The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: ild who wrote (14895)	11/6/2003 7:53:13 PM
From: biometricgngboy	Read Replies (2) of 306849

This guy is very bullish on real estate: Real Estate Live Doug Duncan Chief Economist Monday, November 3, 2003; 2:00 PM washingtonpost.com Some excerpts: "As long as population keeps increasing and unemployment stays at the very low levels that it currently is the housing market should stay strong." * "The US real estate market is going to stay strong for at least the next couple of years and the bulk of the next decade. Demographic considerations like the baby boomers and immigration will drive housing demand to grow at a faster pace than the supply is hitting the market. Interest rates are expected to rise modestly over the next 2 years reaching about 7% by the end of 2005. Rates at that level will not dramatically slow the housing market. Housing price appreciation will slow but prices will not fall." * Doug, tell us more about why you think the housing market won't decline as it did in the early '90s. That's what a lot of us are afraid of (and some are hoping for)..What makes this time different? Isn't real estate always cyclical? Doug Duncan: The most recent housing cycle was different than what we have seen historically. Typically, we see the housing market turn down before the economy goes into a recession. But this time interest rates fell at the outset of the recession and mortgage rates were so good that the housing market stayed strong and softened the recession and sped the recovery. Will this always be the case going forward? In my view, housing is less cyclical than it use to be because the economy is less volatile than it use be. That is good news for homeowners. But it is also good news for homebuyers because it means interest rates are likely to also be less cyclical. *** "I am not a believer in the bubble theory. House prices are driven by supply and demand but also affected by expectations. In the early 1980's when interest rates rose to the neighborhood of 18% prices did not fall. Instead, the number of homes sold fell as owners refused to put their properties on the market. In fact, less than 2 million existing homes were sold in 1982 during interest rate peaks as compared to nearly 6 million this year with the very low rates we have."

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