This will be short. A warning to those who are looking for a quick recovery in residential real estate prices: don’t expect a quick recovery. There are many dscouraged sellers who would like to sell, but have pulled their properties off the market, waiting for a better day. For many of them, stabilization of prices may be that better day, and more supply will come when the bottom comes, extending the length, but not the depth of the bottom.
No V bottom — think of it more as a lazy L.
OK, let’s agree that the current real estate listings do not show the entire supply curve. I’ve pointed that out a few times.
I usually do this in conjunction with a comment about our lack of knowledge concerning the demand curve. Don’t you think that there are plenty of potential and qualified buyers who have been unable to get mortgages?
Much depends on when and how mortgage lending is restored — what our public policy is and how securitization is resumed.
Jeff (“Don’t you think that there are plenty of potential and qualified buyers who have been unable to get mortgages?”):
No one with a good income who can put 20% down is getting denied anywhere. The problem is that most people don’t have that 20% to put down (unqualified). We’ll have to wait for a confluence of dropping prices and increasing savings to create restorative conditions in the mortgage market.
Even then, it’s unlikely that people will be levering their entire retirements on second vacation homes (because they always go up) again.
As a current renter, I think housing prices need to decline a lot more before it would be worthwhile to buy. Property taxes, HOA fees, Insurance, Maintenance, and a big Mortgage: the American dream has turned into a nightmare for many. With prices declining and lots of inventory to be worked off, I agree a V shaped bottom is not to be. The bottoming process could indeed take years as it did in the 1990′s.
I would call it a “U” but I have the value of 11 months since these posts. We expect that the influx of engineers and administrative personnel for the “third lane” locks will give the high end of the market a boost.
Where? In Panama? Or the US?