Hey guys,
How long do you guys see this housing downturn lasting?
At least until after the election. At most 6 years.
If we use the ARM data as a baseline of “potential” further foreclosures things look like this…
2007 had $200 billion worth of ARM mortgages reset for the first time. We all saw how THAT affected markets and housing.
2008 will see $900 billion worth of ARM’s resetting for the first time. :shocked
Now, not every one of those mortgages is going into foreclosure, but obviously if you have 4 1/2 times as many resetting, the numbers alone point to DRAMATIC potential increases in foreclosures for 2008.
The good news is after 08 these ARM resets significantly fall off. The GREAT UNKNOWN out there now is this RECESSION. It’s like the 800lb Gorilla in the room no body wants to talk about.
The scariest part of this entire equation from my side of the fence is the potential for INFLATION. We are already seeing wheat, corn, copper, gold. oil, soy beans and other commodites at ALL TIME highs. If that continues this will be the worst recession most of us have ever seen. If that happens housing will get killed and it will take at least 3 to 5 years for it to stabilize.
All just MY opinion.
It depends on where you are at in the country and your local market.
Mine here has seen a very *slight decline. Maybe 1-3% at most; most of the market in my area has just been flat - no increase and no decrease.
I think most markets will rebound in mid 2009, but again, I’m just a 26 yr old mortgage broker/investor - so what do I know?
How long it will last will be greatly determined by how long it takes to get to the bottom.
If it is a slow slide, with Gov’t trying to stop it every step of the way, then it may take a LONG time before markets that are hurting start to make a real turn around.
Now, if it gets as bad, as fast as fdjake believes it will, while in the short term will be very bad, that will actually be a good thing for housing, as it will rebound quickly.
Just look at the graph that fdjake posted in an earlier post (link it again, pete). During the Great Depression, housing prices went UP.
Raj
http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Roger is right on the money.
In a typical real estate boom/bust cycle, it takes 8-10 years after the low is reached for inflation adjusted prices to reach their previous high. However, there are a LOT of other things going on this time that are not typical and are quite ominous.
Mike
No one can answer that question…
If you have an opinion, you can answer…
When fundamentals return to the normal 3% trajectory we experienced for the 7- years pior to the boom, and the insane inventory has to work it’s way down to 6-7 month supply. With tighening credit standards, I’m guessing at least two more years. But for the savvy investor, this is a great time to expand your portfolio.
Sacramento is an interesting market. It was way overdeveloped during the boom, it is slipping now.
- We are about 25% off of the peak.
- I’ll bet real estate values could fall as much as 60% (total).
- We will hit a plateau no later than August 2009.
- We will be back up at the same levels somewhere between 2014-2019.
There are several wild cards. The California economy has resilience. People are greedy and they like to spend money. The county governments are losing way too much money due to deflating property values. I believe that people who are giving up on the American real estate market are missing a very important point: the BRIC (Brazil Russia India China) emerging economies could place so much demand on commodities used to build single family homes, that the cost appraisal of real estate in this country could soar.
Roger, The government getting out of the way would be the worst thing that could happen. The reason why the Great Depression lasted as long as it did, with the severity that it had, was due to the incorrect approach by Andrew Mellon, the Then Secretary of the Treasury. He thought that economy would rebound quickly if the government stayed out of it. Nothing could have been further from the truth.
“The only thing we have to fear is fear itself.”
For this market to recover quickly, we need a quick return to a frenetic business pace. We need to whip our investment capital up to 1000 miles per hour and put it on cruise control. We need people buying stocks, real estate, businesses, commodities and labor. The banks are going to have to calculate their losses and get back into the game, and people who borrow money will need to be more accountable for irresponsible fiduciary.
however long you think…it will be longer. we have a couple of wild years ahead
If you adjust that graph for the cost of a gallon of gasoline or a loaf of bread or a dozen eggs or even the median income of a household in the United States, the roller coaster becomes as flat as a frying pan. The use of 1890 as a starting year might seem to add credibility, but it just shows how retarded the graph is. Since 1890, advancements in construction technique lending practices have made single family homes much more affordable. Anyone who wants to argue that houses should cost less because of overbuilding would at least be making a reasonable arguement, but “adjusted for inflation” when the inflation rate sits between 2-3% is a denial of reality.