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even if we see a 10-14% further drop in 2009 as predicted by most economists, that will be a combined drop of 25% off the peak 2006 prices.
I am not sure what economists you are talking about. At the moment no economist can predict what will happen nor what it takes to stabilize housing prices and economy.
I do not predict. If one assumes that the prices will go back to average then 50% correction in the next few years is necessary. Compare to historical average, prices are inflated and one is bound to lose equity. Even more so if prices go below average, which is what happens after bubbles.
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I am not sure what economists you are talking about. At the moment no economist can predict what will happen nor what it takes to stabilize housing prices and economy.
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i am talking about the 50 economists that businessweek interviewed in nov 2008. about the 10-14% decline that i am talking about, again that was the consensus of all these 50 nerds put together. i would dare to assume their combined wisdom was at least a fraction more than your alone.
having said that, i agree no one can accurately predit what is going to stabilize home prices and the economy overall. but based on current statistics, they can make an educated prediction.
i am talking about the 50 economists that businessweek interviewed in nov 2008. about the 10-14% decline that i am talking about, again that was the consensus of all these 50 nerds put together. i would dare to assume their combined wisdom was at least a fraction more than your alone.
First, November 2008 was before the current layoffs and housing numbers.
Second, the decline they agreed on was for 2009. I am sure all of them would agree that the prices would reach back historical average. That's common sense. What is NOT common sense is buying now with inflated prices.
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You mention that this recession will take much longer which implies there will be much higher decline than 50%. Take into account that the NY area economy is collapsing, something that did not happen during the 90s when the house prices were below average.
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I say 30% because the federal government is involved in price fixing. If they didn't have their hand in it at all, I would tell you to look to buy 70% of peak.
First, November 2008 was before the current layoffs and housing numbers.
Second, the decline they agreed on was for 2009. I am sure all of them would agree that the prices would reach back historical average. That's common sense. What is NOT common sense is buying now with inflated prices.
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well, i am sure they were not so short sighted that they didn't foresee the waves of potential layoff through 2009-10. if you read some of the articles back in Q4 of 2008, you would see some economists predicted layoffs of more than 4mm combined in 2008-09.
Jan 2009 layoff numbers are very scary but unfortunately this is just the beginning. unemployment will peak in Q4 2009 (again, its what the wise guys predicted, not me!).
if you read some of the articles back in Q4 of 2008, you would see some economists predicted layoffs of more than 4mm combined in 2008-09.
Jan 2009 layoff numbers are very scary but unfortunately this is just the beginning. unemployment will peak in Q4 2009 (again, its what the wise guys predicted, not me!).
OK. I will not argue about the "economists" predictions. Prices will go eventually back to their historical average, independently what government does. Maybe not in 2009. HOWEVER, if buyers are educated and aware of the inflated prices, we will reach 50% sooner than later.
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i'm very thankful i'm not buying nor selling. and that's that.
This is the part the makes me insane.
I am currently renting. But eventually plan to buy. I have so much fear that I will end up buying right before a major price decline. And at the sametime I want to buy so I can feel like I move on/forward with my life. Very frustrating...
We just bought in nj most of the over inflated house's are because they bought high and are stuck.Some just think there house is worth that much and wont budge. Compare the area find your deal and put in a offer if its refused o well move on there's plenty out there.I also found different price discounts on housing depending on budget.If you think you got a deal leave it at that or it will bother you forever just be glad it wasnt bought a few years back.
OK. I will not argue about the "economists" predictions. Prices will go eventually back to their historical average, independently what government does. Maybe not in 2009. HOWEVER, if buyers are educated and aware of the inflated prices, we will reach 50% sooner than later.
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it's not about that. It's about the government disrupting the market forces involved. You are looking at it from a free market perspective, and I would agree with you, the free market would easily have housing prices at 50% below. Had the government not stepped in by bailing out Fannie and Freddie, housing would be doomed. Had they not bailed out he banks, housing would be doomed. Had they not brought the discount window down to 0%, housing would be doomed. Had they not subsidized things like FHA loans, they would be doomed. But the government can keep creating incentives to prop up housing, and unfortunately, at some point, it will probably work, and at that level, it will be above the 50% you are hoping for.
They have already interfered with the foreclosure process with Fannie/Freddie. They are now renting the houses back to people who got foreclosed on. They are creating tax credits. There's a number of things they can do. If the government suddenly allowed you to write off 100% of your mortgage payment as a tax deduction, you would probably see housing bottom right now.
See, the problem is, the government wants the pain to prolong while they appear to try to fix the problem. The more the pain lasts, the more of their pork spending bills they can funnel through congress to funnel money to their friends, lobbyists, and campaign donors. That's why you haven't seen a massive bailout package aimed towards homeowners. The government could have easily price fixed the assets held under the TARP by directly mailing free money to the people who were in those mortgages on those "toxic assets" so they could pay off their mortgage. The banks would be recapitalized from the bottom up (I'm against mailing free money to anyone for the record). Instead, they mailed the money directly to the banks to keep the problem going at the bottom. This has been incredibly effective. The idea of spending 700 billion was unconcievable as little as a year ago. Now, they just did it again like clockwork and no one seems opposed. It's a politicians dream to be able to spend this much money without civil unrest and they'll do it as long as they can get away with it.
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