I have long been a reader of Barron's. I spent countless Saturday mornings early in my career with a big cup of coffee and a hard copy of the weekly.
Over vacation, I almost missed this cover story on housing last weekend by Jonathan Laing, "Betting on the House." In it, he forecasts 5 percent annual increases in home prices during the next three years.
It almost passed without comment until I read this paragraph:
"We claim some bragging rights on the subject: In two cover stories last year -- "Home Prices Ready to Rebound" in the March 19 issue and "Happy at Last" in the Sept. 10 issue -- we not only called the imminent recovery but hit the timing of it right on the screws."
That turns out to be, well, only partially true. The 2012 cover calling the bottom in housing was indeed dead on. I was on the other side of that call, and admitted my error in my annual Mea Culpas. (2013 edition will be out later this month).
However, to call the timing right requires ignoring prior attempts to call the bottom, all of which failed. In particular, a premature housing-bottom call in 2008, titled "Bottom's Up: This Real-Estate Rout May Be Short-Lived." That was brutally wrong -- and never owned up to.
Between 2008 (wrong), and 2012 (right), this one could be the tie breaker.
The argument: House inventory supply is tight, rates are still relatively low, prices are still within reach, and private equity continue to be a big factor.
The counter-argument: Rates are rising, prices are out of reach to many, especially first-time buyers, credit is tight, household formation remains anemic, builders will increase supply in 2014, lots of current home owners have little or no equity (plus many with negative equity) effectively freezing them in place.
Unlike the prior two bottom calls, this one is pretty mild. Five percent appreciation for each of the next three years isn't much of a stretch following a 13 percent year. Indeed, a big 2014 followed by two moderate years could beat three consecutive 5 percent annuals.
Still, if I were a gambling man, I'd take the under.
Thus, if Jonathan is interested, I am happy to make this friendly wager: An NYC lunch for four, restaurant chosen by the winner, tab picked up by the loser, on that 5 percent per annum. (Owning real estate means I am hedged).
And there are much worse ways to spend an afternoon than debating real estate over lunch.
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Barry L Ritholtz at email@example.com