I think we can all agree that historically real estate has gone up an average of 4% per year for as long as we can remember except these last few years. So that said, i took the liberty of doing the math to figure out what real estate should be at if there were never any housing bubble. What I got was that nationally median home prices should be at about 187,000. Right now they are at 208,000 which would mean a 10% drop, but since real estate doesnt drop over night (even though they sometimes seem like it does) next year the median home price should be 194k for 2009 and then 202k for 2010 and in 2011 we are finally going up again..... Now for those of us in CA who hope home prices will go down much further...it wont. Median home prices in CA as of may 2008 were 339k and we should be at about 305k (317k for 2009, 329k for 2010) But to be honest, i dont think we are going to drop that much to get in line with that historic 4% average. I think its more likely now real estate stays flat for those 2 years because there have been so many buyers sitting on the fence for the last 3 years waiting for prices to come down that they will keep the properties inflated that extra 10% until we are back in line in 2011. On another note, (and this is just a rant) I'm always annoyed at the news that says "housing dropped 15% in may" implying it dropped that much in 1 month when it dropped that much in one year. Now that kind of scare tactic doesnt work on us, but most likely everyone in here didnt get suckered into buying a 700k house in 2005 thats worth 275k today. Its very misleading and not accurate at all. If YTD housing drops 30%, but in the last 3 months housing went up 20%, the news could still spin it, like housing droped 10% in June, even though anyone who bought 3 months ago has 20% increase in their home value. Anyways, thats just a rant. Guess i dont like the news scaring off people from buying in this market when its pretty much safe to start purchasing again.
housing is regionally sensitive. Housing in Michigan continues to get worse. Ford and GM continue to cut workforce and the Gov continues to find more ways to alienate new companies from starting business in Michigan. Not to mention the average Metro Detroit commutes over 40 miles a day and with gas where it is forget seeing improvement in your house there. You have to truly evaluate the economic conditions in your community and the long term viability of employment in said region to determine whether a stabilizing environment is present. The idea that there is one overall basis for the entire country is kind of hilarious.
totally disagree for two reasons. RE markets tend to over shoot both on long and short side. sorta like currencies. Inventory problem is going to continue to worsen, not improve in the near term. fence sitters huh? how about all those fence sitters that simply took their homes off the market? OK, 3 reasons. I also think credit will continue to be tough to come by as banks repair their balance sheets, and inflation spirals (high rates). Off the cuff guess, is another 15-20% down in Cal on average by end of 09, maybe a 5% bounce, and then flat for years until the consumer works off some of the record debt he/she has accumulated (cause I think this will hold back the US to flat or small growth for years).