well, the fact that builders cannot replace buildings as inexpensively as the sale price doesn’t mean much. If there are lots of houses, and no one can afford them, the price of building new houses won’t impact the housing prices. Housing prices should be able to go much lower than replacement cost. Consider the bear market in gold. Gold went lower than replacement cost in terms of mining. That just meant miners stopped mining. It didn’t mean the price of gold increased.
To me, the thing to keep in mind, is that these numbers and dates and prices are meaningless. “impossible” numbers which cannot be exceeded, or gone beneath, don’t really exist. A piece of land can be worth far less than zero (for instance,a Superfund site) and can be irrationally high for a loooong time.
The singlemost important factor which is a bit of a wildcard that makes housing valuable or not valuable is something more fundamental than a “good” neighborhood or a “bad” neiighborhood. It’s political stability, social unrest, the sense that things are not going to go nuts. we may be running into trouble in this area gradually in the coming years. I don’t beleive “crime rates” mean anything.
This is different. This is normal people being financially screwed. You might not want to own anything. You might now want to be tied down anywhere. The freedom attached to renting is not just the freedom to wait out markets. the freedom to take off quickly is actually a very valuable and highly undervalued asset. It is my opinion that people will begin to revalue that intangible asset tand that houses will soon sell for less than it costs to rent them. And you still might reasonably want to avoid buying it. Because freedom to leave is worth something, particularly in an unstable and crazy society. This is my first post and I gotta say, i enjoy reading what you people ahve to say. I myself am extremely bearish on all things financial. cannot help it, it’s my nature, and it’s also the way i see it. I say hold gold and avoid all debt. i would like to own a home ina more stable society, but right now, don’t see the upside in being tied down. just my 2 cents and skewed worldview…
