Indonesia Rupiah Falls Most in Two Weeks on Jakarta Hotel Bombs
"The Indonesian rupiah declined the most in two weeks and stocks may drop after bombings at the Ritz Carlton and the JW Marriott hotels in the capital Jakarta. "
The Manchester United soccer team was scheduled to arrive in Jakarta on July 18 and was booked to stay at the Ritz Carlton, said Azwan Karim, media officer for the Indonesia Football Association.
Indonesia Rupiah Falls Most in Two Weeks on Jakarta Hotel Bombs
"The Indonesian rupiah declined the most in two weeks and stocks may drop after bombings at the Ritz Carlton and the JW Marriott hotels in the capital Jakarta. "
Just put things in perspective - from the same article The rupiah slid 0.5 percent to 10,170 per dollar as of 9:03 a.m. in Jakarta, according to data compiled by Bloomberg. The currency reached 10,075 yesterday, the strongest since June 15.
There's a third dimension to this supply-demand chart.....the invizible hand of government mortgage interference and memoratium of foreclosures. Probably should've included it in the macroeconomics class in high school
Tim waiting for 2012, it really is an information problem. People who paid $500K for a house can't believe that the price has fallen to $250K. In their minds that is impossible ... and it takes time for them to grasp reality.
This happens every housing bust. I do think prices are much closer to the bottom than the top in many areas, but I expect a long tail of real price declines.
Mannwich, I believe Cramer is wrong. We will see ...
Scrooge McDuck, yeah - but the government wasn't involved during the first 2+ years of price declines.
If housing was a perfect market, prices would have fallen rapidly to the market clearing price. However housing prices are sticky downward when everyone mucks up the damn process by not foreclosing in a timely manner or making lame moratoriums to give specuvestors a failing chance to save themselves.
CR - I believe Cramer is wrong too. Was being a tad snarky. Of course he'll make excuses and blame others when he's wrong again, and ultimately will declare he was right in the end.
Loss Aversion and Seller Behavior: Evidence from the Housing Market*
David Genesove
Department of Economics, Hebrew University of Jerusalem, the National Bureau of Economic Research, and the Centre for Economic Policy Research
Christopher Mayer
The Wharton School, University of Pennsylvania
"Data from downtown Boston in the 1990s show that loss aversion determines seller behavior in the housing market. Condominium owners subject to nominal losses 1) set higher asking prices of 25-35 percent of the difference between the property's expected selling price and their original purchase price; 2) attain higher selling prices of 3-18 percent of that difference; and 3) exhibit a much lower sale hazard than other sellers. The list price results are twice as large for owner-occupants as investors, but hold for both. These findings suggest that sellers are averse to realizing (nominal) losses and help explain the positive price-volume correlation in real estate markets."
CalculatedRisk (profile) wrote on Thu, 7/16/2009 - 9:39 pm
Tim waiting for 2012, it really is an information problem. People who paid $500K for a house can't believe that the price has fallen to $250K. In their minds that is impossible ... and it takes time for them to grasp reality.
This happens every housing bust. I do think prices are much closer to the bottom than the top in many areas, but I expect a long tail of real price declines.
CR, it is interesting in an informational sense because this willful blindness constitutes an information asymmetry that is deliberately induced by one party on himself. The party's (psychological) need to believe puts them at a strategic disadvantage to an outside, more objective party. Of course there is tons of bad faith and exploitation baked into this, but there is also a key part of market reality exercising itself and exploiting the natural advantage granted by the willfully-blind to the capitalist/investor class.
Apropos of nothing, and totally OT, but going back to the last thread. For you youngsters or if you simply don't follow sports, Jim Bunning was a great MLB pitcher. Now in the Hall of Fame. Stats here:
He is well loved around these parts, but even those who know him and love him say that sometimes he appears "off". I would take his comments with a good dose of caution. It all depends on which Jim Bunning was talking at the time.
"Schwarzenegger said Thursday that he and Democratic lawmakers are trying to get negotiations back on track after talks stalled a day earlier over education funding. At issue is how to repay schools some $11 billion once the economy bounces back."
Once the economy bounces back....OMG...
You keep saying this "bounce" - I do not think this word means what you think it means.
"Two assumptions are necessary for the validity of the standard model. First, that supply and demand are independent and second, that supply is "constrained by a fixed resource." [4]If either of these conditions does not hold, then the Marshallian model cannot be sustained".
Agreed, I was being snarky . On the same topic, with so much interference from government/business entities, when do charts plotted with numbers from these 'official entities' stop being useful? what chart/numbers can we actually use reliably as a major indicator of the economic trends, and from who? I understand I'm questioning the essence of this blog, but wanted to throw the question out there.
Here's a thought: We have artificial supply left over, after the housing bubble. The over production of housing connected to the bogus finance tools, thus the supply curve is distorted (IMHO).
I have been house hunting for the last couple of months in the Bay area. The price of the house (mid range) have definitely increased 10 -15% from it's March lows. Furthermore, the houses that are priced low by sellers often get 20-30 bids. I don't think price will continue to rebound quickly. The recent 10-15% bounce could be technical. The price significant overshot on the downside (e.g. similar to the stock market) and therefore bounce off the bottom.
I am not ruling out housing price stickiness and that prices will come back down. On the hand, I don't expect the price drop back to the lows at the beginning of the year. For the bay area, price will stabilize where it is now or a bit higher.
On the other hand, I would love it if the price fall again. It did cross my mind that the recent up turn is seasonal.
Many trustee sale investors here in California are clearly calling bottom, massive speculation concentrated in narrow areas. These are different than the bubble buyers in that they are using all cash (though some hard money, and many investment group). Speculation in places like Ventura and Orange county is very high (see my graphs for trustee sales posted today).
With now even less motivated supply coming on market expect sales volume to stagnate for even longer. The investors don't care, they are making bank. Only a large interest rate spike or large supply of inventory coming on market will run them away. With the trickle of foreclosures coming on market now the smart investors are destroying the market.
All the laypeople I know (that is, those not all that tuned in to financial news or CR) have no concern about falling house prices. The people I know who are looking to buy a house think that things are on crazy sale and that interest rates are crazy low. They're certainly right about interest rates. But somehow their brains can't fathom that prices might have much farther to fall, especially in the formerly bubbly areas.
Dumb question. Supply should increase as prices increase, because more people are willing to sell for higher dollar amounts, so I don't understand where one gets the houses that are going to be sold at these lower prices.
I know, foreclosures are 1 answer, but if this were a non-leveraged market, where everyone really owned their own homes, where would the supply come from?
Sorry, never took an econ class.
In other words how do I read this chart? What is the access label for the supply curve?
Risk, I find your economics chart interesting,but you miss a key point. Where you have P1 and P2 is on the demand line. Take a look at the supply line. If prices are maintained at P1 or P2 for long, supply is created out at an equivalent level on the supply curve. which over time creates a massive glut. I think this can be evidenced by the level of construction from 1996 to the end of the bubble.
I have been around the real estate and mortgage business since the 1970's. From information I found on your site, I was able to deduce that 1977 and 1978 were the top 2 years in residential pre-owned and new home sales prior to the bubble that began in the mid 1990's. Citing from memory from data I have used from time to time on your site, I believe it was 1996 that the 4 million existing homes sales figure was passed and the 819,000 new home sales were passed as well. Every year following 1996, the 4 million has been passed, even the bust years and the new home sales figures were passed every year until 2008, some years by almost twice the figure. Clearly the excessive price, the speculation and the financing created a market for many more homes that would ordinarily be built and sold.
Having been through one of the worst growth busts in residential real estate anywhere in the US in the DFW area during the 1980's, I know how this mess operates. There are still plenty of lots out there and they have been discounted to a significant degree from where they once were. If prices are maintained at all, we will begin to see new supply undermine pre-existing sales in a lot of areas. Your supply and demand diagram illustrates that. Just go out to where price intersects supply and that is what you get. Even if you put price at P0, you would not have a low enough price to clear the market that has developed nationally over the past 10 years.
thanks, cr
LOL saved by the pig
The bottom is in for housing, or not.
Indonesia Rupiah Falls Most in Two Weeks on Jakarta Hotel Bombs
"The Indonesian rupiah declined the most in two weeks and stocks may drop after bombings at the Ritz Carlton and the JW Marriott hotels in the capital Jakarta. "
Sticky prices = Realtors brokers and owners clinging to fantasy
Ridin on the econ 101 freeway, smack down in LA~
Good, clean, classical economics. Like a splash of fresh water on my face. Nice.
The Manchester United soccer team was scheduled to arrive in Jakarta on July 18 and was booked to stay at the Ritz Carlton, said Azwan Karim, media officer for the Indonesia Football Association.
Coinz--fresh like an elementary school production of Hair!
But Cramer said that housing bottomed on June 30th. Is he wrong?
Indonesia Rupiah Falls Most in Two Weeks on Jakarta Hotel Bombs
"The Indonesian rupiah declined the most in two weeks and stocks may drop after bombings at the Ritz Carlton and the JW Marriott hotels in the capital Jakarta. "
Just put things in perspective - from the same article
The rupiah slid 0.5 percent to 10,170 per dollar as of 9:03 a.m. in Jakarta, according to data compiled by Bloomberg. The currency reached 10,075 yesterday, the strongest since June 15.
There's a third dimension to this supply-demand chart.....the invizible hand of government mortgage interference and memoratium of foreclosures. Probably should've included it in the macroeconomics class in high school
Tim waiting for 2012, it really is an information problem. People who paid $500K for a house can't believe that the price has fallen to $250K. In their minds that is impossible ... and it takes time for them to grasp reality.
This happens every housing bust. I do think prices are much closer to the bottom than the top in many areas, but I expect a long tail of real price declines.
Mannwich, I believe Cramer is wrong. We will see ...
Scrooge McDuck, yeah - but the government wasn't involved during the first 2+ years of price declines.
best wishes
If housing was a perfect market, prices would have fallen rapidly to the market clearing price. However housing prices are sticky downward when everyone mucks up the damn process by not foreclosing in a timely manner or making lame moratoriums to give specuvestors a failing chance to save themselves.
There CR, I fixed that line for you.
scrooge . Are you a reactionary against our five year plan?
CR - much closer to the bottom than to the top in low priced markets, but I think the reverse as you move up the current price ranges.
CR - I believe Cramer is wrong too. Was being a tad snarky. Of course he'll make excuses and blame others when he's wrong again, and ultimately will declare he was right in the end.
this is a good paper about the issue.
http://pluto.huji.ac.il/~msfalkin/0101-paper.pdf
Loss Aversion and Seller Behavior: Evidence from the Housing Market*
David Genesove
Department of Economics, Hebrew University of Jerusalem, the National Bureau of Economic Research, and the Centre for Economic Policy Research
Christopher Mayer
The Wharton School, University of Pennsylvania
"Data from downtown Boston in the 1990s show that loss aversion determines seller behavior in the housing market. Condominium owners subject to nominal losses 1) set higher asking prices of 25-35 percent of the difference between the property's expected selling price and their original purchase price; 2) attain higher selling prices of 3-18 percent of that difference; and 3) exhibit a much lower sale hazard than other sellers. The list price results are twice as large for owner-occupants as investors, but hold for both. These findings suggest that sellers are averse to realizing (nominal) losses and help explain the positive price-volume correlation in real estate markets."
no, I love our 5 year reflationary plan
all hail the great reflation
ok scrooge but vee have our eyez on you....
CalculatedRisk (profile) wrote on Thu, 7/16/2009 - 9:39 pm
Tim waiting for 2012, it really is an information problem. People who paid $500K for a house can't believe that the price has fallen to $250K. In their minds that is impossible ... and it takes time for them to grasp reality.
This happens every housing bust. I do think prices are much closer to the bottom than the top in many areas, but I expect a long tail of real price declines.
CR, it is interesting in an informational sense because this willful blindness constitutes an information asymmetry that is deliberately induced by one party on himself. The party's (psychological) need to believe puts them at a strategic disadvantage to an outside, more objective party. Of course there is tons of bad faith and exploitation baked into this, but there is also a key part of market reality exercising itself and exploiting the natural advantage granted by the willfully-blind to the capitalist/investor class.
Apropos of nothing, and totally OT, but going back to the last thread. For you youngsters or if you simply don't follow sports, Jim Bunning was a great MLB pitcher. Now in the Hall of Fame. Stats here:
Jim Bunning Statistics and History - Baseball-Reference.com
He is well loved around these parts, but even those who know him and love him say that sometimes he appears "off". I would take his comments with a good dose of caution. It all depends on which Jim Bunning was talking at the time.
OT - but you gotta love the complete disconnect with reality :
- NY Times
The money quote :
"Schwarzenegger said Thursday that he and Democratic lawmakers are trying to get negotiations back on track after talks stalled a day earlier over education funding. At issue is how to repay schools some $11 billion once the economy bounces back."
Once the economy bounces back....OMG...
You keep saying this "bounce" - I do not think this word means what you think it means.
When was the last time this market cleared? What did that look like? I doubt it was Boston in the 90s, as the learned gentleman from Wharton suggests.
C
"Two assumptions are necessary for the validity of the standard model. First, that supply and demand are independent and second, that supply is "constrained by a fixed resource." [4]If either of these conditions does not hold, then the Marshallian model cannot be sustained".
Thus spoke Wiki: Supply and demand - Wikipedia, the free encyclopedia
CR,
Agreed, I was being snarky
. On the same topic, with so much interference from government/business entities, when do charts plotted with numbers from these 'official entities' stop being useful? what chart/numbers can we actually use reliably as a major indicator of the economic trends, and from who? I understand I'm questioning the essence of this blog, but wanted to throw the question out there.
Scrooge McDuck, it eventually works out. The foreclosures are still happening and prices are still falling.
Doc Holiday, of course ... but they are useful for concepts
best to all
Here's a thought: We have artificial supply left over, after the housing bubble. The over production of housing connected to the bogus finance tools, thus the supply curve is distorted (IMHO).
See: Artificial demand
Artificial demand - Wikipedia, the free encyclopedia
I have been house hunting for the last couple of months in the Bay area. The price of the house (mid range) have definitely increased 10 -15% from it's March lows. Furthermore, the houses that are priced low by sellers often get 20-30 bids. I don't think price will continue to rebound quickly. The recent 10-15% bounce could be technical. The price significant overshot on the downside (e.g. similar to the stock market) and therefore bounce off the bottom.
I am not ruling out housing price stickiness and that prices will come back down. On the hand, I don't expect the price drop back to the lows at the beginning of the year. For the bay area, price will stabilize where it is now or a bit higher.
On the other hand, I would love it if the price fall again. It did cross my mind that the recent up turn is seasonal.
Many trustee sale investors here in California are clearly calling bottom, massive speculation concentrated in narrow areas. These are different than the bubble buyers in that they are using all cash (though some hard money, and many investment group). Speculation in places like Ventura and Orange county is very high (see my graphs for trustee sales posted today).
With now even less motivated supply coming on market expect sales volume to stagnate for even longer. The investors don't care, they are making bank. Only a large interest rate spike or large supply of inventory coming on market will run them away. With the trickle of foreclosures coming on market now the smart investors are destroying the market.
All the laypeople I know (that is, those not all that tuned in to financial news or CR) have no concern about falling house prices. The people I know who are looking to buy a house think that things are on crazy sale and that interest rates are crazy low. They're certainly right about interest rates. But somehow their brains can't fathom that prices might have much farther to fall, especially in the formerly bubbly areas.
Did you take a Krugman "Napkin-Sketching" course?
Dumb question. Supply should increase as prices increase, because more people are willing to sell for higher dollar amounts, so I don't understand where one gets the houses that are going to be sold at these lower prices.
I know, foreclosures are 1 answer, but if this were a non-leveraged market, where everyone really owned their own homes, where would the supply come from?
Sorry, never took an econ class.
In other words how do I read this chart? What is the access label for the supply curve?
I think an uptick in sales was expected. There were people with money on the sidelines. This baby still has a lot further to fall.
Thanks for the graph, but i never took an econ class either. Question: What exactly does "Quantity Demanded" i.e the x-axis stand for.
Risk, I find your economics chart interesting,but you miss a key point. Where you have P1 and P2 is on the demand line. Take a look at the supply line. If prices are maintained at P1 or P2 for long, supply is created out at an equivalent level on the supply curve. which over time creates a massive glut. I think this can be evidenced by the level of construction from 1996 to the end of the bubble.
I have been around the real estate and mortgage business since the 1970's. From information I found on your site, I was able to deduce that 1977 and 1978 were the top 2 years in residential pre-owned and new home sales prior to the bubble that began in the mid 1990's. Citing from memory from data I have used from time to time on your site, I believe it was 1996 that the 4 million existing homes sales figure was passed and the 819,000 new home sales were passed as well. Every year following 1996, the 4 million has been passed, even the bust years and the new home sales figures were passed every year until 2008, some years by almost twice the figure. Clearly the excessive price, the speculation and the financing created a market for many more homes that would ordinarily be built and sold.
Having been through one of the worst growth busts in residential real estate anywhere in the US in the DFW area during the 1980's, I know how this mess operates. There are still plenty of lots out there and they have been discounted to a significant degree from where they once were. If prices are maintained at all, we will begin to see new supply undermine pre-existing sales in a lot of areas. Your supply and demand diagram illustrates that. Just go out to where price intersects supply and that is what you get. Even if you put price at P0, you would not have a low enough price to clear the market that has developed nationally over the past 10 years.