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02/29/2012

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Wanooski

But Dave! According to Political Candidates A, B, and C (and a large collection of poorly educated rabble) this is all Political Candidate D's fault, and if we just vote for Candidate A, B, or C all will be well. Meanwhile Candidate D maintains that this really Ex-Politician W's fault, and there is nothing to do except to keep believing that Candidate D's campaign promises C through G will eventually pull through, but you have to vote for Politician D again for it to work(and different sections of the rabble think that this will fix it).
Apparently if we wish upon a star or vote for the right professional liar, I mean politician, we will be right back to good ol' pie in the sky America. It's just a matter of time Dave ;)

John D

I think there is a definite distinction between stablizing and increasing prices. Stabilization is important so that people feel they can make a decision on housing without it becoming a losing proposition. Housing price increases can be negative in that it puts the price of a home out of reach of the typical consumer; and it starts up the game of using your home as a piggy bank. We know how that worked out.

Chris

House prices have to come down to match what the average americans income is. Personal around 27k and household around 50k. That means realisticly you can afford about 125k worth of house.

Here in Chicago people are downsizing and buying smaller houses because the property taxes keep going up even as there property values drop.

Bill Hicks

I was driving through an older single-family home neighborhood in Manassas, Virginia, the other day. Manassas is exactly the kind of town that got hit hardest by the housing crash, being both blue collar AND exurban. For several miles, the houses looked almost universally awful: peeled paint, weedy lawns missing shingles--yet most of them still appeared to be occupied. My guess is that the residents were the type of modest income people likely binging on credit during the bubble who now cannot even afford to maintain their properties.

Yep, the housing crash story is a long way from playing out.

rumor

Incidentally, today also sees an article on the impending burst of the Canadian housing bubble, which you might find interesting, Dave.

http://www2.macleans.ca/2012/02/28/youre-about-to-get-burned/

Brian M

It seems to me that the only positive (as in "pushing growth", not necessarily good) thing driving the economy right now is population growth, largely via immigration. Eventually, population growth will eat the excess and result in a new, lower level of housing construction. I suspect that the main drivers of this will actually be on the low end (multi-family homes, apartment buildings, starter single family homes, etc.) rather than on the higher end (McMansions, etc.). The thing is, without rising incomes (something that appears nowhere in sight, at least to me), or easy credit (right now, it's cheap, but not easy), it's difficult to see how people "move on up", which is the historical driver of real-estate.

The future of real-estate seems unlikely to resemble to last several decades (at least). In fact, the long-term "stable" real-estate market may resemble something that very few people born in America have ever seen.

P.S. - This doesn't even take into account the ongoing and increasing downward pressure on pricing as boomers retire and have to divest their real-estate in order to cash out whatever equity they still have so they can survive. That will tend to put more large housing on the market, driving an already soft mid-high market even lower.

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