DataQuick's "Mr. Objective"

Good morning, John David Booty, you too are on the all-name team.  The LATimes profiles DataQuick chief analyst John Karevoll, calling him "the housing market's Mr. Objective."

Highlights:
--Karevoll believes predictions about the housing market are pointless right now: "The kinds of loans that have been made in the last five years, especially the popular interest-only mortgages, 'don't have enough history to predict we're going to sail past this or that the sky will fall -- or anywhere in between,' Karevoll says. 'No one knows.'
--He lives in a house in Running Springs in the San Bernardino Mountains purchased out of foreclosure in 1991.
--He's not a big fan of blogs: "Karevoll tries to ignore the blogosphere, saying, 'Good questions get raised there, but I don't think they get answered.' In any case, he adds, 'predictions of imminent doom started in 2001. If you listened then, you were out a bucket of money.'"

Thoughts? Comments? Email story tips to lalandblog@yahoo.com.

Comments

[Jonah]

I don't recall any predictions of imminent doom in 2001. I head alot of "wow prices are going up fast...i better buy now!"

[Jax]

Karevoll must be blind, deaf and retarded if he can't see what's going on and where the housing market in SoCal is headed. Of course, DataQuick has a stellar reputation for being wrong, spinning & cheerleading for the real estate lobby so anything that comes from that company always has to be taken with a grain of sand. I sold my CA property in the spring of 2005 and got the hell out because only an idiot couldn't see this gigantic freight train coming down the tracks. Maybe Karevoll is one of these guys who spends all of his time down on the ground counting ants while a herd of elephants are stampeding bye.

[sunsetbeachguy]

The closing zinger is irrelevant.

The past is past.

What is everyone going to do now?

The smart ones will sit on their hands...

[YLG]

"don't have enough history to predict we're going to sail past this or that the sky will fall -- or anywhere in between"

I don't need history to know that people with low incomes cannot afford high payments. This obsession with past history is ludicrous.

And no, the sky will not fall.... but housing prices definitely will. Another RE nonsense expression... they should have a doll that sprouts "the sky will not fall" when you squeeze its fat belly.

[Inland Empire]

I agree - its a mixed bag out there. Some will loose their property due to bad loans. Others will make money. There are too many wild cards in the deck right now. Buy if you feel comfortable, stay out of the game if you don't. But don't whine if other people have made some money a few years from now.

[Sam]

Good point, 90% of data has an agenda and is bias. Hell that is what I do where I work. Most on this blog obviously feel more doom and gloom until a bottom in 2010. I know one thing after going through 5 RE cycles in SoCal you cannot time the market. I can’t tell you how many times I was told in the South Bay that housing has peaked and will never go up. That was when a house in Manhattan Beach was going for $70K. So maybe it is time to buy now, rather than later.

[Jax]

DataQuick's information is so far from reality and now we know the identity of one of the prognosticators that couldn't hit himself in the behind with both hands. Here's an example: Miami Florida is another bubble market. Here's a link to: MIAMI, FLORIDA: HOUSING CRASH 50% OFF!!!!...... http://www.youtube.com/watch?v=tkuW8bCjC6c

Did you ever read any articles from DataQuick calling this one?

[Charles Wilson]

I am one of those who started "predicting imminent doom" in 2001. That's when the warning signs started flashing for me. I was equally bullish in 1990, when I was telling people that the '90s would be like the '60s and that 30-year mortgages would be 6%. Everyone thought I was crazy. My lesson: I tend to have a pretty good forecasting record, but my timing could be better.

[Martin]

I think Mr. Karovell's logic doesn't require criticism. He's simply saying it's too early to tell how far prices will drop. Of course, the have-nots will say the writing is plainly is on the wall.

The debate is pointless. Time will tell.

There already is clear documentation that prices have dropped considerably. More reductinos will occur. But that's only because the buyers out there either can't get a loan or are trying to time the market. This really is a crash in every sense of the word. But where it all stops is anyone's guess.

[Linda Slocum]

Whether you agree with Dataquick's point of view or not, Karevoll is correct in saying that there is no way to accurately predict the future in the real estate market unless you're the owner of a finely tuned crystal ball. All of the predictions and news reports are just speculation.

If all of these predictions were true, both current and historically, then there would be a lot more multi-millionaires out there, having bought and sold at precisely the right time and the right price over and over again.

[tag heuer]

oh yeah... I remember the predictions of imminent doom in 2001. i also remember hearing them in 2002 and in 2003. I was at a dinner party in the Spring of '03 and I was telling an acquaintance that my wife and I were going to buy a house soon. This person's mouth dropped and said " DON'T DO IT! YOU SHOULD WAIT A YEAR AND A HALF!" I heard this opinion a lot aroud that time.

i feel bad for people who can actually afford to buy a house and get an earful of nonsense about "waiting it out". DUMB. The right time to buy a house is when you can afford one. Maybe it'sdifferent if you are a flipper, but if you are looking to own a home where you will live, it is always a great time to buy despite the the condition of the market.

[Jax]

Martin, I say that the writing is clearly on the wall and I'm the furtherest person from your description of a "have-not" that you could ever meet.............. so your comment above holds no credibility. Simply look at the percentage of losses that are already occurring in SoCal, then look at Miami, the Washington, D.C. metro area & Miami & the west coast of Florida and the handwriting on the wall is so large that a first grader can comprehend it. There have already been auctions in Florida where places are being sold at 50% off of what they sold for a year ago. If you & Karovell think that this won't happen in SoCal.......there is no hope for you.

[Tim K.]

I have a big problem with people stating categorically "It's impossible to time the market". That's the argument that is used to justify the implication "so therefore the *correct* thing to do is unknown, so buying a house right now just might be the correct thing to do."

That argument is ridiculous, and used to confuse the issue, because NOBODY is trying to time the market! We're all just trying to figure out if we're getting a good deal on a house.

People *regularly* seek out good deals on items whose prices are set by market and are "impossible to time". I regularly go to the market and see that my favorite items are not on sale. So what? I find an alternative that is cheaper (maybe the house brand) and wait until my items go on sale. When they do, I stock up.

Now is NOT the time to stock up on a house! When the prices are high, go for the "house brand", which in this case, is renting an apartment! The house will go on sale. It has, many times, in history. Do I need to know exactly when that will be? No! When it's cheap enough for me to afford it, I will. Is that so friggin hard to understand?

[Rob]

LOL.. I love this blog..
-Rob

[Toby]

"In any case, he adds, 'predictions of imminent doom started in 2001. If you listened then, you were out a bucket of money.'"

Yeah if you bought and then waited two years and then put it up on the market. Who does that?

You don't buy and then shortly later sell. You buy to live, and then when it's time, you sell to move on.

RE Industry is as duplicitous as the Used Car Industry. I wish people would realize that.

[Charles Wilson]

"I feel bad for people who can actually afford to buy a house and get an earful of nonsense about "waiting it out". DUMB. The right time to buy a house is when you can afford one. Maybe it'sdifferent if you are a flipper, but if you are looking to own a home where you will live, it is always a great time to buy despite the the condition of the market."

----------

I actually tend to agree with that in principle, with a couple of important provisos. First, you really have to be able to "afford" a house! Which means coming up with at least 10% down and preferably 20%. If you have to borrow for a downpayment, or if you get one of those no-downpayment loans, then you can't afford a house.

Same goes if you pay more than one-third of your gross monthly income for mortgage + escrow BEFORE any tax deductions. And I'm talking about a 30-year fixed mortgage, not those criminal interest-only ARMs and such. Those are dishonest mechanisms intended to convince people that they can afford what they cannot afford.

People have been encouraged to ignore time-honored rules of thumb with respect to buying houses, and the result is the current crisis. There are no free lunches, and as soon as you can't understand a financial deal then it's a bad deal. Therre were lots of illusionary free lunches and lots of bad deals. That's why I started warning my friends in 2001.

I was too early, I suppose, but then again I now sit in a house that is bought and paid for. Instead of getting sucked into the merry-go-round, I paid off my loan four years ago. When I get solicitations for home equity loans and mortgages, I laugh. And I have no credit card debt. Some "fool" huh? How did this happen for me? The answer is simple: I made a good living, and I've always lived below my means. So there.

The other proviso is that I think now is not the time to buy any property. Pricces will be lower in a year, and still lower in two years. Sit on the sidelines and wait. The right price for a dwelling is 150-170 times its monthly rent. If you pay more than 170 times, you are overpaying. If you pay less than 150 times, you're getting a good deal.

Markets always overshoot, both on the upside and the downside. House and condo prices are still far above the rational rent-to-buy ratio. New buyers should wait until they are BELOW the rational rent-to-buy ratio. It's going to happen, regardless of what the real estate shills -- a group of sleazy, cheesy liars if there ever was one -- tell you.

If you're a potential seller, if I were you I'd get it onto the market right now and take what you can get. If you're underwater on the loan, then hand the keys back to the bank and tell 'em "Hasta la vista, baby."

[MyLessThanPrimeBeef]

I believe Oliver Wendell Holmes once said, "It's not how fast you're going, but which direction you are going.'

Can Mr. Karevoll at least be able to say if the prices are going up or down?