Bob Shiller: 'Decline May Well Continue for Some Time'
Yale econ professor Robert Shiller had an op-ed in the Times this weekend that talked about why there’s not necessarily an end in sight for the decline in the country’s housing market. The piece examines why other declines have dragged out for years: “Despite the uptick last week in pending home sales and recent improvement…
Yale econ professor Robert Shiller had an op-ed in the Times this weekend that talked about why there’s not necessarily an end in sight for the decline in the country’s housing market. The piece examines why other declines have dragged out for years: “Despite the uptick last week in pending home sales and recent improvement in consumer confidence, we still appear to be in a continuing price decline…Several factors can explain the snail-like behavior of the real estate market. An important one is that sales of existing homes are mainly by people who are planning to buy other homes. So even if sellers think that home prices are in decline, most have no reason to hurry because they are not really leaving the market. Furthermore, few homeowners consider exiting the housing market for purely speculative reasons. First, many owners don’t have a speculator’s sense of urgency. And they don’t like shifting from being owners to renters, a process entailing lifestyle changes that can take years to effect.” He concludes: “Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.”
Why Home Prices May Keep Falling [NY Times]
Yes, m4l, BHO and the others think every homeowner is mortgaged to the hilt. Many of us have carrying costs much less than what a comparable square footage would rent for.
My carrying cost is far less than what a nice 2 bedroom with a yard would run
DIBS, you cant say you’re 200k under water when you effectively traded in a massively profitable UES unit.
“BHO leave these delusional Assholes alone!”
They have to be corrected. I’m looking out for the innocent bystanders that might gobble up the garbage.
***Bid half off peak comps***
Agree, wasder. Being single, it would be far less of a hassle for me to rent than for a family. I chose to take my profits in manhattan and go for the deep value in Brooklyn, specifically the real deep value in Bed Stuy. I’m sure I’m about $200k underwater but I don’t really care. I’ve got a beautiful large house with a yard and a deck and I continue to put more money into it. Some of these people don’t understand that.
Besides, one of the motivations to do that transaction in 2007 was the fact that cap gains taxes were probably the lowest they would ever be and most of us in the investment business realized that. It sdid actually drive a lot of decisions to liquidate long held stock in our clients portfolios.
DIBS, will sell when I see a compelling rental. right now, anything decent or comparable to what I have now is around 2.5x or more than my current carrying cost. Right now, the place is a hedge in case mkt doesn’t tank and moves up.
“selling your home and renting because you think the market is going down is not something a lot of people really care to do.
By definition, smart money is not a lot of people.”
Who is “smarter”? The person who decides to sell their home and rent elsewhere (with the hassles and dislocation that this entails, especially with kids) or the person who decides that a house is a lot more than a financial bottom line? The answer is it depends on the person and the circumstances, a nuanced answer I know.
As always, I take issue not with the actual position you are putting out there for yourself but with the extrapolation that its the only smart or reasonable move for anyone.
BHO, contrary to your line of thinking, not everyone took money out with a refi. I will reiterate: Anyone who bought in the early 2000s or earlier still has a hefty profit.
If you plan on denying that you need to prove why its wrong.
m4l…how much longer are you going to wait to sell???
“If I fell for all the garbage (renting is throwing $ in the fireplace, etc.) that David Learah, NY Times RE, REBNY, et al, puts out there…”
Its too easy to ascribe motives to buyers like that BHO and is the weak link in your analysis of the situation. As Joe the Bummer says if you were in the situation of sitting on a house for more than ten years previous to the bubble its an easy call to sell and cash in. But most people here are not in such a clear cut position and as much as you want to believe that people are stupid cows following the above listed sources over their own best judgment, many intelligent people looked into their own circumstances and bought a house as a place to live and to be the rock of their lives. These people will all have their own reasons and needs to get out when they do and they will not line up to some kind of pre-ordained market condition (something that Shiller points out eloquently). Trying to take the personal factors out of the decision is pointless.