- This topic has 36 replies, 14 voices, and was last updated 13 years ago by
The-Shoveler.
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October 1, 2011 at 10:45 PM #19166October 1, 2011 at 10:53 PM #729948
an
ParticipantWhy isn’t this good news? IIRC, 2007 price was crazy high. 9 years is quite short to be expecting to get back to that level.
October 1, 2011 at 11:22 PM #729949The-Shoveler
ParticipantWhy it is not good news,
It means unemployment will likely be above 10% in SoCal until then.
It means the local and state gov will be cash short and likely in defect spending and schools will be a lot more crowded.
It means if you lose your Job you are unlikely to find employment in you current profession.
I could go on.
October 1, 2011 at 11:56 PM #729950Participant10% total unemployment. IIRC, unemployment for white collar (engineering specifically) jobs are around 4-5%.
More crowded public school = increasing value for private school.
Again, losing and finding job is all relative to which profession you’re in. With white collar (engineering specifically) unemployment around 4-5%, is that something to really worry about?
BTW, the article say “49 percent of respondents do not expect housing prices to rise back to 2007 levels for another nine years.” Assuming they’re right, do you think we’re going to stay at today’s level for 9 years and on 9 years + 1 day, price jumped to 2007 level?
So, why is it not good news if they’re right again?
October 2, 2011 at 12:06 AM #729951pencilneck
Participant“The survey conducted by the Professional Risk Managers’ International Association for FICO, found that 49 percent of respondents do not expect housing prices to rise back to 2007 levels for another nine years. Only 21 percent of respondents said they would.”
I wonder how the survey was written. Reading between the lines, it sounds like the question was something along the lines of “do you expect housing prices to rise back to 2007 levels within the next 8 years?”
A “no” response may not mean that housing prices will recover in 9 years as the article suggests.
I only mention this because my first thought was that the risk managers were being wildly optimistic. But, on second thought, this is probably just another example of poor journalistic analysis.
The headline that further misinterprets the article doesn’t help either.
October 2, 2011 at 9:08 AM #729955jpinpb
Participant[img_assist|nid=15409|title=CS chart|desc=|link=node|align=left|width=100|height=76]
Really. I will not underestimate the greed of people, but if we ever get to those highs ever again in however many years, it will be amazing. Nine years only?
October 2, 2011 at 9:26 AM #729957
svelteParticipantHave to say I am skeptical prices will get back to 2007 levels by 2020. They were so artificially high that it seems like it should take longer.
Not that I want them to get higher – I’ve got a couple of kids who will be house hunting soon.
October 2, 2011 at 2:08 PM #729961
Rich ToscanoKeymaster[quote=jpinpb][img_assist|nid=15409|title=CS chart|desc=|link=node|align=left|width=100|height=76]
Really. I will not underestimate the greed of people, but if we ever get to those highs ever again in however many years, it will be amazing. Nine years only?[/quote]
JP, your chart shows inflation-adjusted prices. The forecast in question involves nominal prices.
In San Diego, prices are down a bit less than 40% from the peak (in aggregate per CS) so this implies an average price growth rate of about 5.5% per year over the following 9 years. This does seem a bit optimistic but it’s not completely out of whack (especially considering that homes in aggregate are slightly undervalued at this point).
Personally I think it’s silly to predict the nominal price of anything 9 years down the road, since I do not believe that historical assumptions about inflation will apply over this time period.
October 2, 2011 at 2:30 PM #729962ParticipantThanks for the clarification, Rich.
October 2, 2011 at 7:37 PM #729966Jazzman
ParticipantI don’t understand why this should be news, or why 2007 prices should be any kind of benchmark to aim for. Is the assumption that a return to prices that were artificially highly inflated is somehow symptomatic of a recovery? If it is, then is it any wonder we got into this fine mess. I am seriously starting to be believe I must be from a different planet.
October 2, 2011 at 11:51 PM #729974CA renter
Participant[quote=Nor-LA-SD-GUY2]Why it is not good news,
It means unemployment will likely be above 10% in SoCal until then.
It means the local and state gov will be cash short and likely in defect spending and schools will be a lot more crowded.
It means if you lose your Job you are unlikely to find employment in you current profession.
I could go on.[/quote]
The less people have to spend on housing costs, the more money they get to spend in more productive ways. Lower housing prices will lead to a STRONGER economy, not a weaker one.
Right now, people are tapped out because asset prices rose far higher and faster than wages. The sooner we wring the bubble economy from our minds, the sooner we can recover. High housing/asset prices are BAD for the economy.
October 3, 2011 at 6:09 AM #729976ParticipantOhh yea, Lower home prices have been a real boon alright !!
Just ask anyone in phoenix , Florida or VegasAlthough I must admit there has been a dramatic uptick in home sales in those regions.
October 3, 2011 at 6:47 AM #729977Participant[quote=Jazzman]I don’t understand why this should be news, or why 2007 prices should be any kind of benchmark to aim for. Is the assumption that a return to prices that were artificially highly inflated is somehow symptomatic of a recovery? If it is, then is it any wonder we got into this fine mess. I am seriously starting to be believe I must be from a different planet.[/quote]
Yes, thanks for that. Agreed.
[quote=Nor-LA-SD-GUY2]Ohh yea, Lower home prices have been a real boon alright !!
Just ask anyone in phoenix , Florida or Vegas
[/quote]If one is allowed to use monopoly money, then the economy is good.
October 3, 2011 at 11:37 AM #729982scaredyclassic
ParticipantI predict in 2020 there will be ad campaigns referencing about seeing clearly 20/20 and they will play the song I can see clearly now.
Pretty sure about this.
October 3, 2011 at 3:51 PM #729984Participant[quote=Nor-LA-SD-GUY2]Ohh yea, Lower home prices have been a real boon alright !!
Just ask anyone in phoenix , Florida or VegasAlthough I must admit there has been a dramatic uptick in home sales in those regions.[/quote]
It’s not lower prices that have caused a problem, but too much debt that is the root of the problems. Ten+ years ago, the economy was booming in those places…and housing prices were very low. Their economies were booming precisely because of their affordable housing stock.
Their economies suck now because too many people were forced (and they didn’t help themselves, either) to pay too much of their income toward housing. They could only do that for as long as prices went up — they were using new mortgages to pay their old mortgages. When prices stopped rising, they were no longer able to cannibalize their debt. There was no way it could last indefinitely, and it didn’t. Now, we need to endure the painful correction so that we can get back to a healthy foundation from which a healthy and sustainable economy can be built.
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