RYAN Barker

I have been doing a lot of research on the real estate market and also the economy in general. I have attached many resources, 2 of them are charts from the Federal Housing Enterprise Oversight, which clearly show that in 2003 a dramatic spike of housing prices soared until 2006 (just like economist Schiller predicted.)

Now the incredible spike that occurred during the boom has almost completely reversed, according to the data. (see attachments in email)

Also in an article in Money Magazine (new rules of financial security). There advice to current sellers I quote from page 64. "If you must sell now move fast and be realistic. Undercut asking prices in your neighborhood."

I have come across some very interesting information that I think will bring some historic insight into the current real estate market bubble. I have done an eclectic pull of various resources to bring a balanced view.

Of late, I have come across the works of Robert Shiller. "Robert Shiller is one of the best-known and most widely respected economists of our time. The Stanley B. Resor Professor of Economics at Yale University, Shiller is also a fellow at the Yale International Center for Finance. Shiller is the author, among other books, of Irrational Exuberance, which predicted the bursting of the Internet bubble with exquisite timing." (source: indexuniversity.com)

The following are 'highlights' of many articles I have read. This is done to keep you from having to read all the material I did. Easy to understand summary to follow.

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Economist Shiller created a housing price index (see attachment). "Charting prices from the 1900's to present only during the 1940's to the 1950's and the current 'great bubble" created by easy credit and low interest rates of 2000, did any significant housing appreciation occur in real estate." (see attached Money Magazine article for chart)


"There’s a good chance housing prices will fall further than the 30% drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15% since their peak in 2006, he said.

“I think there is a scenario that they could be down substantially more,” Mr. Shiller said during a speech at the New Haven Lawn Club. (Source: Wall Street Journal 2008)


"The rate of US housing appreciation slowed after 2005, and, to some eyes at least, it would appear just sometime after mid 2006,

we are entering a new regime of downward price changes.' (Schiller)

"As can be seen in Figure the end of the real estate boom of the 1980s was quite
sudden, with a brief period of sharply falling prices in late 1990 and early 1991. The
period of sharpest declines in home prices corresponds almost exactly to the Persian Gulf War. The threat of war began in mid 1990

when Saddam Hussein built up his troops near the border with Kuwait. The biggest 12-month drop in home prices shown in the figure occurred in the 12-month
period ending January 1991, with real prices falling a total of 12.9%. Traffic of prospective home buyers tumbled exactly parallel to this event (war.)


"What Marks Turning Points in Housing Booms?. In one case, the Florida land boom of the 1920s, an exogenous event, a hurricane appears to have played a role in the collapse after the boom. In another case again an exogenous event, the Persian Gulf War, appears likely to have been at least part of the reason for the abrupt change." (Shiller)

"In the Great Depression in the 1930s, home prices in nominal terms fell 25% and there was a huge rash of mortgage defaults. But that was also caused by unemployment. It was a big national crisis. I don’t think it’s going to be that big, but we could have a lot of defaults and foreclosures, which would, of course, harm the economy."

"Except for 2 spectacular booms, the first after WWII and the second starting in 1998- real estate appreciation has been unimpressive after figuring in inflation. As Shiller wrote in Irrational Exuberance, technology has allowed builders to nail up more houses faster, ensuring that supply never gets too far behind demand (and often gets ahead of it). (When supply is high, prices drop.)
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I am a bottom line kind of guy. So here are the facts (according to my analysis)

1. We might see housing prices drop to levels beyond the 30% price deprecation of the 1930's depression.

2. If you are aware of the of the actual state of the current US economy and the imminent collapse of the US currency, you will take advantage of the current window of time we have in the and liquidate your home at a competitive price.

3. If you are a buyer, the only rational home purchases should be foreclosures and rural land. (I am good at getting great foreclosure deals.)

4. Wars and Natural Disaters make housing prices plumett.

5. Get out of debt and use cash resources to pick up property at massive discounts when the next correction occurs (2010?)

6. From both the Schiller articles and graphs, combined with the Money magazine commentary (provided in the attachments) Houses (unless you buy foreclosures) are not generally considered wealth builders for the follow reasons: maintenance costs coupled with inflation and the real estate cycles that artificially drive up home values and then subsequent decline that inevitably follows.

Please call me to discuss if you have any questions!

Real Estate Update for Jan. The average days on market before a sale has increased. Almost 50% of all real estate closings now take 120 days or more. Residential closings are also down 47% when compared to this same time last year. On the bright side buyers are getting great bargains, as well the best rates in years.

The following is an excerpt from my Foreign Currency Broker (If you are interested I can forward the whole article) When price declines affect a majority of goods and services, they can become the expectation of consumers. As inflation promotes current consumption in place of future consumption because goods are bought today in anticipation of higher prices tomorrow, so deflation substitute’s future consumption, when prices are expected to be lower, for current spending. A clear example is the current residential housing market. In many places home prices are now below levels that if they had been offered a year or two ago would have brought out a slew of buyers. But now the same house at the same price attracts no offers. Why? It is not only that mortgages are harder to obtain and that people are reluctant to make a large purchase in a recession. The US economy has, until very recently, had a decade of very good growth. Not everyone has lost their jobs or a fortune in stocks. Not all bonuses have been spent. Nor has the desire to own a home completely dissipated. House buyers are not buying because they are waiting for prices to go even lower. Home price deflation has become the norm, it is the expectation. And it is these recalcitrant buyers who are helping to drive prices even lower. Joseph Trevisani FX Solutions, LLC Chief Market Analyst Joe@fxsol.com My belief is that prices are going to drop again in the real estate market. Statiscally their are also half of the current buyers that are currently looking to purchase in Charlotte's market, plus the inventory is much higher. I don't mean to be doom and gloom, but I study both real estate and finance and it may be quite a while before any significant recovery happens. Nevertheless I will take every step necessary in order to sell your house at the highest possible price.

Thanks Ryan