Tuesday, October 31, 2006

Predict the Prediction

At last year's Sacramento Region Housing Forecast, Michael Lyon, Sacramento real estate's "wunderkind," predicted double-digit appreciation in 2006 for all four Sacramento-area counties. So far, things have not gone according to plan, however. Even as measured by Mr. Lyon's own statistics, appreciation, let alone double-digit appreciation, is nowhere to be found.

Median price change between December 2005 and August 2006:

El Dorado County
- Predicted: 10%
- Actual: -1%

Placer County
- Predicted: 10%
- Actual: -5%

Sacramento County
- Predicted: 12%
- Actual: 0%

Yolo County
- Predicted: 11%
- Actual: 0%

Tomorrow, Mr. Lyon is again scheduled to make a presentation for the 2007 forecast. So Sacramento Land(ing) readers, what will Mr. Lyon's 2007 forecast look like? Predict the prediction by clicking on the comments link below.


Anonymous said...

My prediction for the prediction:
A continued soft correction through the spring, stabilization to be reached in the summer/fall with robust growth anticipated by years end. In numbers: 5%

Anonymous said...

It's pretty sad to see what booms and busts do to ethics. Booms tend to attract questionable ethics, and busts tend to drive away the few ethical people that were originally in the business.

People will lie about anything to try and keep their cash flow.

Think about the telecom bust. Even in 2003 when things were really bad, startup companies would still be selling employees on the potential for getting rich, except they didn't want to pay a salary (just work for options!), or they'd pay a super low-balled salary. They would try to hype their technology to their customers, but now the only customers left standing were the ma-bells and they were smart so it didn't work.

I can almost sense a similar thing happening with the real-estate bust. As things progress we can expect to see more and more cases where people were frauded by mortgage brokers and realtors, because they didn't read the fine print and were too excited about owning a home.

Back during the dot com boom, there were wall street analysts that came up with new models to value stocks of dot coms! That's all history.

This is gonna be a bad bust but it will happen over many years, so it won't appear as bad until we get to 3 - 5 years from now...at which point we'll have a boom in some other area (I feel it's going to be healthcare).

Here's my favorite picture:

Anonymous said...

Ooops. I should have added my personal prediction:
Continued price reductions of at least 10% by the spring. Rapid reductions when the first tidal wave of foreclosures hits early summer. 30%+ reductions over current prices by year end.

Anonymous said...

Another 10-15% in 2007, same in '08- 09. Some signs of recovery sometime in 2010.

Anonymous said...

Prediction another 10% to 15% in the next three months as realtors pound sellers to lower thier price in order to move inventory. Another 20% this summber as the foreclosure mania really kicks in. 10% to 20% decrease for 2008 to 2009. Just a flat market until 2015. Were at an easy 50% decline by 2009. Anybody who buys now will lose a ton money over 15 to 20 years. Anybody who buys now is a fool.

Anonymous said...

My prediction for the prediction: A soft landing and "normal 7-10% appreciation" following the lull in early spring.

My actual prediction, sharp real declines.

Anonymous said...

Realtors don't have the guts to admit that the market will decline. How can you sell a house to person and tell them it will be worth $20K less in a year?

I predict that Lyon will predict a flat market for 2007.

karl marx brothers said...

my prediction of the prediction?

only one thing I know for sure;

he wont tell the truth !!

( and thats " in the bag " )

The Slide Show said...

but if we all hold hands, close our eyes and click our heals three times...

I think perhaps many expect alot from the Wizard of OZ of Sacramento Real Estate.

PREDICTION: -He will give a hint that prices may be going down just a bit.-

If he goes out on the limb that far, he gets a whole lot more credit then he deserves.

JR said...

Remember folks; we are predicting what Mike Lyon will say:

I think Mike will tell it like he sees it. Another 10% correction and sellers need to get real to move this market back into balance. He will indicate a return to the "normal" market by May 07 and inflationary price appreciation thereafter.

My prediction? That Mike does not see that clearly. We already have dropped in value by 15% so far (perhaps more) and will drop another 15% thru Sept 07. Then we will see small drops and small gains for 3-4 years, in nominal terms, with inflation at stealing another 10% in value silently thru 2010.

To Anon 2:43,

You are right about the sadness this entire BS wreaks on our community. All my life growing up, people who built homes were roll models for me. All the men I knew who built houses were healthy, fit, and creating a place for people to live. The smell of fresh cut wood and new paint was always a welcome sign.

Somewhere in this world of corporate greed and obscene profits, the builders seem to have lost touch with some real values. The homebuilders provide a great service to this country. And I think they will again. But it came to the point where they were corrupted by a perfect storm of buying hysteria, creative financing and artificial demand.

Not many of us would be any different than they. In fact, a lot of us bloggers on these web sites sold homes in 2005 for obscene profits, knowing the bubble would burst and understanding that the pricing always reverts to the mean. I must say, I look forward to the day when this all settles down, regular folks can afford a nice home for a fair price and we can look at the builders as an important asset in our society.

Anonymous said...

Mike Lyon will come out on stage and remove his pants and underwear and proceed to stick his head up his rear end, again!

Anonymous said...


Mike Lyon will show up with a big pitcher of Kool Aid, and poison,

and offer all who believe his BS a drink!

Anonymous said...


Mike Lyon will show up with a big pitcher of Kool Aid, and poison,

and offer all who believe his BS a drink!

Gwynster said...

I need to send him a picture of my halloween costume - I went as a soon to be dead Lyon realtor. I predict he'll say that consumer psychology is worse then he thought >; )

Anonymous said...

Flat year over year.

Anonymous said...

I don't think these brokers know what they are talking about.

Their job is to drive people around and tell sellers how to clean all the crap out of their house, replace carpets with cigarette burns, get the dog poop off the front lawn and so on.

They are not economists or financial experts.

I am seering alot of people in sales are now called Account Executives! What departments to they manage? The departments of Me, Myself and I? So in what way are they Executives????

This is all part of the Self Esteem movement.

Anonymous said...

My predication for the prediction is: flat to -5% next year.
What will really happen? -10 to -20% next year and down %5 each year for 3 to 5 years.

Next bubble: A free energy device will come out next year. Manufacturing companies will need to redesign everything to use it.
The bubble will be in manufacturing company stocks.

JR said...

So Lander,

It is Nov. 2nd. We are all waiting to hear what Mike Lyons predicted for 2007. Come on, give it up....

Lander said...

That will be $19.95 plus tax.

JR said...

Lander, that works for me. I've got an appraisal saying the info is worth $27.93. I am going to get me a cash out, no down InfoLoan from Countrywide Funding, and use the $30.72 in proceeds to pay you $19.95 and keep $10.77 for myself. This works great. In fact, Lander, can you double the price so we can do this again?

I am beginning to see the light. In fact, I don't even need that market prediction now, I am creating my own market. It is easy.

JR said...

For those of you wondering about Mike's prediction, it was in the Bee today:

'Though the number of sales are expected to rise about 7 percent next year in the four counties, the number of for-sale signs suggests "prices are going to decline in most areas," Mike Lyon, head of Sacramento-based Lyon Real Estate, told a North State Building Industry Association gathering Wednesday.

"We've got another year of this, another 10 percent probably, in the next year, of value loss," he said. "We won't see true price stabilization until 2007, and then we'll slowly start ramping back up again."'

Mike Lyon always tells it like he sees it, which is much more refreshing than many in the real estate industry. His comments appear in a story about the Nat Assoc of Realtors using a nationwide advertising campaign encouraging people to buy now.