When will you know that housing prices have hit bottom?
Care to predict how many years away that will be?
July 29, 2007
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34 comments:
Not until after all the ARM resets on the Credit Suisse chart.
No need trying to predict when.
The fact is prices keep falling, more and more foreclosures will occur, jobs will be most, marrages will be lost, theft and drug abuse will increase, depression and mental illness will grow, egos will be broken, etc...
The losses will be astronomical.
By the time prices hit bottom, there might not be much of an economy left to salvage.
When Susanne researches it, of course.
You know we will be near bottom when Housing prices go BELOW their inflation adjusted historical norm. THAT WILL BE THE time, the time of financial armagedon, the time of unprecedented misery, the time of busted egos, the time we've all been waiting for for so long. AND ITS ABOUT TIME!
You will know it hit bottom when only half of the public homebuilders are left standing. The others will have gone bankrupt or been bought out. We need more consolidation of HB's and lenders.
BTW - Bravo TV is starting a new flipper show.
When will you know that housing prices have hit bottom?
When renting is not cheaper than buying.
I like the description I read last year, "The hosing market will it bottom when someone mentions buying real estate, and everybody laughs.”
I agree... All the people impatiently waiting to scoop up properties at the bottom don't understand how bad this is going to get.
This isn't a 1992 downturn, RTC, and recover.
This is society changing.
When renting is more expensive than buying
Anonymous said...
When renting is more expensive than buying
July 29, 2007 10:56 AM
----------------
I second this as the sign an RE market has bottomed out. For DC that was the mid-late 90's were price depreciation (unadjusted for inflation) had gone from 5% per year to just 1-2% per year. Most did not notice at first (1995) I think, but after a couple of years by 1997 everyone who was a forced landlord were able to sell and not have to bring money to the table because the equity we had built up from MONTHLY PAYMENTS and as long as we DID NOT use a selling agent.
When The cover of Time magazine says housing will not recover for many years.
When Greg Swan says to sell
Wow its like a black hole - there is no bottom!
When the echo boomers start buying houses in mass. Somewhere around 2020-2024 there will be enough of them in their homebuying years. Until then I don't think we have a chance in hell. It could really get interesting here when unemployment gets to 15-20% and they send the illegals home. These people do live somewhere even if it is 20 people to a house.
Look to Japan for your answers they did all this 18 years ago. They are out of phase with the rest of the world due to WW2. The problem this time is most of the Western World is in phase with each other. This is going to absolutely S@#$. I see houses going back to mid 80's prices or maybe even 70's prices.
At their current birthrates Europe will have less population in 2050 than they did in 1950. I read somewhere years ago that Germany has many towns it will bulldoze and return to forest. Sounds like a great place to sell Real Estate Suzanne.
Doesn't the past serve as a guide?
It takes at least as long to deflate as it does to inflate. Also, there are other countries to use as basis of comparison. So a realistic answer is "several years". Maybe there will be a "teen" at the end of what year it is? Flippers-gone-bad might accelerate things a bit. Maybe other forces such as real estate web sites will accelerate it, too.
It will be like in the late 80s....When no one wants to buy real estate anymore (they shun it). Thats when to buy! I figure at least 15 to 24 months.
Steve from WPB, FL
Ths industry will never recover. We have the twin knock-out punches of Peak Oil and Global Warming. Yes, this is a complete way of life change.
Anon said: "don't understand how bad this is going to get".
This isn't a 1992 downturn, RTC, and recover.
This is society changing.
LauraVella said: I agree with you Anon, will not be anything like our last recession in 1992. I am already getting uneasy about what will be in store, and trying to prepare the best I can.
Imagine a flu pandemic on top of the current crisis, say the last 2 months of Bush-Cheney. (Think Katrina everywhere; a phenomenal logistical challenge). While it probably won't happen, think about how you would keep your family going if you lost your job, looters started targeting stockpilers in their homes due to massive supply disruptions, etc.
House prices would obviously crash, as homeowners are wiped out figuratively and literally. Demand for homes crashes while supply increases. New Household formation down for years. Apartment vacancies soar.
As the young and healthy are disproportionately affected, it's like 1917 in 1929.
Assuming tomorrow really is bloody Monday then I'm just guessing 2011 but I'm hoping for Fall 2009. I think it takes us to collectively "forget" that things change over a 2-4 year period.
Also, one thing to remember that makes this different than past crashes/deflations, speed of change. Wanna bet that thanks to the internet this thing spirals down quicker than ever seen before? The media and bankers cant keep up a charade about values, when everyone can do their own research and read other opinions that aren't popular enough to get into MSM. Look at the war. How much better would we have thought things were if all we had CNN and co, without bloggers and other people keeping them honest?
here bottle, bottle!!!!!!
when i get back my peice of opieville that enabled my people to survive the last depression and..the taxes on it go back to low.. perhaps we worry about the wrong theives........
Too early to tell, but my current thinking is summer to fall of 2009, with a slowly accelerating appreciation rate. Local markets will really dictate the recovery in each region. Some localized markets in my region are stable and down only 7% since 2005. Other cities are down 15% - 20%. They will take a few more hits in 2007-2008. Local economy, job growth, national inflation and interest rate trends will play an important role too.
HUH? This is bottom? Err prices have fallen less than 5% nationally since 2005. If this is it, all the "crash" talk was pure nonesense.
When most of the Mc Mansions are triplexes.
"You know we will be near bottom when Housing prices go BELOW their inflation adjusted historical norm."
Right on! That of course depends on the rate of inflation and the nominal value of housing prices. In some of the bubbliest markets that might take up to 6 years.
Not to sound too NAResque and "all r/e is local" but which bottom?
Flordia's bottom should be showing up real soon, 6-12 months and another 10-15% decline in prices.
SoCal on the other hand probably won't really start falling for another year and won't bottom for at least 2-3 years after that.
Since the majority of these toxic ARM's are resetting in the next 8 months, we will see the peak of foreclosures in 12 months.
This will leave so many people destitute, and the public so disillusioned, that the market will need to absorb these homes before any THOUGHT of entering the housing market occurs.
That will take quite a long time.
4 years before we start to see a bottom.
Unless of course, other markets crash right along with the housing market, then all bets are off.
It (the housing downturn) will be much longer with debt/dollar/oil issues.
I am renting, but the wife is starting to pressure me into buying something. I am holding off as long...
as I....
can...
You are very correct.
The Internet has helped to rapidly bring to light what's *really* going on, but you'll have to look in non-conventional areas ... like this blog for one.
james said...
Also, one thing to remember that makes this different than past crashes/deflations, speed of change. Wanna bet that thanks to the internet this thing spirals down quicker than ever seen before? The media and bankers cant keep up a charade about values, when everyone can do their own research and read other opinions that aren't popular enough to get into MSM. Look at the war. How much better would we have thought things were if all we had CNN and co, without bloggers and other people keeping them honest?
Real estate is almost always in 7 year cycles. 1992-1998 bust, 1999-2006 boom and 2007-2014 bust. The "buying is cheaper than renting bottom will hit about 2011 and we won't see any meaningful appreciation until 2014.
current bust started in 2005, not 2007
Is this a trick question?
Seriously:
Housing prices will have hit bottom (retrospectively) when you see the Case-Schiller indices --- and their futures --- going up consistently everywhere.
Trust ONLY the Case-Schiller numbers. Everything else is garbage.
Facetiously:
When Keith is interviewed on CNBC as a housing guru
When all the media outlets talk about how bad real estate is and how it's dumb to own...
The second sign will be when you've changed the tune of the blog to "renter's now it's time to buy..." :)
second what others said, renting more expensive than housing. i'd add one more... when it is not a hot topic any more. whoever talks about dot-com today? unless they're specifically looking back at history, they might, but it's just not something that ppl talk about much. similarly, when ppl stop talking about houses, that would be the bottom.
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