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We had a good time at last night’s economic forum. Thanks to those of you who came and asked some good questions. Here’s a recap if you missed it, or if you wanted some links to the things we talked about. (My colleagues tweeted some of the points made in the forum here.)
The panel, moderated by Scott Lewis, comprised Rich Toscano, Ryan Ratcliff, Jim Klinge and me.
Here are a few points I found interesting:
Klinge mentioned the places (like his recent foreclosure listing in Oceanside) where prices are right and are sparking bidding wars. He shared a rule of thumb for figuring out pricing in this market: “If you see houses in your neighborhood selling within the first week, all that means is they’re getting the price right.”
Some recession notes from Ratcliff: We’ve had 11 recessions since World War II that are “cut from the same cloth,” he said. All of them begin with the housing market. San Diego usually, because of its higher-educated workforce, does better than the rest of California and the nation in terms of unemployment. But not this time: “In this recession, we’re actually doing worse,” he said.
Toscano said he’s watching the rate at which the federal government is able to borrow money to keep stimulating the economy. At some point, the entities lending it money could change the terms or stop lending money entirely, which could prove devastating to the economy.
Some links we mentioned in the course of the conversation:
- I brought up Klinge’s recent post (and Toscano’s follow-up) about shadow inventory, or the number of houses that are in some stage of foreclosure but haven’t yet been listed for sale.
- Lewis mentioned this examination of the economic impact of the local defense industry, by my colleague David Washburn, in which some experts posited that the industry might help sustain the economy. Ratcliff agreed the industry might serve as a buffer for losses, “but I think that it’s a small buffer,” he said.
- Toscano talked about his recent “prices are reasonable” bombshell and accompanying graphs showing the local wages-to-home-prices ratio.
- An audience member referred to the Case-Shiller home price index (most recent reading) and asked the panelists for predictions on how much further the index had to fall and when the bottom would be. Toscano, Ratcliff and I more or less weaseled out of the question.
But Klinge dropped this prediction like he’d been thinking of it forever, without out any introduction:
“25 percent, December 2011.”
Here’s more on the prediction, from Klinge’s blog post about it today:
Today’s index is 148.25, about what it was in August, 2002.
Knock 25% off and it’ll be 111.19, or about what it was in February, 2001.
- I mentioned some of the weaknesses in the lending industry that became evident in our recent special investigation. And I pointed out that in the recent FBI bust of an alleged mortgage fraud scheme, prosecutors from the U.S. Attorney’s Office said they weren’t considering any role that the lenders might have played in the enabling of the operation. Ratcliff drew a parallel between the innovations in mortgage finance and the “collapse of due diligence.”
Thanks to all of you who attended the forum. I count it an honor to talk to these smart, smart gentlemen frequently. It was great to have a chance to hear some of your thoughts and questions, too. Keep them coming — you can always send me an e-mail at email@example.com.