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Leading housing economist
says he can't explain the slump
Is he serious?
Heaven when it's working for you...and hell when it's not. And right now it's hell for a lot of people. We're well passed the "tipping point" of real estate being perceived as a "fun" risk-free investment.
That's almost all you need to know to understand why real estate is stagnant and heading lower. No need for advanced degrees to figure this one out.
From 1980 to 2006 was a "perfect storm." Rising expectations plus reduced opportunity in other areas of the economy plush absurdly easy credit terms all came together to create the Mother of all housing market bubbles.
Expectations today? Low.
Opportunities? Even lower, when you consider that housing prices for the first time in many decades are going down not up.
Credit availability? It's a whole new tighter ball game.
Unemployment? Through the roof and not getting better.
Fear of unemployment among the employed? High.
This is not a climate in which people thrown down to buy real estate.
Add to all this all the horror stories of people making payments on houses that are worth less (sometimes far less) than they committed to pay and all the people making payments on houses they no longer live in and the bloom is well off the rose.
What will it take to bring real estate "back"?
How about a generation or two? The real carnage has yet to begin and today's 30 to 50 year olds are coming to think of real estate as a mine field, not a road to easy riches.
Maybe when people who are four years old today and younger are old enough to buy a house, the buying frenzy will return, but my best guess is real estate is going to revert back to what it was in the 1930s to 1950s. Something you buy cautiously and then overwhelmingly for the purpose of having a place to live, not as a risk-free, free money speculation.
Yes, that's what real estate was pre Go-Go years and pre 2000s mania. Throw a dart at just about any market back then and it worked. If those years are your yardstick, you're living in the past.
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