Oh, but wait! There's the other side of the formula - demand.
And with unemployment still high, fresh college graduates and yoots who tripped over their own slobber to vote for Obama crushed under student debt and no disposable income, not to mention ever increasing property taxes, there is a fraction of the demand as there was previously. I sincerely doubt there will be "booming" property prices...at least until the presidential election is over and people WITH MONEY have genuine hope in the future of the country.
On the supply side, there's still an enormous hidden inventory of people and institutions who want to sell houses but are waiting for the market to improve. There are also millions of retirees living alone in paid-off houses who will be dying in the next ten years. Why buy a house if I can just be patient and inherit one?
ReplyDeleteA bear market cannot recover until all hope is crushed. E.g. when the Dow reached its all-time low of 41 on July 8, 1932, many were saying it could go to zero. That was the signal to buy!
I hope I never see 'booming' prices in my life time. I was in college during the bubble years and I remember railing in my finance classes that the attitude about 'residential' property was ludicrous. A piece of property with no revenue stream cannot realisticly posses return rates in great excess of inflation/and or income appreciation rates. Of course at the time there were not too many individuals who wanted to listen to this idea.
ReplyDeleteI'm of the opinion that housing still has not bottomed. What's propping the market right now are insanely low mortgage interest rates, which will not, for various reasons, be sustainable. At the moment, I believe we're seeing a sucker's rally in real estate.
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