Knighty, that comment lacked any analysis on the chart.
do you you really think that housing values will magically stabilize at twice their inflation adjusted historical value and, if so, why? all beck is saying is that housing prices tend to regress to a certain average level - just like pe ratios.
i see nothing but a falling rock. my reasons are both anecdotal and logical. when i bought our house in 1998, i recall very clearly that i felt i paid very close to fair value. i didn't buy the bottom, but i didn't buy the top (or what i thought would be a reasonable top at the time).
we are looking at another 30% drop from current levels to hit the price i paid in 1998 (adjusted for inflation).
in context, almost every single macro number is negative compared to 1998...
1. incomes are lower now than in 1998.
2. unemployment is about double compared to 1998 - and accelerating higher.
3. debt levels are much higher.
4. consumer and investor confidence is much lower. much, much, much lower.
5. investors have been taken out and shot as they dollar cost averaged in their retirement plans at levels as much as twice as high as today's value.
6. housing is viewed as an instrument of financial torture, not as an investment.
7. lending standards are much higher right compared to 1998.
8. taxes are increased $1200 per family.
so, based on my experience and the much more negative values of the items listed above, i don't see how we can avoid another 30% fall and, more likely, close to 50% fall from current levels - at least in southern CA.
and that assumes we don't hit 20-25% unemployment and then it gets real nasty.
so, i think the data matches that chart. if you don't, i'd like to hear your reasoning. remember, a broken analog clock is right twice a day. ;-) |
