It seems the media is getting more and more negative. They are starting to sound like a bunch of pessimistic bubble bloggers, or maybe they just opened their eyes.
Much of the nation has had a lovely real estate boom for the last five years, but the house party is almost over and the cleanup won’t be pretty.
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In recent weeks, many major investment firms have concurred. Said a Lehman Bros. report, a “turn in the housing market is central to our economic forecast.”
…
While there is disagreement on what a downturn will mean, it is widely held that a number of factors could bring prices down. A decline in prices will track interest rates: If rates go up sharply, housing prices will plummet, said Mark Zandi, chief economist at Economy.com, an independent West Chester, Pa., provider of financial research. If rates increase slowly, housing prices may ease gradually.
“House prices are at the mountaintop,” Zandi said. “All roads lead down. It’s just a question of how steeply.”
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The CEPR report seems to have made it’s way around the web and through the press in a matter of minutes. I expected it to, it’s one of the best papers on the bubble yet (you can find the link further down the page).
Caveat Emptor,
Grim
What an absolute 180 degree turn around in what people are saying about the market..
All we need now is the cheerleaders to accept it.
-Richie
I agree, the tide changed very quickly. Now all we need is for the anecdotal evidence everyone has been providing to materialize in the NAR and other reports. I’m sure they’ll be spun as just normal seasonal slowdowns, but everyone here knows the real truth.
-james
Wait til the bloodbath in Spring as this thing just tanks.
Sellers and realtors assume things will be back to normal this spring.
They are in for a shock.
The housing market is just going to plunge then grind lower then plunge lower then grindlower until they cry no maas.
Houses sat dormant in early 1990’s.
Demand was weak as hell and buyers were completely in charge. This time I can’t imagine how bad it gets.
In less than 2 years I expect 35% price drops which ONLY takes these ridiculous prices to about 2002 levels.
Bubbles usually overshoot, so maybe 35%is to optimistic this time around.
meaning 40% + drops are in store.
This is by far one of the most irrational markets periods i have ever seen. People are willing to mtg up their life to get into some POS shack that is worth 50% less if even that much.
The psychology tide is turning swiftly and you know the corrupt real estate industry the masters of manipulation will be hard at work to spin spin and spin the neg news.
If an asset can more than double in price in a five year period, it’s entirely possible that it can halve in the same time. Will it? I don’t know, I don’t think we’ll see anything as drastic as that, although I won’t say it’s impossible. A drop of 30% sounds entirely probable to me however.
James