Another lost decade for housing?

[eridani]

Thanks again to Crewleader for introducing me to Dr. Housing Bubble--very educational blog.

http://www.doctorhousingbubble.com/housing-lost-decade-again-case-shiller-no-recovery-for-housing-young-generation-being-locked-out-buying-homes/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+DrHousingBubble-HowILearnedToLoveSocal+%28Dr.+Housing+Bubble+-+How+I+learned+to+Love+SoCal%29


Robert Shiller of the famed Case-Shiller Index came out only a few days ago stating that housing may not recover for over a decade. As dire as this may sound, we have a similar example to look at in Japan. It wasn’t like he stated this just to cause a stir but talked about compressed household wages, record low mortgage rates, and a large pipeline of distressed inventory. Even though real estate values are now down 35 percent from their peak taking values back to 2002 (a lost decade) we would need to increase housing values nationwide by 50+ percent to get back to the peak. This is what he was discussing about home values not recovering to that price point. Japan has had well over two decades of a depressed real estate market and values today still do not approach the peak values reached in the early 1990s in spite of their central bank pushing rates even lower than the Federal Reserve. In fact, prices are holding closer to the trough. Examining the data we already find ourselves into one lost decade. Is another possible?

<snip>

Nothing in history repeats exactly. Yet for home values to recapture that peak, housing prices would need to rise by 50+ percent. When are we ever going to capture that price again unless wages rise? Interest rates are reaching levels that are below inflation and we risk more dramatic problems because of this just to support bank balance sheets. Ultimately home values will once again become a boring local commodity that provides shelter. In many markets that already seems to be the case. In many other markets tiny bubbles flourish and people keep saying “it is different here” until clearly it is not.

[no_hypocrisy]

1. My concern is will the value of housing ever rise "naturally" again, meaning can the market

ever grow unimpeded, without going from bubble to bubble to bubble? My guess it can't and won't. The slow rise in value versus the kind of growth in a bubble would be unacceptable to sellers, to banks.

[dixiegrrrrl]

4. Exactly..notice how the article focuses on "prices will not regain peak"

as if re-inflating the bubble were a good thing.
Of course when a bubble pops prices drop...
and of course when prices drop those left holding the the last trade are going to lose big time.
With or without jobs, over inflated prices could not last.


btw..anyone notice the current bubble in rental prices in high market areas???

[fasttense]

2. From hunger or starvation to food insecurity and

from poor and underpaid to compressed household wages, change the words and it all sounds so much better. No need to feed people who are merely food insecure. No need to help people who merely have compressed household wages. See how nicely we paste over reality.

[westerebus]

3. Another lost generation is more the case.

There is nothing on the horizon that would indicate the general economy is improving in terms of jobs and wages, that being the case, it does not matter how high the FED pumps the stock market to give the appearance of a rising economy. The common working person buys a house and the family that lives there makes it a home and that expands the wealth of the community. This is middle class america in a nut shell. Without jobs it does not matter how inexpensive housing becomes if it remains un-affordable to the common person.

It is high time to break the monopoly of the ruling class which have prevented a recovery from happening.

It will not be televised.