Since housing related thread Since housing related thread is quite slow around here lately, I’ll try my hand at a poll and see if we can have a lively discussion. My guess would be 15 years from today. Which would bring peak to peak price of ~19 years. Which is ~ 2x longer than the last peak to peak.
briansd1
October 1, 2009 @
12:12 AM
AN, I pretty much agree. AN, I pretty much agree.
I’m looking down the road in 6 months increments. And we’ll see. I’m predicting that lots of homeowners will be losing wherewithal this winter.
But 15 years is a long time. A lot depends on America’s ability to develop a new “killer app” to restart the economy. Otherwise, we’ll just slug along like Japan has been doing since 1989.
If we can’t achieve greater than 2.5% GDP growth, it will feel like a recession (because the slow growth won’t be able to absorb new entrants to the labor force and improved productivity where, over time, fewer workers could do the same work previously took more workers).
Just ask people how they felt in the early 90s. Then suddenly Clinton’s second term became the best years in memory, beginning with the IPO of Netscape.
an
October 1, 2009 @
12:38 AM
Diego, I edited my tittle to Diego, I edited my tittle to clarify. I totally agree with you that inflation is key here. Only time will tell how high inflation will go.
The way I see it is, the longer we stay in the flat/declining part of the curve, the steeper the increase have to be in order to get peak to peak time frame we’re thinking about.
Example, places that have dropped 50% so far. If it rise 5% from here on out, it’ll take 15 years just to get back to peak level. 5% is well above the inflation number. So, lets say we stay flat for the next 5 years, either it’ll take 20 years from now to get back to 2005 level or prices have to rise at 7% annually in 5 years to get to 2005 price in 15 years.
an
October 1, 2009 @
12:38 AM
Sorry, I screwed up this poll Sorry, I screwed up this poll by editing the title. Recreate a new one.
Diego Mamani
October 1, 2009 @
12:59 AM
Thanks for clarifying AN… Thanks for clarifying AN… nominal and real house prices will move differently, I think. The former may start going up even if the latter is still going down, provided inflation outstrips nominal housing appreciation in the first years of the recovery.
Making predictions is hard, especially about the future, Yogi Berra said. Even harder in this case: the level of govt intervention in the mortgage market is unprecedented, and it’s hard to foresee how much that will increase and accelerate before they start to slow down.
moneymaker
October 1, 2009 @
11:14 AM
I’m still predicting I’m still predicting Depression. The government is acting like a bank. The more people pulling money out of the stock market the lower they make the 10 year note, right now it’s pretty low. I’m not saying they are wrong to do this, just that it makes people with money not want to invest it anywhere. Gold is down, the market is down, the 10 year is down, housing is ?. I have seen quite a few housing starts around town lately, but who is bank rolling them? Will they make a profit with rents going down? Scary times, but it is like a spring, something has to give or at least one would think so.
werewolf34
October 1, 2009 @
11:18 AM
The US has real long-term The US has real long-term problems — poor public education and limited competitiveness as a service economy (see outsourcing)
Until the job situation is resolved (a jobless recovery won’t do it) the fundamental driver for home purchase is gone. Why? Asset-based wealth will be eroded through the stock market declines and rising inflation. Slowly and not so slowly, people will be unable to afford real homes.
It’s grim. Anybody buying now is buying in a fundamental declining market
moneymaker
October 1, 2009 @
11:42 AM
Many people feel their jobs Many people feel their jobs are secure. I used to feel that way. There is no way my job can be exported overseas but that does not mean I cannot be replaced by a contractor and when the economy gets tight companies will do what ever they have to do to survive. Time will tell.
Diego Mamani
October 1, 2009 @
12:12 AM
The answer depends on how The answer depends on how high inflation gets. We’ll likely have 1970’s-style high inflation over the next decade, so house prices may get to 2005-2006 peak levels before 2020.
If you meant to ask how long it’ll take to get back to inflation-adjusted 2005 peak house prices, then it’ll probably take 20 or 25 years, at a minimum.
September 30, 2009 @ 11:06 PM
Since housing related thread
Since housing related thread is quite slow around here lately, I’ll try my hand at a poll and see if we can have a lively discussion. My guess would be 15 years from today. Which would bring peak to peak price of ~19 years. Which is ~ 2x longer than the last peak to peak.
October 1, 2009 @ 12:12 AM
AN, I pretty much agree.
AN, I pretty much agree.
I’m looking down the road in 6 months increments. And we’ll see. I’m predicting that lots of homeowners will be losing wherewithal this winter.
But 15 years is a long time. A lot depends on America’s ability to develop a new “killer app” to restart the economy. Otherwise, we’ll just slug along like Japan has been doing since 1989.
If we can’t achieve greater than 2.5% GDP growth, it will feel like a recession (because the slow growth won’t be able to absorb new entrants to the labor force and improved productivity where, over time, fewer workers could do the same work previously took more workers).
Just ask people how they felt in the early 90s. Then suddenly Clinton’s second term became the best years in memory, beginning with the IPO of Netscape.
October 1, 2009 @ 12:38 AM
Diego, I edited my tittle to
Diego, I edited my tittle to clarify. I totally agree with you that inflation is key here. Only time will tell how high inflation will go.
The way I see it is, the longer we stay in the flat/declining part of the curve, the steeper the increase have to be in order to get peak to peak time frame we’re thinking about.
Example, places that have dropped 50% so far. If it rise 5% from here on out, it’ll take 15 years just to get back to peak level. 5% is well above the inflation number. So, lets say we stay flat for the next 5 years, either it’ll take 20 years from now to get back to 2005 level or prices have to rise at 7% annually in 5 years to get to 2005 price in 15 years.
October 1, 2009 @ 12:38 AM
Sorry, I screwed up this poll
Sorry, I screwed up this poll by editing the title. Recreate a new one.
October 1, 2009 @ 12:59 AM
Thanks for clarifying AN…
Thanks for clarifying AN… nominal and real house prices will move differently, I think. The former may start going up even if the latter is still going down, provided inflation outstrips nominal housing appreciation in the first years of the recovery.
Making predictions is hard, especially about the future, Yogi Berra said. Even harder in this case: the level of govt intervention in the mortgage market is unprecedented, and it’s hard to foresee how much that will increase and accelerate before they start to slow down.
October 1, 2009 @ 11:14 AM
I’m still predicting
I’m still predicting Depression. The government is acting like a bank. The more people pulling money out of the stock market the lower they make the 10 year note, right now it’s pretty low. I’m not saying they are wrong to do this, just that it makes people with money not want to invest it anywhere. Gold is down, the market is down, the 10 year is down, housing is ?. I have seen quite a few housing starts around town lately, but who is bank rolling them? Will they make a profit with rents going down? Scary times, but it is like a spring, something has to give or at least one would think so.
October 1, 2009 @ 11:18 AM
The US has real long-term
The US has real long-term problems — poor public education and limited competitiveness as a service economy (see outsourcing)
Until the job situation is resolved (a jobless recovery won’t do it) the fundamental driver for home purchase is gone. Why? Asset-based wealth will be eroded through the stock market declines and rising inflation. Slowly and not so slowly, people will be unable to afford real homes.
It’s grim. Anybody buying now is buying in a fundamental declining market
October 1, 2009 @ 11:42 AM
Many people feel their jobs
Many people feel their jobs are secure. I used to feel that way. There is no way my job can be exported overseas but that does not mean I cannot be replaced by a contractor and when the economy gets tight companies will do what ever they have to do to survive. Time will tell.
October 1, 2009 @ 12:12 AM
The answer depends on how
The answer depends on how high inflation gets. We’ll likely have 1970’s-style high inflation over the next decade, so house prices may get to 2005-2006 peak levels before 2020.
If you meant to ask how long it’ll take to get back to inflation-adjusted 2005 peak house prices, then it’ll probably take 20 or 25 years, at a minimum.