Housing will come down to 50% of what it was at the peak.
By Daniel at 31 January, 2010, 10:48 pm
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During the five years of the housing bubble, home prices rose an average of 10% to 20% a year depending on your location and other demographic factors.
During that same time period real wages remained stagnant. — What does this mean?
The fact is significant since it goes to the heart of our economic model of “debt driven consumption”. A home is the ultimate consumable item since it drives even more consumption as eager home buyers rush to fill it with more consumable items. The problem with this scenario, is that no one took into consideration what will drive our economy once the days of “debt as money” came to an end.
You can’t hide from the math. You can’t spin your way out of math, and you can’t spend your way out of the math. The math will have to be dealt with eventually and houses will remain inflated in value up and until their affordability is adjusted down to meet real wages, or real wages are adjusted up to meet home prices. In other words, the economic collapse is still playing out!
Anyone who bought at or near the peak will never see any profit.
http://www.businessinsider.com/henry-blodget-the-housing-chart-worth
-1000-words-updated-2009-7
What’s ironic is that government officials always claimed to want “affordable” housing for the masses. Yet, what they are doing is trying to keep housing prices from falling to their real market value. They want inflated home prices to save the banks balance sheets instead. All we will get is more pain down the road.
- Mr-Bickers
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