Buffet on Rating Agencies and Predictability

Did anyone credibly predict the housing bubble and bust?  Moody's, in which Berkshire Hathaway holds a major stake, certainly didn't. Some like Case/Shiller became famous for accurately claiming there was a bubble, but accurately predicting it's bust?  And likely to predict the next one should it occur? Personally, I'm not so sure..  

However, real estate is no more about easy money than any other investment, so the quick runup in itself was certainly a warning sign.  Here, via CNN/Money, is a brief video of what Warren Buffett thinks about the real estate bubble's predictability via rating agencies, Fannie & Freddie, and the rest of us.  His most relevant comments on real estate are near the end of the clip. Sorry, there's an ad for Citi at the beginning. - David

The Risk of Further Declines in Home Prices: Someone Knows the Answer

What's the risk of more wholesale price declines in real estate?  Low, and getting lower. 

So whose prediction is that?  It is the prediction someone who really needs to know the answer: major providers of private mortgage insurance (PMI).  These are the folks who know how to measure mortgage default probabilities much better than AIG knew how to predict MBS (mortgage-backed securities) default probabilities, and here's what they think: Risk wanes for real estate price declines | Inman News - David

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Southern California Home Buyer's Fair - The Presentations

Miss the recent Southern California Homebuyer's Fair?  Well, not completely.  Here are the presentation materials from the many seminars at the Homebuyers Fair!  Topics included the California housing market outlook, finding the right investment properties, and negotiating a loan modification. - David

RCLCO Market Outlook - Brightening Horizon?

"As economic growth matures into employment growth—probably later this year and in 2011—move-up activity, in particular, will accelerate, creating more dramatic pricing power as the market becomes significantly more fluid."

This forecast, relating to residential real estate, is from Robert Charles Lesser & Co., the leading commercial real estate consultancy in the U.S. and perhaps the world.  Their forecasts for the real estate markets tend to be focused and intelligent.  Here's RCLCO's Spring 2010 Market Outlook, including sections relating to both retail and commercial markets. - David

Nab a real estate deal – while you still can - CNN Money

The combination of affordable home prices, low interest rates, and the federal tax credit for home buyers have created an opportune time for many buyers to purchase a home. Many real estate analysts also believe that most housing markets have stabilized, but that some markets may decline further.

KEEP THIS IN MIND

• Buyers should keep in mind that housing markets are local and can vary greatly from one neighborhood to the next. Working with a REALTOR® familiar with the area in which the buyer is searching can help the buyer select a house that best suits their needs.

• California’s housing market has shown signs of stabilization since early last year. Sales of existing, single-family homes bottomed out in August 2007, and the median home price reached its trough in February 2009. In January, California’s median home price was 17.2 percent above the low for the current cycle.

• The federal tax credit for home buyers was extended and expanded late last year. Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010. Repeat buyers may be eligible for a tax credit of up to $6,500. Visit http://www.irs.gov/newsroom/article/0,,id=187935,00.html  for more information about the federal tax credit for home buyers, including eligibility requirements.

• The Federal Reserve has helped maintain low interest rates, which, in turn, has assisted home buyers. However, the agency plans to stop purchasing mortgage-backed securities at the end of this month, which likely will increase rates on 30-year fixed mortgages. Buyers may be able to lock in a low interest rate by working with their lender.

To read the full story, please click here:

http://money.cnn.com/2010/03/02/real_estate/real_estate_deals.moneymag/index.htm

Looking At The 2010 Predictions For Housing Markets And Mortgage Rates

2010 is just a few days old and already the "experts" are making predictions for the year.

Housing calls and mortgage rate predictions run the gamut:

• Home prices will fall in 2010
• Home prices will rise in 2010
• Mortgage rates will rise in 2010
• Mortgage rates will rise by a lot in 2010