Comments on: The real estate spinners who are artificially inflating prices

By: james mcdonald

james mcdonald — Wed, 21 Oct 2009 02:58:57 +0000

Gary, please tell the Japanese lady domo arigato for the compliment. Which is probably a laughably incorrect expression but I’m sure she’ll know what I mean.

By: Gary Johnson

Gary Johnson — Wed, 21 Oct 2009 02:44:04 +0000

Mickey & Mark Jones…ditto for me too.

Adam Schwab…you were never meant for this world.

James McDonald…there is a Japanese girl who is quite fond of you.

Crikey…why was Adams story taken down so soon?..come on guys, at least give some people the chance to sink their teeth into it.

By: james mcdonald

james mcdonald — Tue, 20 Oct 2009 23:42:38 +0000

In any case, the Supply:Demand ratio is not Total-Homes:Total-People. It’s current For-Sale-Homes:Ready-Buyers. Why does that matter? Because it means changing the ratio does not require building millions of new homes. All it takes is for the number of homes on the market at a given moment, or the availability of finance for buyers, to change dramatically and the Supply:Demand ratio would shift. The fact that this hasn’t happened for some time is a result of careful maintenance rather than fundamental stability.

By: Scott

Scott — Tue, 20 Oct 2009 22:58:53 +0000

Fundamental analysis also takes in the greater macroeconomic data as well as the micro stuff to build it’s models..this includes such things as supply and demand of the product in the economy, interest rates etc.
However you are correct in the lack of good information coming out of the housing market. It’s all smoke and mirrors (with a little bit of self interest thrown in)

By: james mcdonald

james mcdonald — Tue, 20 Oct 2009 11:41:38 +0000

Sorry for any confusion, first address to Adam is Adam Barker, second reference to Adam is Adam Schwab.

By: james mcdonald

james mcdonald — Tue, 20 Oct 2009 11:40:02 +0000

Adam, supply and demand is not a part of fundamental analysis theory. Fundamentals are things like earnings, costs, and cashflow.

Supply and demand also does not depend on the ratio of homes to warm bodies, and is not as stable as the word “fundamentals” would suggest. Supply and demand in the housing market is the ratio of properties currently on the market to buyers trying to buy them. That ratio is made of much smaller numbers so is unstable. It behaves steadily only because of constant effort to keep it so, by governments and, as Adam shows, by the industry.

By: Micky

Micky — Tue, 20 Oct 2009 08:09:56 +0000

Ditto to Mark J. You can’t expect the media to be impartial when they are generating tens of millions of revenue from advertising real estate. Imagine how much revenue ‘Melbourne Weekly’ brings into Fairfax. The real estate agents and their vendors pay serious money for these ads. These agents and their friends at REIV would get pretty upset if The Age kept running articles about the housing bubble. News media will always present the news in a way that will not upset their revenue streams. Or not even mention the news.

By: Mark Jones

Mark Jones — Tue, 20 Oct 2009 04:07:30 +0000

The real estate industry has a very strong mutually beneficial relationship with the newsprint media. They spend vast quantities of money on inserts, special sections and the like for both residential and commercial real estate every week (clients like this are getting harder and harder to find for newspapers). It is in the media’s interest to ensure one of their best clients is looked after as far as editorial content is concerned. There is a constant barrage of articles on just about every aspect of the market, talking it up and priming the consumer for higher prices and greater returns. The relationship between the industry and the media needs a tad more disclosure before any investor acts on the ‘advice’ given in the news rags.

By: Adam Barker

Adam Barker — Tue, 20 Oct 2009 03:26:45 +0000

Any asset bubble, be it shares, property or tulips, is only able to inflate if investors are naïve enough to ignore fundamentals and believe spin.

So far, if property prices are any guide — the spinners are winning.

Fundamentals? What about the massive shortfall in housing in our capital cities and the rising population rate? I would have thought supply and demand was pretty ‘fundamental’.

Not to mention a lack of infrastructure being developed over the last generation, shortage of available land and finance for development drying up, but hey, don’t let the facts get in the way of a good story.

By: robbi64

robbi64 — Tue, 20 Oct 2009 02:24:37 +0000

Hmmm … this article reminds me of a squabble I had with a survey worker on the phone one night. She rang up to talk to me about a certain advertisement and whether I had seen it.

I replied that I did not have a television, and she attempted to end the call. I said “oh no you don’t”. And then explained to her why her survey would not be accurate if she failed to include people like me.

She really struggled, so I had to ask for her supervisor in the end. The supervisor was most miffed at my insistence, but had to concede the point. I made them then go through the survey with me (which only took two minutes). They mumbled something about having to include the data in their results and sloped off.

I would bet $10 my replies went straight into the nearest bin. If advertisers were to get even a notion of how many people their money does not reach, they would stop spending it on TV ads.