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Another Housing Bottom This Year (Maybe)
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2012 Jun 29, 5:53am 51,255 views 89 comments
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David9
2012 Jul 4, 3:21pm
Trulia says many markets are 'In the clear' regarding a housing recovery today.
These are same people who send me an email with the Real Estate advice:
"don’t even bother trying to align your buy or sell with market peaks and troughs. It’s a better practice to time your transaction in accordance with your life,"
What's driving the recovery of home prices? Prices getting closer to rental parity have set a support and people unable/unwilling to sell their homes have contributed to low supply.
The question then becomes, how long will they hold onto their overpriced home that has zero change of appreciating back to the bubble price they paid within the next 10 to 15 years?
I think the answer for most of them is as long as they're at or below rental parity they'll stay whether it be 10, 15 or 30 years. Less people will trade-up. Does it matter if you're underwater if you're paying less than a comparable rental? .. If they're close rental parity and they HAVE to move, I'd think many people will opt to become landlords rather than foreclose or bring money to the table. It might not be the ideal scenario and an additional headache, but it could make financial sense.
For all your musings about stagnant wages, you didn't respond to my assertion that the top quartiles of Americans are doing very well, while the bottom quartiles are stagnant and facing high levels unemployment. If you just look at median income numbers and regular unemployment figures you might deduce that housing prices need to follow that trend. However, homeowners these days are going to be in the top quartile and aren't necessarily facing the same hardships of those in the lower tiers.
Perhaps we're looking at a trend of lower homeownership rates and a separation of income/housing ratios. Wealth is increasing as a whole in the United States but is sharply diverging away from the middle class. Home ownership could do that as well, don't you think that's a possibility?
Goran_K
2012 Jul 5, 5:16am
I'd think many people will opt to become landlords rather than foreclose or bring money to the table. It might not be the ideal scenario and an additional headache, but it could make financial sense.
That's a huge assumption, and one I'm not inclined to agree with.
As for your point of the "top quartile" of Americans doing well, I didn't respond to it because the amount of households that make $150,000+ is about 5% according to IRS data.
Is that what you feel is normal? 5% of the nation being perfectly okay with stagnant wages? I'm not sure what your point was to be honest.
Perhaps we're looking at a trend of lower homeownership rates and a separation of income/housing ratios. Wealth is increasing as a whole in the United States but is sharply diverging away from the middle class. Home ownership could do that as well, don't you think that's a possibility?
What your describing is wealth disparity, and yes I do think that is happening, to the detriment of the majority of the people in the country. So if your point is that home ownership will become a rich man's game in the future and the U.S may become a failed nation, then yes, that's a possibility.
As for your point of the "top quartile" of Americans doing well, I didn't respond to it because the amount of households that make $150,000+ is about 5% according to IRS data.
Is that what you feel is normal? 5% of the nation being perfectly okay with stagnant wages? I'm not sure what your point was to be honest.
The top 20% of Americans have not had stagnant wages. Those 20% are the ones that are buying homes, especially in metro coastal areas. Furthermore, it's that 20% that are investing either as small investors or in pools of money that are buying up multiple homes. We're trending towards more homes being held by fewer people.
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http://www.nytimes.com/2012/06/28/business/economy/new-indications-housing-recovery-is-under-way.html?_r=1&hpw
Okay, this is my first posted Real Estate Discussion, please feel free to tear apart at will. I expect nothing less.
Articles like this irritate me, so I thought I would take quotes from the article and write my housing bear thoughts, which the article did evoke.
1.) "Joe {Last Name}, a real estate agent in the Minneapolis suburb of Eden Prairie, said he recently concluded a streak of 13 consecutive bidding wars over homes that his clients wanted to buy. Each sold above the asking price."
-- I just don't buy these stories and every time there is an opportunity to search for the sales record I can't find it.
2.) "Millions of people remain underwater" & "Millions of families still face forclosure"
-- So how in the hell is there a housing recovery and / or bottom?
3.) "Our sense is that the market is recovering"
-- Well, isn't that reassuring. Data? A thread of evidence?
4.) "The trend is clear in the data. The widely respected S.&P./Case-Shiller index reported earlier this week that sales prices for existing homes rose in April for the first time this year." & "Indeed, in a growing number of areas demand for homes is outstripping supply."
-- Yes, that is true. There is no inventory. Why? Please refer to # 2
5.) "This is the fourth consecutive year that the housing market has shown signs of revival, and each previous episode ended with prices renewing their downward slide."
-- And this year is different because?
6.) "Government efforts to help homeowners have intensified, allowing more borrowers to refinance or avoid foreclosure."
-- Yes.
7.) "The influx of investors is a major reason that the market is looking stronger"
-- Really? Ok, in what way? True, Wall Street is a cash cow for a few.
8.) "And the rise in prices is happening despite the vast number of vacant houses awaiting buyers, up to two million more than the normal level, with several million more houses still at risk of being foreclosed."
-- Again, this indicates a recovery?
9.) "There are still reasons for caution."
-- Agreed.
#housing