase in the affordability of US real estate for US citizens, although real estate may be more attractive as an investment for those with foreign currency.
In hind sight, the Fed’s action in purchasing Treasuries and GSE’s has probably significantly helped in keeping the CPI positive and in keeping long term interest rates low. It has also probably helped keep real estate prices from falling more rapidly and more chaoticly, thus keeping the fall in the real estate market slower and a little more “orderly” than it otherwise would have been. This probably helps stop an over reaction in the market to the down side.
With those paragraphs as a bombastic prefatory comment, now to your question which was: ” When will it be tactically most advantageous for the Fed to do this? Obviously we will not be notified in advance, what are the triggers in your opinion?”
First, last year the Fed did tell us they were going to buy Treasuries and GSE’s and in effect print money. And as Patient, Scottsman, and others sometimes point out, the Fed’s purchase program is about to end in about a month and there is a big issue as to what will happen to interest rates when they stop buying. About a week or 10 days ago, if I recall correctly, I think someone on the Fed open market committee said that they may decide to reinstitute their purchasing program because the economy is still weak. That was the first warning by the Fed that it might continue to purchase Treasuries and GSE’s. And that is probably one of the things (along with continued mediocre economic and employment news) that is keeping the 10 yr treasury rate from blowing up thru 4% given all the government debt that will be for sale in the coming year.
That’s the long way of saying that the Bernanke Fed does tend to telegraph some of its moves on buying Treasuries and GSE’s and it has a potential big move coming up in a few weeks when they have to decide if they will let their buying program lapse or reintitute it because of the continued weakness in US employment and the overall economy.
But never the less, Enrique’s 50% number is hyperbole and would take a long time (probably years) to play out to that extreme even if the Fed continues to purchase indefinitely.
So, The Tim, are you going to post statistics for SeattleBubble.com as I requested before? I am hoping there is more correlation to the local market in that data!
RE: One Eyed Man @ 49 –
Thanks for your post, I arrived at my conclusion of a 50% (or more) overnight dollar haircut based on the opinions of people much more experienced than I whom I trust due to their predictive abilities or access to insider information.
My most reputable source is a private investigator by the name of Daniel Estulin, who resides in Spain. He has direct family ties to Russia’s intelligence community as well as to individuals who attend the annual Bilderberg meetings. I have made consistent money trading the information that Estulin makes public.
There are a handful of other economists and traders who I trust as well. Such as Max Keiser and Michael Hudson.
Not to mention I follow meetings such as the G20 and G7, WTO, and so on. The last G20 meeting was mostly devoted to determining how the US dollar would be replaced as a world reserve currency, for example. This made the news but for some reason people keep forgetting that most powerful people in the world are actively planning the demise of the US dollar.
Add to this that the US govt is purchasing somewhere between 85% and 95% of its own Treasury debt right now, and that there is ample evidence that an unidentified entity is purchasing massive amounts of options contracts whenever the major market indexes reach sensitive technical price areas. In other words, the market is being artificially propped up, as it should have collapsed already, along with the US dollar. The Plunge Protection Team is no secret anymore, nor are their methods for manipulating the markets, including commodities and precious metals.
Historically, this level of govt manipulation is what happens prior to a currency collapse.
As far as timing, one would be better off purchasing silver and gold bullion, than trying to time the collapse of the US dollar. I always ask people — if you are being forced to play Russian roulette right now, would you prefer to purchase life insurance 2 or 5 years from now, or right now? What makes the most sense, from a risk perspective?
Moving into other currencies will likely not help much, as most currencies are expected to tumble with the US dollar when that happens. if there is a flight to safety, it might be to the Euro or to the Yuan. I would place bets on the Yuan if that were to happen. Poland, by the way, is the only country in Europe right now that is doing well, from a GDP growth perspective.
Land for growing food is another alternativefor investment away from the US dollar. Once a currency crash happens, the next step is for people to convert their currency into hard assets — usually food, water and gas are the first to be horded. That is, if you have these things on hand and you are well-armed, you may become rich from selling these items. Expect a food shortage due to hording in the case of a US dollar crash.
If you want details on these things usually play out, check out what happened to Russia as well as Agentina during their currency crashes. The US is much more debt-ridden than those situations, and our infrastructure is much more vulnerable to this type of crisis.
RE: David Losh @ 48 –
Who am I? I am not an agent, just a person vested in understanding where the real estate market is going. I am either looking to buy a house or own a house – doesn’t matter either way.
I have an engineering background with graduate degree and good understanding of statistics. So mostly I come here for monthly numbers but when there is BS posted either by Tim or posters, I struggle to keep quiet!
RE: Enrique @ 51 –
Some of you reading my last post may find this information from Daniel Estulin worth reading…
http://bilderbergbook.com/
We are very lucky to be able to read this information online, without it being repressed. I believe this is happening since the powers that be have already determined that nothing will change the course of events.
RE: Rojo @ 51 – There are those who analyze literary works. Are you suggesting that’s all just BS?
I’d suggest that looking to the language to help explain, understand consumer behavior isn’t such a far out science, but I am not an engineer.
RE: One Eyed Man @ 49 – In addition to all that you’ve written, I’d like to add two points:
1. If the dials were set to drop the value by 50%, then it would have to happen in stages. It’s not like anyone can just set the dial to 50% and be sure not to over- or under-shoot.
2. From a currency theory perspective, there is a certain level of “in God we trust” (i.e. send us the Greenbacks) that will be violated if the currency falls 50% overnight. While this also is part of #1, in that how could you reset the value to 50%, if the currency fell in value by massive unexpected amounts overnight, then it would be nearly impossible to stop at 50% based on trust in the currency.
The other number suggested in the open thread, 5% per year, is a reasonable level that could be targeted while not violating the “in God we trust” part of the currency. A level of 5% is probably about double what normal inflation is expected to be by the aggregate market players, but 5% per year clearly isn’t hyperinflation.
RE: Rojo @ 50 – What message did you specifically ask for something to be posted?
I am not suggesting that The Tim should post based on your whims, but I am not even sure what you’re to be posted.
Also why don’t you just post it, as an appropriate reply?
My prediction: Fed will end purchases, as planned, in March and make a big stink about it. This will cause market disruption/fear in equities which will bring about the long waited for 10-20% correction, keeping bond rates low as people pile out of their casino C shares and into the safety of treasuries. Our moron government officials will panic with elections coming up, meaning the real reform is scrapped for a weekend congressional session in which they will decide to give the Fed the keys to the car again. QE2 is immediately announced, along with another foreclosure moratorium and principal elimination for a large amount of existing homeowners courtesy of Fannie/Freddie (this will be in the 200-400B range). Local RE will end down about 10% by EOY, mostly in a large series of drops during the panic and then sitting flat/slightly up after QE2.
By Rojo @ 51:
You must be one of the heavy hitting donors on this site to make such demands of Tim.
How much did you pay?
It must have been a lot to get the privelege of being such an a$$hole.
By AMS @ 57:
Or maybe he could just look them up himself. It’s really hard…
http://www.quantcast.com/seattlebubble.com
RE: deejayoh @ 60 – Oh, I guess when someone suggests they’d like to see something, it’s a demand.
I missed that this was a demand: “Also, let us see another set of internet statistics – number of individual hits per day on this website. I would be very interested to see that. Guessing most of those hits are coming from the greater Seattle area, correlation might make a lot more sense than this US wide data.”
I’ll offer him another option:
http://www.alexa.com/siteinfo/seattlebubble.com
But, all that said, once again I am reminded that Seattle is very special. One cannot look to any other part of the United States for any data. Seattle is special, very special. Special, Special, Special.
Thank you.
EconE: How about some more popcorn?
RE: AMS @ 61 –
Is it time to upgrade to caramel corn?
RE: Enrique @ 52 –
I’m going to run with this.
The G-20 threats to the dollar were a calculated attempt at black mail. The Euro, as you must know, from your contacts in Spain, is in serious trouble. Spain, Greece, and Italy being the weak links in that chain. That’s not to mention the manufacturing sector of Germany that relies on exports. Let’s leave that alone for a minute.
China wants to come out as a global partner. They have to. They have no choice. The investments they have made were geared toward exporting. Well we don’t need it. We may want it, we may have corporations that have invested in off shore labor, they may have moved jobs, and manufacturing off shore, but we don’t need to care about that. As a matter of fact a politician could do well to start a Buy American campaign, it’s long over due.
The United States can grow tons of food, and if we get tired of doing that, we can buy food from Mexico. We’re all good here in the food department, we only have 350 million people.
Last, but absolutely not least, is to watch for those gold prices. If you want a conspiracy theory, mine is that corporations will start dumping gold. Is there such a thing as a gold bubble? It really seems so.
In my opinion, our government can stop fooling around, redirect attention to the United States economy, and manufacture, pun intended, a way out of our mess. The rest of the global economy? Maybe not so much.
RE: Enrique @ 52 –
Just to be clear Enrique, any disagreement we have is probably more over the pace of decline in the dollar and whether the US will suffer more or less economic chaos than other countries in the event of a decline in the dollar, than whether there will be a significant decline in the dollar. My use of the term hyperbole was with reference to the phrase “over night,” not to the assertion that the US Dollar may suffer a 50% decline.
I’ve never been in a society that experienced food shortages, or where you needed gold as a means of exchange, although I’ve known people who have. But I have waited in gasoline lines in the US before, and I still have a paperback amortization table from 1980’s that starts at a lowest rate of 10% and goes up to 20%.
I think that the policies of Bernanke and the Fed will error on the side of inflation and the Fed will incur as much destruction to the US Dollar as that might require. I just think that what ever dollar destruction is incurred will likely occur more gradually over a period of several years, and the phrase “overnight” is on a probability basis, hyperbole.
Obviously, the high level of US debt, uncompetitive wage structure, uncompetative tax structure, healthcare costs and dependence on foreign energy sources all add to the factors weighing in favor of a decline in the dollar. But I doubt that the decline will be “overnight.” The US is still the biggest manufacturer in the world, a huge market for foreign exports and a huge producer of agricultural goods. If the US economy falls into chaos resulting in food and water shortages, in all probability, most of the rest of the world will be even more f___ed up than that. In that event, the US economy and the dollar will most likely be seen as a comparative safe haven causing the dollar to gain in relative strength.
Just for the record, I may be wrong, but my opinion isn’t based upon some nationalistic or patriotic bias in favor of the United States. I got over any love I had for anybody’s flag before I got out of high school.
Rojo said :
“Who am I? I am not an agent, just a person vested in understanding where the real estate market is going. I am either looking to buy a house or own a house – doesn’t matter either way”
Maybe it does matter. You questioned Software Engineer’s regular posting, wondering what he got out of it, and inferred that Kary and I posted regularly in order to fish for clients.
First of all, Kary doesn’t even link to his business when you click on his name.. And if you’ve read my posts, you’d notice that I’ve spent a lot of time expressing house prices were likely to keep declining, and that continuing to rent was not a bad option. Hardly a sales pitch.
That I’ve gained a few clients via Seattle Bubble is something I’m thankful for, but it’s not the reason I post, it’s not the reason Kary posts, and it’s not the reason that Software Engineer posts. In my case, I too often think that I’m brilliant and hilarious, and how could I not share all this brilliance and hilarity with the world?
Likewise, I think Kary and Software Engineer also believe that they have things to contribute to the discussion. Regular commenters make Seattle Bubble a fun and educational community to hang out in.
RE: EconE @ 59 –
You call me an a$$hole yet you are the one calling names! Who was the one here saying I am “intent on getting personal”?
No, I don’t pay anything for this website. I like stuff free especially when some of it might be questionable.
- RE: EconE @ 59 –
Where in my post does it say I demand to see something?? RE: Rojo @ 10
Chill out dude before you cause yourself an Aneurysm!
By deejayoh @ 60:
Thanks dude. Had no idea you could just look it up like this!
What can we infer from this data? Since the hits are going down, people might be getting less fearful.
Maybe the bottom was in Feb-March of 2009 and since then traffic has been declining consistently.
RE: Rojo @ 67 –
Perhaps it was the manner in which you stated your “request” with your chest all puffed out in post #51.
But really…I’m just enjoying the popcorn.
BTW…what’s the correct usage WRT exclamation points?
Group Hug!
RE: corncob @ 58 –
Agreed- the money flows out of equities and calms the bond market, keeping rates down while the government cooks up more of the same.
One-Eye: agreed, a slow drift down for the dollar, but not a collapse. The U.S. is not the only country caught in this mess, and that is what saves us. True, we are hurting, but others are hurting even more and it’s our relative position that counts.
Those who buy gold now will be disappointed- energy, land, or commodities would have been a better choice in my opinion.
RE: corncob @ 58 –
Sounds reasonable. I think that greater drops will be in the high end market but the banks will squeeze the wealthy for all they can while the soon to be un-wealthy homewners attorneys have their go at his bank account before it’s toast. Too many refinanced so the debt is recourse in many states. All eyes will be on California for this one I think.
RE: Scotsman @ 70 -
You really don’t like gold do you? What’s the matter? Is your hoard not big enough? Trying to talk it down under $1000 to pick up some more ;^)
I dunno. If it’s good enough for the central banks….
After all, it seems to be one of the few things that they really want to load up on.***
***(not meant to be investment advice…just thinking out loud)
Oh…and I do think that there will be some equities that take off if any sort of health care bill is passed fwiw.
RE: Rojo @ 68 – Rojo, as you say, maybe the bottom has already come and gone and we are on the upswing. However, I get that viewpoint ad nauseam in all the mass media. It is nice to find the contrary voice here. That is what this site is about, to me, is the voice not heard in the press. Of course it is good to doubt or question this site’s, or a poster’s methodology, but you can do it assertively with out offending. I think you just sort of came off sounding rude and offensive. Often times the message can get lost in the delivery.
RE: EconE @ 71 –
“You really don’t like gold do you?”
I admit- there are still some personal growth issues I have to work through. But I just don’t see gold being the new reserve currency in a post modern world. It’s utility is pretty minimal outside of narcissistic adornment and a few industrial uses. And at $1200/ounce it’s pretty hard to make change for a $20 purchase. My brain is too small, and my nature too pragmatic to allow seeing it as anything more than the new fiat currency of seemingly infinite value.
On the other hand, if I set aside reason and my pride, I could join the frothing speculative herds and make a chunk of change. However, be forewarned- the minute I buy in it will crash- karma, et al. ;-)
By shawn @ 72:
I might have sounded rude and I apologize for it – no need for that.
With that said, I think this site has been very offensive, rude to people stuck in this downturn. People have been called dumb, brainless, duds, and others. Now how is that ok?
RE: Rojo @ 74 – “With that said, I think this site has been very offensive, rude to people stuck in this downturn. People have been called dumb, brainless, duds, and others. Now how is that ok?”
It’s one thing to suggest that those who purchased at the top are trapped without naming any names. It’s quite another to point to a specific person and begin a string of ad hominem attacks.
I once read a guy who used the “He started it” defense.
http://seattlebubble.com/blog/2010/01/15/google-search-trends-suggest-real-estate-not-yet-at-bottom/#comment-91955
RE: Rojo @ 74 – It is not okay, though we all probably make that mistake from time to time, however, it can derail a message and offend folks that otherwise might embrace the message.
RE: Rojo @ 68 –
.
Referencing what Elizabeth said @ 15: “… we (Google) found that there’s a very close relationship between the frequency of these (flu symptoms) search queries and the number of people who are experiencing flu-like symptoms each week…”
.
Similarly, an inference could be made that the number of hits on Tim’s site could be an indicator of market demand or overall interest in buying / selling real estate. Like flu symptoms searches, the number of queries are probably related to how many people are affected on a personal level. In other words, if you are not really interested in buying / selling right now, why would you care about market trends?
.
RE: Scotsman @ 73 –
Hi Scotsman,
The reason I am so bullish on gold is because the central banks of most countries are now purchasing it again, in large quantities, For example, China doubled its gold stockpile in the last five years, with little media attention during that time. China is still interested in purchasing much more. So is India and many others.
If you follow the Commitment of Traders (COT) reports, you can follow the big market players and ride their coattails. Follow the volume sentiment of the big players, and you will never be wrong on your long-term trades. This is a standard trading methodology.
I am actually much more bullish on silver, and may even become even more bullish on platinum, and palladium.
RE: Researcher @ 78 – As prices rise, the production will increase too. Once the eventual lull in purchasing begins, there will be excess capacity. Sound familiar?
RE: One Eyed Man @ 64 –
One Eyed Man and Scotsman –
Estulin has reported that the last G7 (?) meeting was focused on determining whether there would be a quick dollar collapse, or a drawn out collapse (what Catherine Austin Fitts calls a “slow burn”). Apparently, Henry Kissininger and a few others were pushing for a quick collapse. A quick run down in the dollar would cause the most human suffering, but would put the new structure in place more quickly (this was their thinking, according to Estulin). Also, a quick event would create a certain amount of chaos that may cause things to get out of control. At the time of the meeting, no one really knew what side Obama was on.
My understanding is that either scenario can happen, as no one has leaked yet which path this will take. My guts says it will be quick, and the reason I say that is because of the speed of political change and the nuances in the news headlines. We seem to be getting our preparation for a quick collapse. One of the best signals, IMO, was the recent drop in gold and silver despite the super high interest. This has caused many people to flee to the bond market for safety. However, I believe the goal is to remove as much wealth from the US middle class as possible, and the best time to do that would be when everyone is in the bond market.
There are political plans in the works, IMO. I follow those plans in order to make my determinations. I am not a believer in that which is not already well-documented, and much has been documented. What is also documented is the mainstream media’s blatant work toward making the political agendas appear as fiction. This is the most disturbing part of the picture. The media influence on public perception is much more powerful than I would have ever guessed. It’s more powerful than religion, IMO.
RE: AMS @ 79 –
Sorry, I don’t want to misinterpret your post. Which country trading relationships are you referring to? Most analysts I follow agree that most if not all currencies will drop at the same time (though likely to different degrees) when the dollar crash happens. This would likely even the playing field, in most cases, IMO. Not sure if that answers your question.
I haven’t gone too deep into which currencies will be most stable, as I believe there is much less risk in precious metals and agriculture (grains). If I had to pick something, I would choose the Yuan — however, note how almost overnight the news media has released coordinated perception that China is indeed in a “bubble” and is on the brink of collapse. I believe this may be more disinformation to keep US dollars from flowing into China for safekeeping. Just a guess.
I saw the media do this with Europe, recently, as well. The idea seems to be to let private firms such as Moody’s downgrade all other debt besides the US dollar in order to keep people in the dollar. For what? For more wealth transfer via a sudden dollar crash.
RE: Researcher @ 81 – You are suggesting that gold is being purchased, and the purchasing of gold is pushing prices higher (i.e. Present demand >> present supply). With that as a preface, as prices rise, the production will increase too. Once the eventual lull in purchasing begins, there will be excess capacity and supply of gold. Sound familiar?
RE: Researcher @ 80 –
Sorry, if memory serves me, I believe if was the Bilderberg meeting from back in 2009. A lot of good, useful news leaks came out of that meeting. I highly recommend reading –
http://canadafreepress.com/index.php/article/10854
and also
http://www.prisonplanet.com/leaked-agenda-bilderberg-group-plans-economic-depression.html
Keep in mind that the Lisbon Treaty has passed, and the EU now has a president. Most Americans are completely unaware of this due to the failure of our US media, despite that this news is huge. Obama is also now (illegally) the chair of the UN security council.
Estulin from May 2009:
“•The future of the US dollar and US economy: The plan is for the Bilderberg Group players, through their allies in Washington and Wall Street to continue to deceive millions of savers and investors who believe the hype about the supposed up-turn in the economy. They are about to be set up for massive losses and searing financial pain in the months ahead. The bank “stress tests” now being conducted by Washington are little more than a shameless hoax: Based on the irrational assumption that the economy won’t get as bad as it already is!
•US unemployment: Solutions and assumptions (Stated as such in the pre-meeting booklet sent out to attendees.) Bilderberg is quietly assuming that US unemployment numbers will hover around 14% by the end of this year, far higher than the official numbers released by the US government.
• ******* Depression or a prolonged stagnation? (Stated as such in the pre-meeting booklet sent out to attendees.) Bilderberg is looking at two options: Either a prolonged, agonizing depression that dooms the world to decades of stagnation, decline, and poverty … or an intense-but-shorter depression that paves the way for a new sustainable economic world order, with less sovereignty but more efficiency.
•There will be a final push for the enactment of Lisbon Treaty, pending on Irish voting YES on the treaty in Sept or October. One of their concerns is addressing and neutralizing the anti-Lisbon treaty movement called “Libertas” led by Declan Ganley. One of the Bilderberger planned moves is to use a whispering campaign in the US media suggested that Ganley is being funded by arms dealers in the US linked to the US military.
RE: AMS @ 82 –
Yes, gold production will increase under such a situation. Silver, however, is in limited supply, as the number of silver veins is being tapped out and few new ones are being found. Silver also has industrial use, unlike gold.
New technology has allowed for gold to be collected from our ocean’s floors, as well. There is much gold to be found there.
There is no way to tell how gold will play out. More significant than your post is that the gold spot price is being actively manipulated by the Plunge Protection Team, in concert with central banks worldwide. This is now very well documented and this includes public statements revealing the same.
For this reason I believe silver to be a superior investment to gold. I do recommend owning both, however, and recommend looking into palladium and platinum, as well. No one has a crystal ball.
The rumor is that the new global reserve currency will be backed 50% by gold. I see evidence of this based on what private wealth interests affiliated in the political arena have been doing regarding gold over the last five years.
For example, Odyssey Marine Exploration seems to have a lot of political connections. One of them probably being George Soros. John Edwards most definitely. These guys have collected gold from all the last big ship wrecks.
RE: Researcher @ 84 – “More significant than your post is that the gold spot price is being actively manipulated by the Plunge Protection Team, in concert with central banks worldwide.”
My question, however, remains: What happens when the music stops? Can the “Plunge Protection Team” keep prices high forever? If so, why don’t we have a such a team for housing, as falling prices is considered by so many to be a problem.
“Silver, however, is in limited supply, as the number of silver veins is being tapped out and few new ones are being found.”
This is peak oil theory applied to silver. To be honest, I have not reviewed the assay reports of explorers as of late, so I am not sure about this claim. Maybe you could provide some authoritative sources to support the claim that silver production has peaked, and, of course, we also need that demand is greater than what’s available. Who is going without?
RE: Researcher @ 83 –
Pretty “extreme” sites eh?
If the Bilderberg folks are so evil and powerful…will they let you keep your gold?
[...] to the contrary evidence out there is warranted: While Google Trends seem to contradict me (see Seattle Bubble for analysis), I’m skeptical of Google Trends as a measurement tool here – buzz about [...]
RE: Rojo @ 10 –
I would have to agree with Tim as a Realtor and a website owner and a fanatical googler myself the first place people go to search for a home in 2010 is online that is why webpages and blogs for Realtors have doubled or more in the last 5 years. We know that all the top realtors rank high in the searches and also have heavy internet marketing, Google is the most searched Engine online without a doubt and they save all their searches. I can assure you as a Realtor that there is some truth to this information the dip and rise in the fall of 2009 is obviously due to the Tax Credit I am willing to bet that you will see a slight peak for March and april as well. The question is what will happen after April 30….Stay Tuned!! Raleigh Realtor
[...] data sets, and since his idea has been replicated by researchers working on private consumption, housing prices and unemployment [...]