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[Housing Our Shoes] Guilt Is The Gift That Keeps On Giving

Since this is Matrix… [1]

The issue of buyer’s remorse isn’t something I can throw a shoe at, let alone be a heel, a loafer or strain my sole to AA…or…

A shoe in the hand, beats throwing two at Bush [2] (Ok, ok, I will stop.)

Ok, so I am feeling guilty about enjoying a 50%-75% average discount (without even trying) during my holiday shopping expedition this past weekend. Clearly retail stores do not have an extra 50%-75% margin to play with and I am not even asking for a discount. Retailers are pleading for us (consumers) to make an appearance. The stores were not crowded – amazing at this time of the year. I may even visit (shhhhh) the local mall, which I swore off (and at) while ago because I don’t expect it to be packed.

I would think that a number of big retailers already know it is over and we will learn their identities in early 2009 when the holiday receipts are totaled. Some are already dead but don’t know it yet. Is the consumer going to benefit from slash and burn retail pricing? In the short run, yes, of course. In the mid to long run, it sure feels like “no”. Ruinous competition for survival may lead to less selection and higher prices.

It seems that no matter what the bar is set at, consumers aren’t shopping in large numbers. The “black friday” uptick [3] was due to the huge discounts offered from the start. Prices have to drop further to get more people out.

We all are observing the lack of activity in the housing sector right now (California is a notable exception with higher sales, thanks to properly priced foreclosures off 50% to 75%.)

It’s all about pricing.

Many housing markets are simply going to have to correct sharply before activity returns in a meaningful way.

Ironically, many of the actions being taken to stimulate activity, are crushing demand in the short run. When the consumer got wind of lower mortgage rates, activity in some markets ceased [4] as consumers wanted to time their purchaser to an historic rate low.

By all accounts, sellers are about 9-12 months behind the market. Lenders are twice as disconnected. National retail banks are distracted with all the buyout activity of the past year and are not focused on consumer lending yet. It’s a lot to swallow: BofA -> Countrywide, JPM Chase -> WaMu, PNC -> National City, Wells Fargo ->Wachovia

Why can’t I simply be happy with a discount?