Off topic: Doc, I do not think that we will see the sustained rise in home prices that you forecast to begin later this year, once the foreclosure backlog clears.
I ran the numbers on the downturn and run-up in San Diego home prices over the late '80s/early-to-mid '90s, and found that three factors predicted a sustained increase in home prices: rising employment, falling defaults, and rising sales.
With the household debt/income ratio still at unprecented highs, I do not see the appetite nor capacity for increasing household debt loads.
And, given how long it will take to liquidate the household debt to bring debt/income down to historic norms, my gut sense tells me that household formation will remain below average for a long time.
I think we have long winter ahead for housing. Any year-end peek of sunshine will be fleeting, at best.
Off topic: Doc, I do not think that we will see the sustained rise in home prices that you forecast to begin later this year, once the foreclosure backlog clears.
ReplyDeleteI ran the numbers on the downturn and run-up in San Diego home prices over the late '80s/early-to-mid '90s, and found that three factors predicted a sustained increase in home prices: rising employment, falling defaults, and rising sales.
With the household debt/income ratio still at unprecented highs, I do not see the appetite nor capacity for increasing household debt loads.
And, given how long it will take to liquidate the household debt to bring debt/income down to historic norms, my gut sense tells me that household formation will remain below average for a long time.
I think we have long winter ahead for housing. Any year-end peek of sunshine will be fleeting, at best.