When The Housing Market Will Bottom Out, And Why?
Readers suggested a topic on the future housing markets. “What are HBB predictions for when the housing market will bottom out, and why?”
One was bearish. “I think it will be so bad in 2009 that no statistics are even made. Like the lost years. The dark ages of the housing market in California lasts until 2012. I’m off to burn a witch.”
Another had this. “The NAR has stopped reporting statistics for Metro Detroit. A local group published a median of $62,800 for the whole metro area, and another $18,578 in the City of Detroit. For the metro, with 10% down and the 4.5% interest rate the Federal Reserve is targeting, that implies a monthly mortgage payment of just $285 per month for 30 years.”
A reply. “Look at the BBC Report on Detroit. I feel for the area… but why didn’t they reform the Automakers when there was a chance? Ugh… You cannot fix what doesn’t want to be fixed. Its going to get ugly… I admit I was too much of an optimist.”
One sees this. “It was a rolling bust, so it will be a rolling recovery.”
“I will maintain to the end, however, that the longest suffering will be endured by Larry’s ‘flyover’ country. As some of you point out, the bubble masked the Rust Belt’s death throes. Stories of fleeing manufacturing were already there eight years ago - for those that cared to put their 401k statements down long enough to look. I remember small mfg. closures being well documented in the Midwest press circa 2000.”
“Given a choice, I’d still cast my lot with the Sun Belt states - over the longer term.”
Another predicts. “Think ‘infrastructure.’ Long pipelines from the Great Lakes to the Everglades!
Refill the Florida swamplands with clean, cool water from Lake Superior. Plenty of water. Plenty of Sunshine. Florida Restored, and ready for the next wave of carpet-baggers from Cincinnati.”
One looks at migration. “I think the immigrants will have a positive affect on the real estate markets of such cities as Frisco and NY. I’m from NY, and I can tell you that these immigrants from Korea and South America (Savers) are just keeping otherwise slums from being turned into such. It’s all a tug of war, as it were, but in the last downturn, circa 1991, Jamaica, Queens all but folded up. Not now. There are all these immigrant businesses to fill the gap with restaurants, cheap stores, like 99 cent stores, etc. Not upscale, but it does seem to have its own economy.”
Another sees a political angle. “‘When and why’. I will still go with 2012. Reserving the right to amend that estimate as time goes forward!”
“Why not sooner: Prices are still very high by the measure of rents and incomes, and the downward movement of prices, though now accelerated in many areas, would still take a few years to bring prices in line with rents (if rents don’t fall a whole lot). We have often noted that the resets in the Zellman chart and other people’s updates of that chart have a second peak in 2011. I’m not sure if that matters while prices are sinking — foreclosures will feed on themselves without requiring the additional impetus of ARM resets. However, if prices had any other reason to stabilize, the ARM resets would tend to prevent it.”
“Why not later: Let’s just say, Obama, C. Dodd, B. Frank, and Columbia dean Glenn Hubbard, not to mention Sheila Bair (if she’s rehired) will all be trying very hard to arrest the decline. The worst of it is, they may succeed in making the decline go slower and last much longer. But O will be up for re-election in 2012, so it would be good for him if there had (then) been several months in a row of flat-to-upward house-price statistics.”
One last time prediction. “When I finally get off my lazy ascii and send Ben a Christmas card, for crying out loud.”
