Monday, November 20, 2006

Housing: many years of decline

The stock and bond markets are fully aware of the housing situation. Then why aren't the markets worried? The housing decline could be slow and very extended rather than sharp and short. Thus, the decline in housing (think Japan) could take many years, with no single year being disastrous. Could this be what the market is "thinking"?

After all, volatility in almost every area is now low, low, low. Why couldn't volatility in housing also be LOW? Meaning, we could see years of gradually declining home prices with never a single disastrous year! Just a long, drawn-out bear market, a regression to the mean.

Any thoughts????

5 Comments:

Blogger hemorrhoidforhousing said...

Your comments are similar to mine I believe. We are not at a housing price peak but instead a housing price plateau with a long extended flat top with gradual declines until we return to the mean.

Sellers are taking their houses off the market instead of taking a lower price hoping next spring will bring back the buyers. Unfortunetly for them the affordability index says there isn't anybody left who can afford these prices without taking on toxic financing.

Let's wait and see but I think next spring has already sprung and it isn't going to be any better than last spring. The market peaked in July of 2005 and from there we're talking about a dead market for at least 5 years.

4:37 PM  
Blogger A Tampa Realtor said...

I am even more bearish... think; "The 2nd Great Depression"

6:40 AM  
Blogger AnalysisGuy said...

Today’s report on San Diego has been released!
Local Home Price Analysis

10:57 AM  
Blogger seamus said...

Because we live in a dynamic American economy. Money is shifting away from housing, but into other markets, including commercial construction.

6:50 PM  
Blogger LookEast said...

The fed and seller will not let the housing falls violently. With today still relatively low rate and plentiful liquidity (many lenders private or institutions), sellers can afford to slowly sell their too many houses down to a few to make a stand and then reduce their inventory further over time.

Since the babyboomers will grey out just like Japan's babyboomers did in the 80, the similar housing bubble would leak the same as well.
Look for 10 years or more of slowly numbing decline.

10:19 AM  

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