Housing could take a generation to recover

[jstoesz]

Living in sac…things could be/may be getting a lot worse for SD. Many neighborhoods around here can only wish for the “meager” 30-40% reductions of SD. Granted the economy up here is not much better than Detroit, but houses are certainly much more affordable.

[patientrenter]

House prices in Southern California are still around 50-100% higher, adjusted for inflation, than they were at the bottom of the last real estate cycle, in 1996. Individual areas will have their own peculiar variances, of course, but that’s the big picture I see.

Just because they are 40% off their peak doesn’t mean anything if the peak was 200% above the cyclical low points. (I am adjusting everything for inflation to get rid of that noise.) There is still plenty of downside room for this cycle.

Only a few trillions of taxpayer-backed dollars provided thanks to Mr Bernanke, Mr Geithner, and certain well-connected members of Congress are preventing house prices falling to their natural cyclical lows.

Oh, and I can’t help but agree with the prior poster who pointed out that “recovering” really isn’t the right word for re-entering the world of bubble prices. Even now, prices are still above their long-term trends, per Robert Shiller’s analysis. Why prices that start above their long term trend and then rise further represents a normal or recovering market, I’ll never know. Does someone still hope that houses are magic money machines, if you just wait long enough? LoL!

[patientrenter]

House prices in Southern California are still around 50-100% higher, adjusted for inflation, than they were at the bottom of the last real estate cycle, in 1996. Individual areas will have their own peculiar variances, of course, but that’s the big picture I see.

Just because they are 40% off their peak doesn’t mean anything if the peak was 200% above the cyclical low points. (I am adjusting everything for inflation to get rid of that noise.) There is still plenty of downside room for this cycle.

Only a few trillions of taxpayer-backed dollars provided thanks to Mr Bernanke, Mr Geithner, and certain well-connected members of Congress are preventing house prices falling to their natural cyclical lows.

Oh, and I can’t help but agree with the prior poster who pointed out that “recovering” really isn’t the right word for re-entering the world of bubble prices. Even now, prices are still above their long-term trends, per Robert Shiller’s analysis. Why prices that start above their long term trend and then rise further represents a normal or recovering market, I’ll never know. Does someone still hope that houses are magic money machines, if you just wait long enough? LoL!

[patientrenter]

House prices in Southern California are still around 50-100% higher, adjusted for inflation, than they were at the bottom of the last real estate cycle, in 1996. Individual areas will have their own peculiar variances, of course, but that’s the big picture I see.

Just because they are 40% off their peak doesn’t mean anything if the peak was 200% above the cyclical low points. (I am adjusting everything for inflation to get rid of that noise.) There is still plenty of downside room for this cycle.

Only a few trillions of taxpayer-backed dollars provided thanks to Mr Bernanke, Mr Geithner, and certain well-connected members of Congress are preventing house prices falling to their natural cyclical lows.

Oh, and I can’t help but agree with the prior poster who pointed out that “recovering” really isn’t the right word for re-entering the world of bubble prices. Even now, prices are still above their long-term trends, per Robert Shiller’s analysis. Why prices that start above their long term trend and then rise further represents a normal or recovering market, I’ll never know. Does someone still hope that houses are magic money machines, if you just wait long enough? LoL!

[patientrenter]

House prices in Southern California are still around 50-100% higher, adjusted for inflation, than they were at the bottom of the last real estate cycle, in 1996. Individual areas will have their own peculiar variances, of course, but that’s the big picture I see.

Just because they are 40% off their peak doesn’t mean anything if the peak was 200% above the cyclical low points. (I am adjusting everything for inflation to get rid of that noise.) There is still plenty of downside room for this cycle.

Only a few trillions of taxpayer-backed dollars provided thanks to Mr Bernanke, Mr Geithner, and certain well-connected members of Congress are preventing house prices falling to their natural cyclical lows.

Oh, and I can’t help but agree with the prior poster who pointed out that “recovering” really isn’t the right word for re-entering the world of bubble prices. Even now, prices are still above their long-term trends, per Robert Shiller’s analysis. Why prices that start above their long term trend and then rise further represents a normal or recovering market, I’ll never know. Does someone still hope that houses are magic money machines, if you just wait long enough? LoL!

[patientrenter]

House prices in Southern California are still around 50-100% higher, adjusted for inflation, than they were at the bottom of the last real estate cycle, in 1996. Individual areas will have their own peculiar variances, of course, but that’s the big picture I see.

Just because they are 40% off their peak doesn’t mean anything if the peak was 200% above the cyclical low points. (I am adjusting everything for inflation to get rid of that noise.) There is still plenty of downside room for this cycle.

Only a few trillions of taxpayer-backed dollars provided thanks to Mr Bernanke, Mr Geithner, and certain well-connected members of Congress are preventing house prices falling to their natural cyclical lows.

Oh, and I can’t help but agree with the prior poster who pointed out that “recovering” really isn’t the right word for re-entering the world of bubble prices. Even now, prices are still above their long-term trends, per Robert Shiller’s analysis. Why prices that start above their long term trend and then rise further represents a normal or recovering market, I’ll never know. Does someone still hope that houses are magic money machines, if you just wait long enough? LoL!

[pemeliza]

Sac might be getting hit hard but how about over by the ocean in the bay area? Seems like comparing coastal to inland is apples and oranges.

PR, maybe I am getting old but when I moved to SD in 1993 to work in Sorrento Valley I remember the Wyndam Garden hotel on Mira Mesa Blvd. being the big hotel for the area. I remember when Qualcomm was building A and building B (I worked in building A programming intel 80186 assembly for a mid 30k a year starting salary). I also remember when Trilogy was being sold over in south Carmel Valley. Me and my buddies thought they were crazy to ask 250k for that stuff. It was right on top of each other and on 3 levels. Those were the days. Here we are 15-20 years later and I barely recognize the place. I would have to take a time machine back to the mid 90’s to even remotely get a feel for what the place looked like back then. The other thing I remember from the mid 90’s is that a lot of my friends hated real estate because they bought condos in UTC and were down big on them. Some of them sold at a loss and bought bigger houses in areas like the Ranch in Carlsbad. Pretty smart moves in hindsight.

[pemeliza]

Sac might be getting hit hard but how about over by the ocean in the bay area? Seems like comparing coastal to inland is apples and oranges.

PR, maybe I am getting old but when I moved to SD in 1993 to work in Sorrento Valley I remember the Wyndam Garden hotel on Mira Mesa Blvd. being the big hotel for the area. I remember when Qualcomm was building A and building B (I worked in building A programming intel 80186 assembly for a mid 30k a year starting salary). I also remember when Trilogy was being sold over in south Carmel Valley. Me and my buddies thought they were crazy to ask 250k for that stuff. It was right on top of each other and on 3 levels. Those were the days. Here we are 15-20 years later and I barely recognize the place. I would have to take a time machine back to the mid 90’s to even remotely get a feel for what the place looked like back then. The other thing I remember from the mid 90’s is that a lot of my friends hated real estate because they bought condos in UTC and were down big on them. Some of them sold at a loss and bought bigger houses in areas like the Ranch in Carlsbad. Pretty smart moves in hindsight.

[pemeliza]

Sac might be getting hit hard but how about over by the ocean in the bay area? Seems like comparing coastal to inland is apples and oranges.

PR, maybe I am getting old but when I moved to SD in 1993 to work in Sorrento Valley I remember the Wyndam Garden hotel on Mira Mesa Blvd. being the big hotel for the area. I remember when Qualcomm was building A and building B (I worked in building A programming intel 80186 assembly for a mid 30k a year starting salary). I also remember when Trilogy was being sold over in south Carmel Valley. Me and my buddies thought they were crazy to ask 250k for that stuff. It was right on top of each other and on 3 levels. Those were the days. Here we are 15-20 years later and I barely recognize the place. I would have to take a time machine back to the mid 90’s to even remotely get a feel for what the place looked like back then. The other thing I remember from the mid 90’s is that a lot of my friends hated real estate because they bought condos in UTC and were down big on them. Some of them sold at a loss and bought bigger houses in areas like the Ranch in Carlsbad. Pretty smart moves in hindsight.

[pemeliza]

Sac might be getting hit hard but how about over by the ocean in the bay area? Seems like comparing coastal to inland is apples and oranges.

PR, maybe I am getting old but when I moved to SD in 1993 to work in Sorrento Valley I remember the Wyndam Garden hotel on Mira Mesa Blvd. being the big hotel for the area. I remember when Qualcomm was building A and building B (I worked in building A programming intel 80186 assembly for a mid 30k a year starting salary). I also remember when Trilogy was being sold over in south Carmel Valley. Me and my buddies thought they were crazy to ask 250k for that stuff. It was right on top of each other and on 3 levels. Those were the days. Here we are 15-20 years later and I barely recognize the place. I would have to take a time machine back to the mid 90’s to even remotely get a feel for what the place looked like back then. The other thing I remember from the mid 90’s is that a lot of my friends hated real estate because they bought condos in UTC and were down big on them. Some of them sold at a loss and bought bigger houses in areas like the Ranch in Carlsbad. Pretty smart moves in hindsight.

[pemeliza]

Sac might be getting hit hard but how about over by the ocean in the bay area? Seems like comparing coastal to inland is apples and oranges.

PR, maybe I am getting old but when I moved to SD in 1993 to work in Sorrento Valley I remember the Wyndam Garden hotel on Mira Mesa Blvd. being the big hotel for the area. I remember when Qualcomm was building A and building B (I worked in building A programming intel 80186 assembly for a mid 30k a year starting salary). I also remember when Trilogy was being sold over in south Carmel Valley. Me and my buddies thought they were crazy to ask 250k for that stuff. It was right on top of each other and on 3 levels. Those were the days. Here we are 15-20 years later and I barely recognize the place. I would have to take a time machine back to the mid 90’s to even remotely get a feel for what the place looked like back then. The other thing I remember from the mid 90’s is that a lot of my friends hated real estate because they bought condos in UTC and were down big on them. Some of them sold at a loss and bought bigger houses in areas like the Ranch in Carlsbad. Pretty smart moves in hindsight.

[SK in CV]

[quote=UCGal]Ok… I think most people would agree that housing was overpriced during the bubble.
Do people want it to “recover” to the overpriced values? Or find a natural market.

For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.[/quote]

I think you’ve missed his point about what a real housing recovery means. It’s not prices. It’s construction.

If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so theres very, very little comfort here.

New home construction is lower than any time in more than 60 years. We lost 2.5 million residential construction jobs and probably an additional million jobs in allied fields…finance, architecture (sound familiar?) , engineering, loan, title and RE agents, etc. Almost every single recession in the last century has been lead out of recession by new home construction. Not this time. The fact that the economy has recovered at all given those job losses is miraculous. (Anyone that thinks that politicians could have done anything to fix the economy in the last three years is nuts. It could have been better. It could have been tweaked. But there is virtually nothing that could have been done to replace those 3.5 million jobs.)

I’m not sure he’s right. It may not take a generation nationwide. Some areas will recover sooner. But in markets like Phoenix, Las Vegas and much of Florida? Twenty years sounds about right.

[SK in CV]

[quote=UCGal]Ok… I think most people would agree that housing was overpriced during the bubble.
Do people want it to “recover” to the overpriced values? Or find a natural market.

For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.[/quote]

I think you’ve missed his point about what a real housing recovery means. It’s not prices. It’s construction.

If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so theres very, very little comfort here.

New home construction is lower than any time in more than 60 years. We lost 2.5 million residential construction jobs and probably an additional million jobs in allied fields…finance, architecture (sound familiar?) , engineering, loan, title and RE agents, etc. Almost every single recession in the last century has been lead out of recession by new home construction. Not this time. The fact that the economy has recovered at all given those job losses is miraculous. (Anyone that thinks that politicians could have done anything to fix the economy in the last three years is nuts. It could have been better. It could have been tweaked. But there is virtually nothing that could have been done to replace those 3.5 million jobs.)

I’m not sure he’s right. It may not take a generation nationwide. Some areas will recover sooner. But in markets like Phoenix, Las Vegas and much of Florida? Twenty years sounds about right.

[SK in CV]

[quote=UCGal]Ok… I think most people would agree that housing was overpriced during the bubble.
Do people want it to “recover” to the overpriced values? Or find a natural market.

For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.[/quote]

I think you’ve missed his point about what a real housing recovery means. It’s not prices. It’s construction.

If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so theres very, very little comfort here.

New home construction is lower than any time in more than 60 years. We lost 2.5 million residential construction jobs and probably an additional million jobs in allied fields…finance, architecture (sound familiar?) , engineering, loan, title and RE agents, etc. Almost every single recession in the last century has been lead out of recession by new home construction. Not this time. The fact that the economy has recovered at all given those job losses is miraculous. (Anyone that thinks that politicians could have done anything to fix the economy in the last three years is nuts. It could have been better. It could have been tweaked. But there is virtually nothing that could have been done to replace those 3.5 million jobs.)

I’m not sure he’s right. It may not take a generation nationwide. Some areas will recover sooner. But in markets like Phoenix, Las Vegas and much of Florida? Twenty years sounds about right.

[SK in CV]

[quote=UCGal]Ok… I think most people would agree that housing was overpriced during the bubble.
Do people want it to “recover” to the overpriced values? Or find a natural market.

For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.[/quote]

I think you’ve missed his point about what a real housing recovery means. It’s not prices. It’s construction.

If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so theres very, very little comfort here.

New home construction is lower than any time in more than 60 years. We lost 2.5 million residential construction jobs and probably an additional million jobs in allied fields…finance, architecture (sound familiar?) , engineering, loan, title and RE agents, etc. Almost every single recession in the last century has been lead out of recession by new home construction. Not this time. The fact that the economy has recovered at all given those job losses is miraculous. (Anyone that thinks that politicians could have done anything to fix the economy in the last three years is nuts. It could have been better. It could have been tweaked. But there is virtually nothing that could have been done to replace those 3.5 million jobs.)

I’m not sure he’s right. It may not take a generation nationwide. Some areas will recover sooner. But in markets like Phoenix, Las Vegas and much of Florida? Twenty years sounds about right.

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