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Homeowners turned renters, by choice or otherwise. In seven-ten years, when the foreclosed homeowners credit is rebuilt, I expect we'll see a mini-boom in home buying as these folks will be jonesing to get back in a house.
This thread is just for fun, and no scientific data to prove it, no fancy articles, but just my personal hunch. What do you guys think?
Ten years and one world war following the peak of the Great Depression marked the start of a housing/building boom, fueled by government stimulous:
100% financing VA loans ( 50% down was the most common term prior to the Great Depression)
FHA insurance enabling low-moderate income earners to buy homes.
Mortgage securitization via FNMA to increase the money available for mortgages
20 year amortization schedules ( 3-5 year balloons were the most common mortgage terms prior to the Great Depression)
There have also been some real doozy regional ( Cali, NY tri-state, Boston, DC, Arizona, Florida) market corrections as well as serious economic downturns which impacted housing, since then.
Plenty of folks predicted markets would never return to what they had been. They were mistaken. It just takes time, a lot of time.
I think the POLITICS of who is going to pull what levers is far and away the biggest factor as to when more people might have enough confidence to again venture into ownership...
I'm guessing we don't see another housing boom in a generation.
I'm hoping that whatever the outcome, the market finds equilibrium between buyers and sellers, and at levels which allow something of the salad days to return, where a single family income can afford a reasonably sized home in a good neighborhood without having to spend more than 20-25% of their AGI.
Without real job and wage growth (which we haven't had in nearly 20 years in the US), combined with the ongoing banking crisis, ongoing and permanent demographic changes, and toss in all those homes owned by baby boomers who will be selling over the next 20 years, I just don't see another true boom. Maybe there'll be local areas which find equilibrium sooner, but that is probably the best case.
I'm sure there will be another housing boom, but let's not forget once a speculative bubble bursts, it can take a very very long time for the market to recover to its peak-bubble valuations. After the stock market bubble burst in 1929 it took until 1954 before stocks recovered. And that was after a period of incredible economic growth during and after WW2.
The Nasdaq and tech stocks are still over 50% below their peak valuation a decade after that bubble burst, and it doesn't look like they'll head anywhere near those levels in the coming decade.
And my favorite, the Japanese, well they're still waiting their real estate market to return to where it was in the early 90s. It's still closer to 100% lower than where things stood in the early 90s.
Ten years and one world war following the peak of the Great Depression marked the start of a housing/building boom, fueled by government stimulous:
100% financing VA loans ( 50% down was the most common term prior to the Great Depression)
FHA insurance enabling low-moderate income earners to buy homes.
Mortgage securitization via FNMA to increase the money available for mortgages
20 year amortization schedules ( 3-5 year balloons were the most common mortgage terms prior to the Great Depression)
There have also been some real doozy regional ( Cali, NY tri-state, Boston, DC, Arizona, Florida) market corrections as well as serious economic downturns which impacted housing, since then.
Plenty of folks predicted markets would never return to what they had been. They were mistaken. It just takes time, a lot of time.
What started that building boom was the huge number of young men returning from WWII anxious to start a family and buy a house with a good steady manufacturing job.
We have ( and I do not see that scenario in the future ) a completely different set of circunstances today and in the future.
Plus, families are smaller today so there won;t be 4 or 5 young adults from nearly every family looking for a house.
Couple that with ( as another poster mentioned) the baby boomers eventually selling their house-----through choice, necessity, or death.
IMHO-----I see no housing boom on the horizon even looking thru binoculars
It all depend on the banks, but I am guessing there will some form of regulation to come out of this mess that will prevent it to some degree.
Just like the Savings and Loan / Bank (700) collapse of the 1980's their will be some feel good laws passed and some stupid laws passed to protect us and prevent it from happening.
Then we will get a President like Bill Clinton and a congress who passes laws that will make credit loose again and some loans that should never be made are given to people who can't pay them back.
Then the market will go up and a big bubble will burst.
We have a short memory and there will be another generation of people who will come along and do it all over again. It may not be the exact same mistakes but we are smart enough to work around any laws and come up with new dangerous and creative business practices.
This is all speculative unless we all go bankrupt from Govt overspending and double digit inflation raises it head. Remember double digit inflation from the 1980's ?
I do not think it will happen as long as the banks do their jobs. A person who makes $50,000 should not be able to buy a $500,000 home unless they have a lot of cash to put down.
I hope it does not. I hate what these vultures have done to the American dream. I hope we get back to buying homes to raise our families and create memories as oppossed to looking for property that will double in 2 years.
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