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I know abolutely nothing about real estate (and don't own a home yet), but people keep talking about the market's imminent return to prominence in a few years, but that does not make sense. If the market was completely out of control a few years back, wouldn't it be safe to say that it is down and will eventually level off? In my opinion the government knew this day would come and this idea of the resurgence of the market in a few years is sort of reverse psychology? Basically a way to get people to buy homes now. I don't think it is advantageous to buy now or later. I think this is our market now and for a very long time (15 plus years). Maybe I'm wrong though. I would like for anyone to share their opinion on this matter?
For my area, Memphis, home prices are expected to go UP UP UP in all scenarios. Even in the worse case scenario "Deep National & Local Recession with Higher than Average Inflation (Stagflation)" they project 18.1% home appreciation during such a period. In the "previously hot" bubble areas such as CA & FL, they expect home prices to fall in all scenarios, deep losses at that. Scarry stuff.
You must consider the factors that will affect demand and prices which are:
population, interest rates, inflation, income, & supply.
Factors that will contribute to higher home prices:
Increase in population.
Low interest rates.
Higher inflation.
Higher incomes.
Less supply (natural disasters, demolition, et cetera)
Factors that would contribute to lower home prices:
Decrease in population.
Higher interest rates.
More supply.
Low inflation.
Lower incomes.
Common sense tells us that nominal home prices will continue to rise because of inflation. However, real home prices may very well remain flat in some areas due to the factors above. Making a projections for inflation adjusted real home prices for 15+ years from now would be anyones guess.
The only class of people that are holding our economy together in the U.S. is the middle class. IF the middle class goes broke then they become low income or 'poor' people. Once there is a gap - void between the poor class and the wealthy, then the U.S. economy completely collapses. This is what both the business world and our government is worried about for the future. And so this is why every business / service organization / realtor and governent try to avoid by painting our economy as being 'great'. But it is not. In fact, it is in a very bad situation.
How will the middle class collapse? Well, several ways. Middle class people in the form of college graduates are now receiving less employment remuneration in the U.S. That is because of the fierce college graduate competition. Also, products are manufactured off shore and then brought back to the U.S. in hopes that Americans will buy that product. But we are destroying our own employment destiny in buying off shore products.
My personal prediction:
Housing prices will fall 10-40% between now and late 2009.
They will resume a 5-6% yearly increase following that.
Meaning that the housing market will be "up" again in the 2020's. However, since it will be chasing inflation, the value of the money you can get for a house will not exceed 2005 levels until the next bubble, probably out in the 2030's or 40's.
My personal prediction:
Housing prices will fall 10-40% between now and late 2009.
They will resume a 5-6% yearly increase following that.
Meaning that the housing market will be "up" again in the 2020's. However, since it will be chasing inflation, the value of the money you can get for a house will not exceed 2005 levels until the next bubble, probably out in the 2030's or 40's.
That is kinda what I'm thinking! I know I'm not crazy now. Do you agree that the govenment is trying to brainwash us with this 2 to 3 year thing also to get more people to buy?
That is kinda what I'm thinking! I know I'm not crazy now. Do you agree that the govenment is trying to brainwash us with this 2 to 3 year thing also to get more people to buy?
I would believe that houses are in for a long-term downslide, except that investors in America have VERY short memories. VERY. The tech bubble burst, the stock market slowed, and within 5 years we're back to RECORD highs. The housing market was CRAP in the '80's (property in NY was cheap comparatively) - and then in the 90's and more importantly 2000's.. its like we were running out of land.
Of course we're not - but there is a sort of natural constraint that people want to stay within when commuting. So as areas close to work centers become desirable, or maintain desirability - and populations continue to increase, there will be some rise in housing.
And - as people enter more high paying jobs, a certain percentage of them will be more willing to pay more to have "the house". (not people on these boards, as they seem to be much more fiscally conservative..
So I don't think this is a "If you don't buy now, you'll never buy" time.. but I do think that over the next couple of years things will bottom out - and then slowly climb again..
You're not crazy. The crazies bought massivley overpriced houses after 2004 and they're trying to convince the rest of us to jump off that same cliff.
Don't be a lemming. Keep renting until the bubble deflates back to the long-term trend. Check zillow.com for your area to see when that is.
Yeah, it sucks to be a renter, but you can rent nowadays for half what you'd pay in interest on a house loan. That interest payment is "throwing money away" just as surely as your rental lease, plus, you'll be throwing away a big chunk of the principle on your loan as that house devalues over the next few years.
The tried-and-true rules still apply. Don't spend more than 25% of your gross income on housing. If you buy, be able to put at LEAST 10% down, get a FIXED mortgage that is 30 years or shorter. Simple stuff, don't let any NAR shyster convince you that any of these rules have changed.
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Several Frightening Scenarios
