I agree with with CR.

As CR said, housing is not prices but contribution to economic growth.

When most people think “housing” — they think house prices. However what matters most for the economy and employment is residential investment, a category that includes single family and multi-family construction, and home improvement. I expect residential investment to make a positive contribution to both GDP and employment growth in 2011, for the first time since 2005.

As the economy recovers, more houses will be built and that will mean more choices for buyers.

Actually, it seems like the general economy has decoupled from housing in the last year. We had economic growth without housing.

Waiting for that extra 10% leg down might be worth it if you want more choices. Or if you’re waiting for a higher-end house, or a house that requires less work.

Or if you’re an investor wanting the most bang for your buck.

Or if you’re after personal satisfaction and the art of the deal. I feel good when I get a bargain.

I know that nesting parents with kids are the ones most wanting to buy. But not everybody fits that profile.

I agree with with CR.

As CR said, housing is not prices but contribution to economic growth.

When most people think “housing” — they think house prices. However what matters most for the economy and employment is residential investment, a category that includes single family and multi-family construction, and home improvement. I expect residential investment to make a positive contribution to both GDP and employment growth in 2011, for the first time since 2005.

As the economy recovers, more houses will be built and that will mean more choices for buyers.

Actually, it seems like the general economy has decoupled from housing in the last year. We had economic growth without housing.

Waiting for that extra 10% leg down might be worth it if you want more choices. Or if you’re waiting for a higher-end house, or a house that requires less work.

Or if you’re an investor wanting the most bang for your buck.

Or if you’re after personal satisfaction and the art of the deal. I feel good when I get a bargain.

I know that nesting parents with kids are the ones most wanting to buy. But not everybody fits that profile.

[quote=briansd1]As the economy recovers, more houses will be built and that will mean more choices for buyers.

Actually, it seems like the general economy has decoupled from housing in the last year. We had economic growth without housing.

[/quote]

I think you missed an important point that Bill made here. Residential construction spending will make a positive contribution to GDP growth, but that’s growth from a more than 50 year low. Residential investment will remain extraordinarily low for at least the next 2 years as the inventory overhang is absorbed. Foreclosures in 2011 will remain at the very high 2010 level, and probably won’t subside until mid 2012. Buyers already have a huge number of choices. (Keep in mind, i’m talking nationally, there will be wide geographic variations.)

You’re right on the second point, but the timing is off. Historically, increased residential investment has lead us out of recessions. That would have been mid-2009. We didn’t (and still don’t) have that huge boost to employment that residential contruction provides. And we won’t for the forseeable future. Maybe 3 to 5 years, and even then will not return to the units/year that we saw the middle of the last decade. Which is why some economists are talking about the current unemployment problem as structural rather than cyclical. Of the more than 5 million jobs in new home contruction of a few years ago, probably 1/2 or more will not return in the next decade.

[quote=briansd1]As the economy recovers, more houses will be built and that will mean more choices for buyers.

Actually, it seems like the general economy has decoupled from housing in the last year. We had economic growth without housing.

[/quote]

I think you missed an important point that Bill made here. Residential construction spending will make a positive contribution to GDP growth, but that’s growth from a more than 50 year low. Residential investment will remain extraordinarily low for at least the next 2 years as the inventory overhang is absorbed. Foreclosures in 2011 will remain at the very high 2010 level, and probably won’t subside until mid 2012. Buyers already have a huge number of choices. (Keep in mind, i’m talking nationally, there will be wide geographic variations.)

You’re right on the second point, but the timing is off. Historically, increased residential investment has lead us out of recessions. That would have been mid-2009. We didn’t (and still don’t) have that huge boost to employment that residential contruction provides. And we won’t for the forseeable future. Maybe 3 to 5 years, and even then will not return to the units/year that we saw the middle of the last decade. Which is why some economists are talking about the current unemployment problem as structural rather than cyclical. Of the more than 5 million jobs in new home contruction of a few years ago, probably 1/2 or more will not return in the next decade.

[quote=briansd1]As the economy recovers, more houses will be built and that will mean more choices for buyers.

Actually, it seems like the general economy has decoupled from housing in the last year. We had economic growth without housing.

[/quote]

I think you missed an important point that Bill made here. Residential construction spending will make a positive contribution to GDP growth, but that’s growth from a more than 50 year low. Residential investment will remain extraordinarily low for at least the next 2 years as the inventory overhang is absorbed. Foreclosures in 2011 will remain at the very high 2010 level, and probably won’t subside until mid 2012. Buyers already have a huge number of choices. (Keep in mind, i’m talking nationally, there will be wide geographic variations.)

You’re right on the second point, but the timing is off. Historically, increased residential investment has lead us out of recessions. That would have been mid-2009. We didn’t (and still don’t) have that huge boost to employment that residential contruction provides. And we won’t for the forseeable future. Maybe 3 to 5 years, and even then will not return to the units/year that we saw the middle of the last decade. Which is why some economists are talking about the current unemployment problem as structural rather than cyclical. Of the more than 5 million jobs in new home contruction of a few years ago, probably 1/2 or more will not return in the next decade.

I’m thinking that if housing is to contribute to GDP and employment growth, there will more new construction.

New construction and continued foreclosures will mean more choices for buyers in the near future. Buyers do have choices now, but they are not at risk of losing choices soon.

Yes, historically housing has led us out of recession. It’s different this time where housing lags recovery (housing also led us into the recession whereas, historically, a housing downturn follows general employment losses).

If unemployment is structural rather than cyclical, then fewer new buyers will enter the housing market. Given the high ownership rates of the last decade, the strongest most able buyers already own homes.

Can the economy power along without housing? It did in 2010.

It would be a good thing for GPD growth to decouple from housing. If that were to happen, policy makers could withdraw housing support without endangering economic growth. And I suspect that would result in more choices and lower prices for buyers who qualify.

As to sdrealtor’s point of buying now or waiting, well, it all depends.

If buyers want a certain house on a certain street, or certain neighborhood, they may want to take the opportunities that open up. Those would be buyers who view houses as consumption or lifestyles (eg making the wife happy or having the desired family life).

But those who view houses as interchangeable units of shelter, or investments, may wish to continue to watch the market and wait a little longer.

I’m thinking that if housing is to contribute to GDP and employment growth, there will more new construction.

New construction and continued foreclosures will mean more choices for buyers in the near future. Buyers do have choices now, but they are not at risk of losing choices soon.

Yes, historically housing has led us out of recession. It’s different this time where housing lags recovery (housing also led us into the recession whereas, historically, a housing downturn follows general employment losses).

If unemployment is structural rather than cyclical, then fewer new buyers will enter the housing market. Given the high ownership rates of the last decade, the strongest most able buyers already own homes.

Can the economy power along without housing? It did in 2010.

It would be a good thing for GPD growth to decouple from housing. If that were to happen, policy makers could withdraw housing support without endangering economic growth. And I suspect that would result in more choices and lower prices for buyers who qualify.

As to sdrealtor’s point of buying now or waiting, well, it all depends.

If buyers want a certain house on a certain street, or certain neighborhood, they may want to take the opportunities that open up. Those would be buyers who view houses as consumption or lifestyles (eg making the wife happy or having the desired family life).

But those who view houses as interchangeable units of shelter, or investments, may wish to continue to watch the market and wait a little longer.