By now most of you have probably already seen the Today Show video from last week in which financial entertainer Jim Cramer stated the following:
Don’t you dare buy a home now. You will lose money.
Of course, real estate salespeople across the country were outraged by this, and pretty much immediately flew into frenzied attack mode. In a follow-up interview on the Today Show a few days later, Jim clarified:
Matt Lauer: “The overwhelming majority of the responses we got through email said that you’re ignoring the fact that real estate is regional, and there are some places where it is a good time to buy. How do you respond?”
Jim Cramer: “Seattle, and 10005 are the only two. Maybe Montgomery County in Maryland. Three. That’s it.”
Nice. Gotta love that. I am wondering though, does Jim know something I don’t know? Because the recent trends in the Seattle numbers don’t seem to indicate that a buyer today will be any less likely to lose money than anywhere else across the country. All that the numbers show is that last year’s buyers haven’t lost money—yet, which is certainly a step above the rest of the country.
But I’m just some know-nothing blogger with too much time on my hands. So don’t take my word for it. Listen instead to what Robert Shiller (Yale professor and economist—of Irrational Exuberance and Case-Shiller HPI fame) had to say on the matter in a Marketwatch interview last week:
John Wordock: “And what about the Pacific Northwest? Still sort of immune from everything else that’s going on?”
Robert Shiller: “I don’t say they’re immune… Nobody is immune… Generally cities have been weakening, even though their price has been going up, these cities have shown weakening price increases, and if you extrapolate that, it might not be too long before they show price decreases too.”
I suppose we only have to wait 12 months before we find out which of these two men is correctly interpreting the evidence before us. I think you know who I’m betting on.