When will prognosticators stop using that old chestnut, “Now’s the time to buy!”
The WSJ wonders, too. In a hilarious little blog post headlined “Bank Stocks: Nowhere to Go But Up in 2012?” blogger Shira Ovide writes:
Bank stocks are cheap! Where have we heard that before? Oh, right. A year ago, repeatedly, at a point when the KBW bank-stock index was about 24% higher than it is today. That call turned out to be premature. And premature is just another word for wrong.
She goes on to skewer the bank boosters.
We feel the same way when we hear, “Now’s the time to buy! This is a real estate buyer’s market! Interest rates have never been lower!” Notice all the exclamation points. That’s to drive home the sincere enthusiasm the promoter feels about this.
Now, go read Dr. Housing Bubble. He explains the macroeconomic climate that foretells the continued slow train wreck that residential real estate has become. He’s covering Southern California, but it’s the same here in Oregon, though you’d never know it to talk to recent buyers, as I did, or listen to radio ads from mortgage lenders and RE agents.
To sum up DHB, we’ll never have housing that most Americans can afford to buy, given their salaries, until the banks let loose their shadow inventory. And even then, things might be difficult for a while, until the economy improves and personal debt declines.
Investment lesson: don’t believe hype.