In what year will US housing median price hit it's 2006 inflation-adjusted bubble high again?
A) 2008
B) 2010
C) 2015
D) 2020
E) Not in the 21st Century
F) Never
April 30, 2007
HousingPANIC Stupid Question of the Day
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37 comments:
If the Republicans win the White House and maintain or lower tax rates: 2010-2012
If the Democrats win and crush the economy with oppressive tax hikes and stifle job growth (to pay for free healthcare for a bunch of illegals and unemployeds:) 2015-2020.
2018, A.D.
Inflation adjusted not for over 100 years, if ever.
D sounds about right. That will be around the time of the next mania that will drive real estate prices sky high, with another wave of clueless subprime borrowers and mortgage broker scammers fudging incomes, and Lereah's son will be the new shill for the NAR (if he has one). That will help prices reach another bubble peak in approximately 2025.
Frank,
How's this. We'll pay a for free healthcare for a bunch of illegals (which granted I am not happy about) and which we at least we get a return on (work/sales/payroll taxes) versus 1 trillion dollars for a war that gets us N-O-T-H-I-N-G and leaves us with the tragedy of dead or disabled young Americans (who will need gov't support the rest of their lives.)
The only thing that crushed this ecnonomy is unfettered free markets and deficit spending that skyrocketed under your beloved administration.
Yet you continue to parrot this nonsense of tax and spend democrats...who the hell has been running things the past eight years...if they're so "right" why is everything on the verge of collapse...
"If the Republicans win the White House and maintain or lower tax rates: 2010-2012"
LOL! You're out of your mind! Lower tax rates are not going to make a $500k house in California more affordable to someone making 50K to 70k a year.
You neo-cons seem to be so out of touch with regard to the affordability issue. Answer a simple question: why do you believe that exorbitant prices for homes are a good thing?
" (to pay for free healthcare for a bunch of illegals and unemployeds "
Many Republicans, including the idiot Arnolds in California, are proposing the same thing. It's called letting the working class subsidise the cheap labor of big business. Have you ever bothered to see where George Bush stands on illegal immigration?
So far in the future that other things we can't predict will have occurred, changing the whole picture.
(But people will still fall for scams).
~2015 give or take a year & depending upon the local/regional market's conditions (jobs, degree of the run-up, speed of the price drop etc.)
2012
I think 2050-60. 2015 to 2035 are baby boomers house dumping years. No way anything will appreciate ... with the ironic exception IMHO of florida, cos no matter what, they'd want to get away from the arctic tundra of NY/NJ etc.
Cool.
Cow_tipping.
D looks to be close, considering housing cycles run about 18 years.That gives the next generation of dumb Americans the chance to exercise their God given right to be stupid.
Why should they ever be as high, in inflation adjusted terms? Are our workers going to suddenly become that much more productive that their wages are going to go up in inflation adjusted terms? Are taxes going to go down, allowing more spending on housing? Is the cost of oil going to go down, alloing more spending in housing?
I do think we are going to see a dual housing picture. Glamor cities that produce for the international market, such as NYC, LA, Seattle, SF Bay; energy cities such as Houston, Tulsa, certain other locales tied into the former set or from international tourism, such as South Florida, DC, Aspen, Sun Valley, will probably be above where we are in a few years. Large portions of the rest of the country will never see the highs again, namely Detroit, Philly, Ohio, Atlanta, Phoenix, etc.
I also think that if you believe in peak oil, exurban areas are screwed. A 3,000 SF house 50 miles from a good job, with 2 suv's, - that life is coming to a quick end. How is such a house in suburban Atlanta or the inland empire ever going to regain its value?
2020 - if people that bought after 2003 can hold onto their homes until then - it may be possible for them to walk away with their original investment. If they ever take away the $250K/single and $500K/couple capital gains exemption - assets may never look so good again though.
never say never.
But hopefully not in our lifetimes. The last credit explosion like this occurred in the 1920's.
Since the median price is 5-10x income in many areas, and real/adjusted incomes are going down thanks to global income arbitrage, I'd say the housing median price in adjusted prices represents the American society's high-water mark for greed, corruption, wealth, and ignorance of anything other than our own appetites.
Probably never. Remember that rents are a substantial part of the inflation indices and that the fair value of real estate is determined by the rent. So, one should expect that RE prices would be strongly tied to inflation. And the historical data backs this up. Generally, RE prices are relatively flat in inflation adjusted dollars.
We're currently at 2x the fair value. It'll fall back to fair value as everything eventually does (in real dollars.)
After the crash, it will take a long time for the market to forget the pain.
E) Not this century.
Also - Frank, you are a bit clueless. There have been no tax cuts under the current crop of Republican idiots. There have only been tax deferrals. Everything that looks like a tax cut to you is borrowed money put on credit cards, mainly the one issued by the Chinese government. Real tax cuts include spending cuts, which Republicans were unable to enact despite having full control of all three branches of the federal government. Of course the reason they were unable to cut spending is that they don't actually believe in small government; they believe in small government when Democrats are in charge, and in looting the government for their cronies when they are in charge.
2012, as foreign countries shift their over population burden to the U.S. by using their dollar reserves to purchase U.S. real estate.
Well let's see with the boomers retiring soon and therefore selling ther homes I'd say adjusted for inflation maybe 50- 60 years. That's about the right time for the next bubble, you need to wait until most of the people living through the current one are dead before you can get a new batch of suckers to fall for the same old line.
"It's different this time!"
I am going with a Nasdaq scenario -- never.
Bingo...
Yes, frank, because printing yet more money to finance the war in iraq while also lowering taxes will have no bad consequences at all.
In order to protect the environment a little they could at least replace $5 bills with $500 bills as those printers start overheating.
You have to love Republicans. They had control of all branches of government for 6 years and did nothing but lead the country to historic levels of debt. They presided over the largest bubble creation in all of history.
But those darn Democrats are going to ruin things in 2008!
come on folks, be reasonable. assuming 2008 makes 2007 look like 2006, we should hit rock bottom sometime late next year into 2009. so an inflation-adjusted recovery by 2015 seems plausible.
2016
If the republicans win the whitehouse in 2008, they will create even more easy lending policies, with no regulation;like they always do,and hyperinflation sets in by 2010, and that 2006 dollar will be worth a nickel in real 2006 purchasing power by 2010. So your question Keith needs to phrased accordingly.
Likely not this century, if ever. Read the Robert Shiller paper "Long-Term Perspectives on the Current Boom in Home Prices" for some historical perspectives. The current US boom is unprecedented throughout history.
Remember, folks, the key phrase was inflation-adjusted. If you think that prices are going get anywhere near as high in terms of real dollars anytime soon then you don't understand the question.
2017
Going with Never. Or at least not in my life time.
We're at the end of a 25 year trend toward lowering taxes. I doubt taxes will ever be this low again (in my life time) or land so expensive. Unfortunately for me this coincides with my natural working life.
Bad timing on my part.
Frank,
Republican or Democrat, the next administration will likely be forced to raise taxes.
If we want to rest of the world to continue buying our bonds (for if they don't, we collapse) we need to comfort them by slowing down the deficit spending and debt accumulation. We are so far in hole now, there's no way spending cuts alone will do it.
For the same reason, interest rates will probably have to be kept kind of high (other countries selfishly want a return on their big bond purchases), which will provide further downward pressure on home prices.
My guess is D.
I agree with apollonius and cow tipping, the answer is never. Or at least not in our lifetimes.
Home prices are wildly inflated. Returning to this price level in inflation-adjusted terms would mean another bubble like the one we're in right now. Noone alive right now will get caught in another real estate bubble. Even stupid people, when they burn their hand on the stove they understand never to do it again.
They won't understand the causes or consequences of this bubble so they will remain susceptible to other bubbles but real estate will become a forbidden territory. Even when prices drop low enough that you can make a good profit on rental properties everyone will think you're crazy for investing in real estate. But that's how you know there's easy money to be made.
2020
I agree with the one who said that people who say 10 - 15 years do not understand "inflation adjusted". Adjust for inflation, home prices have never been this high and the debt load people are carrying because if this has never been greater. The consequences to our economy are going to be very severe and real estate investing will become taboo. Then, homes will go back to being a place to live. I'd say, they will not hit this peak again for another 50 years.
Yes, frank, because printing yet more money to finance the war in iraq while also lowering taxes will have no bad consequences at all.
Are you people really THAT clueless? Are you not aware of the fact that tax revenues are at an all-time high, or are you just dumb followers of the corrupt MSM who don't report that? Or are you reading flyers passed out by long-haired pot-smoking liberal college kids, and believing them???
Tax cuts (and "deferrals" as you call them) have increased tax revenue 100% of the time. Tax hikes have decreased tax revenue 100% of the time.
I've created a lot of jobs with my business and I can tell you that would not have been possible, at least not on this scale, under the oppressive, pre-Bush tax rates.
You gullible people who buy into the MSM's spin need to read some basic economic books.
"Are you people really THAT clueless? Are you not aware of the fact that tax revenues are at an all-time high, or are you just dumb followers of the corrupt MSM who don't report that? Or are you reading flyers passed out by long-haired pot-smoking liberal college kids, and believing them???"
Frank, would you please do us a favor and stop with your simplistic platitudes that come straight from the trunk of Rush Limbaugh!
"Tax cuts (and "deferrals" as you call them) have increased tax revenue 100% of the time."
Yawn... We've been through this before. It's called the Laffer Curve and no serious economist buys into it. If there were any truth to it, tax rates would be lowered to zero and the government would then get an infinite supply of revenue.
"ax hikes have decreased tax revenue 100% of the time. "
You have no proof of this whatsoever!!!
"I've created a lot of jobs with my business and I can tell you that would not have been possible, at least not on this scale, under the oppressive, pre-Bush tax rates."
Most of the new GOOD jobs that have been created since Bush's tax cuts have been in India. There goes your trickle-down theory out the window.
"You gullible people who buy into the MSM's spin need to read some basic economic books. "
I suggest you do the same. And stop listening to Limbaugh!
It depends on the inflation rate. If we have hyper inflation it could be 2015, but if no inflation then 2025!
This "wreak" won't bottom for years. Remember Florida real estate in the roaring "20's! It just returned to the 1920's prices during this bubble.
People are going to hate real estate at the bottom, and with the Dem.s talking about reducing the rental and second home deductability in taxes this could drop it even more.
Barbara Walters says; 20/20
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