New words from Gary Watts

NEW -> Contingent Buyer Assistance Program
Eyeball: What’s your outlook for the O.C. housing market?

Gary: My forecast for 2007 appears to have been too rosy!

Gary admits he was wrong. First sign of the apocolypse.

Eyeball: Any “off-beat” economic indicator you’re watching now for signs of recovery?

Gary: The number of foreigners taking advantage of our cheap dollar and low prices to buy our undervalued real estate.

Ah, those furriners. Buying all those tract homes in Anacrime and Santa Ana. RIGHT! THEM!
 
They skewered him pretty well on Lansner's blog. I don't have much to add. I am surprised anyone can take him seriously. It is akin to asking Richard Perle what would happen if we invade Iran. He was so totally wrong on Iraq, his judgment cannot be trusted. Gary Watts was so wrong for the last 2 years, his judgment is beyond suspect. The guy makes a living predicting prices will rise. This works well in a bull market, but not so well in a bear market.
 
There are some real gems in the responses to that column.

crispy&cole says:

Where is Pat “Taco Industrial Complex” Veiling? Can we get his opinion (spin) too?

george says:

Inventory is through the roof and pool of qualified buyers is way down.

This is not a formula for stability. This guy is an idiot.

lessismore Says:

For all his puffery, Watts is correct about one thing: There is “pent-up demand” - lots of us want to buy houses in OC. But, you know, I also have “pent-up demand” for a Ferrari 599 GTB. That does not mean it makes financial sense for me to buy the Ferrari. Just like it does not make sense for me to buy an over-priced house, no matter how much I want one and no matter how many stupid lenders will give me the money to get it.

Brice Says:

Having had dinner a few months ago with a prominent CEO of a local home builder a comment he made was extremely hilarious “I knew the game was out of whack when I saw strippers carrying century twenty one business cards driving mercedes”

Charles Says:

Gary - I’m not sure in what areas Realtors service who raise their hands when asked if they have prequaled a buyer. I work out of a broker’s office in Anaheim and couldn’t begin to tell you how many transactions have dropped out of escrow because the buyer couldn’t get the loan.

I can't post anymore. I have to go do something productive - fold clothes.
 
Actually I did a closing with a stripper back before Aug 9/10 and she reported all her earnings, and she did very very well financially. She called herself as being in "entertainment" on the application, which is whitewashed but true. The broker found her very easy to qualify.
 
"Where is awgee when you need him??"

I am right here with you buddy. Right here whenever you need me.

Watts was right once, about eighteen years ago when he called the last real estate downturn. He is right less often than a broken watch.
 
That is twice a day and you are correct in that he is right less than that.

Actually his stats were very accurate for the last 10 years. When many experts were calling for a decline he was correct in the appreciation numbers. His problem was that a couple of years ago he started believing his own PR.

As a side note, last week I made an offer for a client of $900K on a $1.2 million listing in south county. large lot, single level, no mello-roos. They sellers didn't even counter. Part of the problem is that it was a 2 week old listing. I get as frustrated as many others on this forum do when both agents and sellers just don't have a clue. We will see if they get the message in a month or so.

I will keep you all posted as to action "in the trenches".

Enjoy!
 
" Watts was right once, about eighteen years ago when he called the last real estate downturn."

Is this true? I know it is commonly believed, but does anyone have any documentation or actual memory of him doing this? Graphrix suggested this may just be a myth, and I have not been able to find any real proof he did this. Anybody care to find an old newspaper link or something to prove it?
 
Actually, he has been right more often than that. I do not have proof, just memory. But it is fun to say that he is right less often than a broken watch. When someone starts paying me for my predictions and opinion, I will be more accurate and less hyperbolic.
 
Gary did predict the late 80s decline when nobdy else would believe that things would slow down. His nickname became "Scarey Gary" because of his negative predictions. At that time he was a contrarien and that got him notoriety. He then beat most of the major economists and forecasters which upheld his sucess rate.

He gave presentations 2 times a year and I have heard most of them since the late 80s.

I was there and remember it well but don't have much in the way of proof to refer to. He was mainly listened to by agents and investors.

Enjoy!
 
When did he decide to simply become a shill for realtors? Was this a development of the bubble? Also, when you read his analysis, he is obviously totally clueless. Did he get lucky in the late 80s, or did he dumb down his analysis when he decided to become a shill?
 
IR

He is not a "shill for realtors".

Gary is a broker and deals mainly with investor clients. He began his forecasts for his clients and became somewhat of a local "Guru" by calling the earlier downturn. As far as being clueless I have a recap of his predictions and he has been pretty accurate up until mid 2006. His overall averages beat UCLA and Pepperdine real estate predictions.

I am not waving a flag but sometimes facts do help prove a point. Many professionals and government types totally missed the implications of the sub-prime mess. Most bears missed the upside due to constantly believing the crash would occur and missed 5 years of appreciation and potential profit between 2000 and 2005.

As I have agreed not to use rose colored glasses neither should one use blinders. There are now and have always been cycles in real estate, and business in general, and this one appears to be "bigger and badder" than prior ones. Profit can be made on the upside and the downside if one really focuses and does not to follow the herd.

Gary Watts’ forecast for 2007/2008 marks the 34th year of bringing to the real estate industry his outlook for the resale housing market. More than just forecasting appreciation numbers such as those below, Gary looks into the various factors that effect real estate values and growth. These detailed searches point to various trends in housing. From those trends, he forecasts what is most likely to happen.

For the record, here are his appreciation numbers compared to actual numbers since 2000:

2000 2001 2002 2003 2004 2005 2006 Totals: 2007

Forecast: 12.5% 12.0% 10.0% 15.0% 25.0% 15.0% 15.0% 102.5% 7%

Actual: 13.0% 10.1% 16.8% 19.1% 24.8% 16.5% 3.4% 104.1% 1.9% (as of Aug. ’07)

It is hard to follow the addage of "Buy when everyone else is selling and sell when everyone else is buying" but can be very rewarding.

Enjoy!
 
"I am not waving a flag but sometimes facts do help prove a point. Many professionals and government types totally missed the implications of the sub-prime mess. Most bears missed the upside due to constantly believing the crash would occur and missed 5 years of appreciation and potential profit between 2000 and 2005. "

This is exactly why we needed a bear on the board. Thanks XS for being the voice of reason.

The market might of been overbought in 2000 and that didn't stop it from continuing to run up another five years. Just like the stock market in the late 1990's when I pulled the plug in 1998 - two years and a couple of months too early.

That doesn't mean that Gary's forcast is currently credible. If someone is giving you directions and they get 90% of it right, you'll say they weren't any good. This is the same deal - he missed the last turn and drove off a cliff.
 
No_Vas

Thanks. I think that many of the bears will be surprised in the future when it is hard and expensive to obtain a loan and even though prices are low the mentallity will be to wait. An example was a couple of years ago you could get a 30 year fixed loan at a little over 4%. That was a historical low but I know people who wanted to wait for lower rates or went with adjustables. You didn't have to be a rocket scientist to realize that there was only one way for rates to go and that was up.

Gary based his numbers on the underlying economic information and somehow didn't read some of the day in day out evidence that was popping up in the market late 2005 or early 2006. He may have been somewhat cought up in his semi celeb status.

In the future this may bite some of the bears since it is easy to over analyze the market. There is still a certain amount of "seat of the pants" thinking that seems to do well in decision making.

Enjoy!
 
xsc,

The problem as we see it now is mobility.

My dad and I were talking a couple of months ago and he made the comment he felt bad for me and his other three sons. His comment was it used to be when you bought a home it was because you were ready to strap on for 20 years of payments and then move in. He recognized that the work world is much more fluid now than it was then and it was unrealistic to assume you'd be in the same spot for 20 years. Which was exactly my problem - I couldn't justify a property that was so cash flow negative and couldn't eat the short sale bill because the ammounts we are talking about are so big. The possibliity of relocation was so big it stopped me from buying, among other things.

If I had my way, I'd move back to the Fresno area to be closer to my family and buy back my home I sold in 2001 for $68,000 (that today sells for about 80K). Problem is, I'd be unemployed and so would my wife. Plus, I'm sick 200 or so days a year up there because I have a bunch of allergies that aren't a problem in SoCal unless the Santa Ana's blow. Ohwell, that's life.
 
No_Vas

Its is very hard to understand where we are in the cycle until we look back. I have sold several properties based on my perception that the market was near the top only to see it move up further. Better to do that than get caught holding when it is going down unless you are in it for the long run.

Mobility is a new factor in life decisions. It does put a new spin on the decision to buy or rent. There are times that either renting or buying based on personel needs rather than market timing should drive the decision.

Housing will always be driven by employement generators like SoCal which will keep demand and prices higher than in areas that were "investment" driven. It is a viscious circle as you said, both you and your wife generate income but have to compete against others in the same boat for housing.
 
Operator error!!!

To finish my thoughts: SoCal in general and the coastal areas in particliar will continue to hold up better than IE and other inland areas due to jobs and demand for the coastal lifestyle.

It will be interesting to see where some of the bulls are in 2009 as far as buying, waiting, or just plain stuck in the same old rut. Following the herd is easy and I see a lot of it here.

Remember that if you are not the lead dog-the view never changes.

By the way I am going to the Barrett-Jackson auction for the first time since I now live a little over an hour from West World. That might be a whole new thread as to value and spending when it comes to collector cars. Many of them have inflated many more times than housing and there are no signs of it leveling off.

There is a lot of money available in this country.

Enjoy!
 
xlm - Interesting that you would mention the Barrett-Jackson. I have been planning to watch this year to see if those in the higher income brackets are spending like they did last year and the year before.

"As I have agreed not to use rose colored glasses neither should one use blinders. There are now and have always been cycles in real estate, and business in general, and this one appears to be "bigger and badder" than prior ones. Profit can be made on the upside and the downside if one really focuses and does not to follow the herd."

Agreed. I also have to agree on Gary Watts. He is usually good at analyzing economic factors contributing to the local IC housing market, but I think he completely failed to recognize the influence that easy credit was having and the inevitable and historical consequences of easy credit. I also think that most are failing to recognize that business has also taken advantage of easy credit and the excesses incurred in the corporate credit markets have only begun to retreat. But it is alot more fun to call Watts a moron than it is to be reasonable.

Also, I don't know if folks will not desire to purchase at the bottom, but it may be unattractive to do or they may be precluded from doing so because of interest rates, high prices on neccessities, lack of down payment, extreme tightening of loan standards, etc.
 
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