Mark Hanson IS NOT at the top of his field. He is a permabear. What is the point of that?
I started looking for my first house in mid-2011 and purchased later that year. I did so because I saw prices were well below rents on a 30 year 5% down mortgage.
My $30,000 or so downpayment + initial renovations resulted in, so far, a $450,000 or so capital gain. Plus a mortgage payment far below local rents and a low property tax locked in for life.
So, this financial decision that turned my $30,000 in $450,000, what would he have said about it at the time?
All I see from him in 2011 was doom and gloom in the midst of the biggest buying opportunity of my adult life, possibly one that will never come again:
Here he is in May 2011:
“With respect to negative equity as it relates to the housing market and repeat buyers — the much needed but missing ingredient to a magic housing fix — effective negative equity is far greater. This is because to rebuy a homeowner has to sell, which means paying off the first (and second) mortgages, paying a Realtor 6% and putting 10% to 20% down on the new purchase. When you lower the negative equity thresholds to real life, effective negative equity is epidemic and will keep the organic buyer — especially at the mid-to-high end — at bay for a generation.”
That’s right, he predicted depressed prices, right before a massive appreciation, for “a generation” ie 25-30 years.
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Here he is in October 2011, right before prices in my sub-market began a beeline to a near doubling in just the next 6 years:
“After nearly 5 years, if there was an easy fix (HAMP mods, HARP loans, HAFA short sales, printing trillions of dollars in order to try to create inflation) housing would be experiencing a v-shaped recovery already. Housing and mortgage are in a generational downturn for which the only cure is time. Anything done to prevent the market from clearing extends the duration and ultimately, the severity.”
Now let’s go to April 2012, when the take-off in housing prices was starting to clearly show up in the data. So he writes a very long post saying don’t trust the data:
“In conclusion, this is not a healthy housing market; rather an epic “stimulus” and “select supply driven” dash-to-trash trap, which will lead to housing market “paralysis” and lower sales volume and prices.”
