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How long do you think it will take for real home prices to go back up where they were in 2005?
Most everywhere I look prices are still double that of 2005 and 200 to 400% higher since 2000. If you listen to the media you would think home prices dropped and lets not forget about salaries have not changed that much since the 90s.
I am still on the side lines like allot of other people since I cannot afford todays outrageous prices. If they go back to 2000 and in some places 2005 then I will have another look. But I have a feeling the economy may collapse before that happens and my savings (US dollars) will be useless.
Assuming there is some level of recovery in the economy in the next year, and housing starts remain well under household formation. We still have about 8 million units of excess supply. So it could take over a decade just to absorb the oversupply. I can't see building of new homes recovering soon, since in many areas existing homes are becoming so much cheaper than building a comparable house.
Additionally funding the debt has to start driving interest rate higher. With higher interest rates housing affordability will decline, placing some additional pressure on prices.
Hopefully home prices will track with affordability. As wages and job opportunity improve so goes home prices.
It's going to take a while 'cause the bubble prices were totally inflated. In my area, there were homes built in the 50's 2bd/1bth that were going for close to 400k. The house is probably only worth 130k-150k. If the 3% appreciation estimate works out, it'll take almost 4 decades for that house to be worth 400k again. That's also assuming we have an instant recovery, which I don't think we will. It'll level off for a few years than graduall increase. I'm no economist, just a gut feeling so take it for what it's worth. If I'm wrong, I'll refund you what you paid for my advice
Oh. I don't know, 10 years or so sounds pretty optimistic. Y'all really went nuts there for a while.
A median Florida buyer could afford $115k in 2001, $250k in 2005, and now $155k in 2009. If we assume that $155k is a bottom, and 2001-2009 represents "natural" 5% annual appreciation for a desirable place like FL, then a 5% annual increase from here on out would bring you back to $250k in 2019. That's just a guesstimate, and it also looks like some places were much crazier than others.
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