A prolonged period of falling real estate prices, as we have right now... The Wealth Effect from rising RE prices was evident... granted, the wealth was phony, and we only borrowed to consume, NOT to produce.. as the phony wealth from lax lending standards evaporates, at this rate, we are going to see the reverse happen..Negative Wealth Effect (if there is such a term)... It's going to get ugly..much uglier..before it gets better.. I think Marketsurfer pointed out that these Bus Tours of foreclosures are just ramping up now...if that's not sign of further decline to come, I don't know what is..
Hmmm.......hadn't heard of that.....bus tours of foreclosures. Something as extreme as that sounds to me more like a sign of a bottom than an indicator of future declines. Sorta like when everyone, including your cabbie, is talking about how good his stocks are doing....time to become a bear.
Stock market and housing market are very different though. Stocks are very liquid (for the most part) but RE isn't.
the scary thing is that in real terms, RE has already dropped further than during the Depression (they had overall deflation then). Inventories are continuing to grow, as is household debt, and unemployment isn't even that bad. yet.
How come no one was keeping track of how high prices were going during the bubble? Its amazing that everyone talks about losses in housing prices, but nobody complains about outrageous gains. Same as stock market bubble. I bet that prices are still higher than they were 5 years ago. definitely the case in NYC. So quit bellyaching, a house is a place to live, not a liquid investment. Next time try making housing out of paper shares of stock or bond certificates and see how far that gets you. p.s. I'm pissed I have to pay $4/gallon at the pump so overleveraged morons don't walk away from their houses. Time to flush the toilet and dump the weak hands.
I got a couple of turds on my block that are about to get flushed. I'm just hoping not that many more pop up in my immediate vicinity.
I'm partial to Schiller, here's a Harvard study. http://www.jchs.harvard.edu/publications/markets/son2008/son2008_executive_summary.pdf
1) We aren't in a prolonged period of falling real estate currently. It is a year or so. 2) We have had numerous prolonged periods of falling real estate. I don't know which history books you read.
Cool graph. Is the "standard" house they are tracking for the times, or what? I mean, today, your typical house constructed is at least 1800 S.F. and has 3 BR. Back at the turn of the century, houses were more like 1 BRs and 900 S.F. Does anyone know how the index reconciles that? SM