patrick.net

wI'm pretty bullish on the economy which I think will effect housing. Even if there's no inflation when the economy improves either rents or housing prices should go up.

Hmmm....I see more newly joined bulls. What happened to our seasoned bulls?

shrekgrinch says

Expat64 says

House prices always go up. You can’t make more land. It’s a great time to buy. Interest rates are low. Foreclosures and distressed sales don’t count. Real estate is all about location and each house is unique in its specific location so it will go up in price. The Bernank has our back. Lereah will return! And, it’s a great time to buy or you will miss out.

Please tell me you’re being sarcastic.

Seriously, I am thinking he is sarcastic.

Tim Aurora says

While I do not want say that there will not be an inflation, the following reason is why Housing market will com back in 4-5 years

* There is a need of ~1 million unit a year and currently the builder are not even constructing half of it. That will continue for a few years till the current inventory is low enough to rebound. Builders ( and associated infrastructure such as roads and schools ) will not be able to ramp up very fast and that will cause a good rebound

* Foreclosed activity started 4 years ago. The associated population can renter the market in approximately 6 years time. That gives another 2-4 years before we start see these folks coming back

* Unemployment will ease in another 3-4 years which in turn will have two effects

** Unemployed folks who are now living in their parent’s basement and apartments will enter the housing market.

** Increased confidence means folks will start moving up.

these are conditions that should see prices rising nominally with inflation (over the long term).

they will not cause prices to "come back" to rates of appreciation seen during the bubble.

I think housing will keep on going down simply because too many can't afford it, and average person out there isn't making the money hence no inflation. Housing bubble was a trend that could not go on.

It's Herbert Stein's Law "Trends that can't continue, won't.".

Housing is just consumer item, there is no reason to be bullish or bearish on it. It's like a price of potatoes, not an investment.

I expect normal 2% yearly inflation, and housing deflation since it is ballooned.... which is very reasonable considering the fundamentals. All the other stuff about inflation and more housing bubbles that's borderline conspiracy theories insecurity in people.

When there is no salary increases in sight how can the money that's going to buy homes keep coming from banks or thin air to support the still bubbly prices? Heck! there will be inflation every where but the home prices.

MYTH #5
Boomers will crash the market
http://money.cnn.com/galleries/2007/moneymag/0710/gallery.retirement_myths.moneymag/5.html

thunderlips11 says

I pray for inflation, it’ll be the best thing.

I hope you're wrong. I lived through years of high inflation and also stagflation, and neither one of them are pretty. That is some history I would rather not live through again.

rob918 says

I hope you’re wrong. I lived through years of high inflation and also stagflation, and neither one of them are pretty. That is some history I would rather not live through again.

amen.

ChrisLA says

rob918 says

I hope you’re wrong. I lived through years of high inflation and also stagflation, and neither one of them are pretty. That is some history I would rather not live through again.

amen.

Unfortunately, stagflation seems to be a likely forward course.

ChrisLA says

It’s like a price of potatoes, not an investment.

I'm waiting for Apocalypsefuck to come here and tell you otherwise.

If I thought there was going to be high (5%+) inflation for a sustained period within the next decade I'd be a housing bull too.

There isn't really much of a reason to be a bull otherwise.

I've been predicting this for years on this board, and so far I've been right: moderately high inflation of commodity prices, that will NOT translate into overall (headline) inflation in the US. The economy is very different than it was in the 70's (globalization, greatly diminished unions, nose-bleed household/fed/state/local gvt debt being three major differences)

>they will not cause prices to “come back” to rates of appreciation seen during the bubble.

Thank you. I know that there are plenty in that camp but I am looking at the subset who believes real (as opposed to nominal) appreciation will take place.

I think it depends on specific property.

The housing market is artificially depressed right now and houses are selling below replacement cost. So there are definitely some deals out there that will show real returns.

American in Japan says

Thank you. I know that there are plenty in that camp but I am looking at the subset who believes real (as opposed to nominal) appreciation will take place.

The same subset who rationalized the last bubble, will rationalize the next bubble.
How they do this... is pure emotional greed.

toothfairy says

The housing market is artificially depressed right now

like i said...greed... and its cousin denial...

Does this look like housing prices are 'artificially depressed right now' ?

Interest rates at mid 4% mean the monthly cost of a home in the year 2000 is about the same monthly cost as it is in 2011 in alot of hard hit areas. Even if say the price was higher by 60k in 2000 the 4.875% interest rates wipe out that difference since rates were around 7.25% in 2000. People paid more interest on the lower priced home. The monthly payments are starting to even out in areas that dropped 40% or more.

toothfairy says

The housing market is artificially depressed right now and houses are selling below replacement cost.

Below replacement cost does not mean they are under priced. If houses always sold for more than their replacement costs, then building a home would be a guaranteed business to be in. Build a home, and you're guaranteed a profit.

Ah... wouldn't that be nice if every business you decided to invest in was guaranteed to turn a profit?.....let me close my eyes and imagine that happy dream for a moment......ah, that was nice.

Too bad the world doesn't work that way.