Yes we have had this conversation many times…
if history is any indication, and this was an average housing boom, then 2010-2012 (usually 5-6 years of price declines) would be the bottom, however, this has been the mother of all housing booms, so it is possible that this one takes even longer to return to fundamentally sane pricing.
This is what we are comparing housing costs to anyway… rents, incomes, and to a lesser degree, home prices in other parts of the country.
We are still looking at absurdly high home prices, even though they may have come down 10-15% in some areas. We are still seeing shady loans being funded, we still have relatively very loose credit, we still have historically low interest rates, and we still have very low unemployment. Once lending standards really come back, and we start the clean up from the 8 year credit party. (hasn’t happened yet). Chances are good that rates may rise as well.
Inventory is sky high, and for every home that is for sale or a foreclosure, you have two or three more that either are “planning to list as soon as the market gets better” or are on the verge of foreclosure themselves. Speculators are gone for a long while and in a few years, people will need more than a pulse to buy a home. Also, I don’t think it really started until late 2006. How many price reductions happened in 05-06??? Most discounts started in late 06 or early 07.
There is no way that in 18 months this will be at the bottom. There are still many loans resetting and many overwhelming economic forces going against home prices making a comeback. Its hard to say how long, but I say 2011 will be close enough to the bottom to buy.
You may want to revisit Rich’s Chart(linked below)if you think that this will only take 2 years to correct, or to remind yourself of how long the previous RE “corrections” lasted for. I’m not saying it will take 12 years, but not 2 or 3.
