Mark Kiesel is Still Renting and Other Major News

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Why does it matter that some guy in Orange County named Mark Kiesel has sold his house and is still renting? Because he’s a big shot at PIMCO in Newport Beach, which is a bunch of really smart people who manage $700 billion (yes, billion with a ‘b’) in other people’s money, and he has decided to sit out the housing market because he thinks it’s a bubble. In an essay titled ‘Still Renting’ (so succinct, those PIMCO guys), he writes: ‘Based on the current outlook for housing, I will likely be renting for one to two more years. While many factors that influence housing prices have turned negative, I suspect we have not yet hit bottom. In fact, housing prices should head lower throughout the rest of this year and next year as well.’ He continues, ‘This is all great news for renters and buyers who are patient. Over time, housing prices and interest rates should decline, resulting in improved affordability. This adjustment, however, will take time and occur over a period of years, not months. Housing is illiquid and prices are sticky.’ Other Stuff Worth Reading: The Financial Times is telling rich people in London that ‘trouble is brewing in the Inland Empire.’ Goldman Sachs, for my money one of the smartest outfits on Wall Street, is telling its clients that California real estate is heading for a fall, and the big lender Countrywide Financial is vulnerable. ‘Many metros in California have home prices that are not justified by the underlying fundamentals,’ Goldman writes. ‘Instead house price trends have been driven by the availability of subprime and non-traditional credit.’ We found the Goldman report through a blog we like: www.lenderimplode.com, which tracks the subprime lending crisis with great enthusiasm. Comments? Use the comment button with reckless abandon.