No Rise in Home Prices Until 2020

that's right. You can't rush a recovery, especially one that comes after such a massive blow to the economy.

Hi Bill. I know that is over all the country. Here in the Sacramento area I believe the prices are starting to level off. Fewer DOM and new homes selling again. The house we live in is still under water. We paid 365k in 08 the same modle home went down to 290k and now the same is selling around 340k so hopefully it is coming back up some.

We also have properties in IL and IN that did not go down much and are not really gaining anything.

We want to buy a lot more properties before 2020.

Thanks for the post as always Bill. I like reading your info.

Steve

I think what you are seeing is a false positive. Things are never in a straight line. Just as sick people sometimes get better right before they die, so does real estate get better before the market is flooded with pent up seller and tired investors. Prices can plummet again and you may have no time to react. Will that happen?? I don't know but I do know that old models like DOM are absolutely poor barometers of what's to come. Realtors are juicing this number by trying to make each listing look "new". Be careful and watch the banks as they tip their hand to the next phase of this catastrophe.

I think you are right. If there is any appreciation in the next 5 to 8 years it will be in the 1% to 2%. Very flat.That is after the true bottom is reached. There will be pockets that do better but most will be as you say I am afraid.
We can make money we just better buy right!

Thanks Bill, for the real world info you always provide!

Michael Mangham
MD Home Acquisitions LLC

A survey of bank risk managers? Really? Because they did such a good job of managing risk for the previous 10 years? There are a lot of variables in play and a lot can happen in 8 years. One key variable is employment. If employmewnt remains stable or improves even slightly, credit deficient tenants will create a demand for rentals that will provide support for housing prices. There are also policies that can stimulate the housing market that this administration hasn't even scratched the surface of yet.
Consider the quote by Raphael Bostic, HUD Assistant Secretary for Policy Development and Research...“There is this notion that being housed well is synonymous with being a home owner. That narrative has got to change.” ......Doesn't sound like an administration that wants to promote home ownership. Who knows what direction a different administration could take. Just my opinion and I may be wrong. Doesn't really matter tho...keep spreading the doom and gloom, less competition.

to buy LOW

Bill, I've been watching the Seattle market for close to a year now. In the northern cities of that market 2 particular types of homes are selling and sold for twice what they were (back in Nov. - March) as recent as April. They'd drop off and come back 2 times as much and sell. What shocked me was a few sold for more than asking price (exact same house)in the last couple months. Realtor s inflating and super marketing. If so they are doing a super job of it.
I'm not saying in overall the report is wrong, but those pockets make it an oops if you hit them at the wrong time.

Mike - That's my feeling too. Smart RE investors are going to make money here, I'm just saying that new investors should have a thoughtful exit plan in place in the case of a turn in direction.

Thomas - You're right in your analysis. Almost every group has let us down over the last decade. That goes for bankers, industrialists, Congress, media, justice system, religious leaders, etc. But the problem is that they still control the ball. If we don't at least listen to their opinions it is like we are burying our heads in the sand. I personally don't believe it will be as bad as reported all over the country but I can see some of the greatly overbuilt areas (Las Vegas, Orlando, Phoenix) having a very long cycle to get back where they were.

Mike - If they is a lesson here, you hit it on it's head

Tony - It won't be funny when it drains your bank account for not having a plan of action. Sorry.

Micheal - There will always be exceptions to any rule. The secret of the REI is to capture them while they can.

AS always thank you for your post. It has a few things that I would like to give my take on. First it will not surprise me if it takes 10 or more years for things to turn around and have an upturn. On a personal and spiritual note at church this morning it was made clear that I am here on the earth to deal with what ever until the Lord's RETURN or until He calls me home. Profound I know.

Next I am keeping a watchfull I and trying to piece things together. I hear and see everyday how we are going into the 2nd dip or that it is inevitable and will happen. Our two parties don't seem to get things done and hammer out laws and plans to fix the mess. And Bill, you said:
* * * * *
I think what you are seeing is a false positive. Things are never in a straight line. Just as sick people sometimes get better right before they die, so does real estate get better before the market is flooded with pent up seller and tired investors. Prices can plummet again and you may have no time to react. Will that happen?? I don't know but I do know that old models like DOM are absolutely poor barometers of what's to come. Realtors are juicing this number by trying to make each listing look "new". Be careful and watch the banks as they tip their hand to the next phase of this catastrophe.

__________________

You are correct that things are never in a straight line. Its like saying that everything is black and white and we know that is not true. Sometimes we have grey areas or red, yellow, or brown for that matter. We can have many perspectives on one issue or topic. As I see it we are on a very choppy sea that could easily go turbulent. Since we are a global economy its not just what we do any longer in the USA. DOM are not always correct. When you ask your realtor to send you listings regarding DOM you need to add the word CUMULATIVE in front of DOM. Also when listings expire the agents are getting the client/seller to renew the listing and it is set up to look like a new listing.

With regard to the banks, they are already starting to tip there hand I do believe. Its all over the news that B of A is now going to charge its cust $5.00 fee to use their debit card and people are very riled as they should be. The bank sees it as opportunity to make a bundle much like gas and oil companies have done with the up and down pricing. This is the same bank that was bailed out among others (Chase and Wells Fargo). Bank of America said they want out of the mortgage business and so they are assigning the loans to other servicing companies. They sent mine to GreenTree. Also B of A is in the process of some mass layoffs. I get this info from CBS13 here in Sacramento. Employment is still on the rise in California. My neighbor bought in 2005 $375,000. and his plant just closed here in Sacramento because some of the work was sent to China and some to Mexico. So he was in mgmt and saw this coming. As a result they told me they did not make their house payment for the past year and they walked/flew away this past wednesday back to the state they came from. Its pretty depressing for me but I have to just see it as a sign of the times with more to come and I have to keep on keeping on.

DOOM and GLOOM - No I do not think so. We need to be informed and let each other know what we know or believe to be true so that we can make those informed no risk or low risk decisions. We have endless opportunities and can take advantage of the coming period of time that will have so much unrest and hardship for many people. We have a chance to help many people too. It can be gloomy but we have to watch our mindset make good choices. It does not her to plan and prepare for the worst case scenario just in case. It would not hurt to pick up a few extra canned goods, rice and beans to put aside each time you shop for groceries.

Remember too that many real estate agents took a weekend training course and do not have the knowledge that Dean has blessed us with. We have much to be grateful for.

There is th UP market and the DOWN market and the BOTTOM market. We think we have hit the BOTTOM but what if we have not ? At some point we will and then what ? How long will the BOTTOM last before we trend up ? Just food for thought. If the BOTTOM market does not last long ok, but if we stay at the BOTTOM for a year or years it would be disaster. I say we need huge changes in our govm't and our homeland. Even within a Global market I think the good ol USA needs to be self-sufficient. Before my neighbor flew away he told me the first law of nature is "self preservation". I am so glad he told me that because it is true.

I appreciate everyone's input on this post. It is how we learn and keep each other informed. I learn a lot here and I have my struggles to. Believe me I do.

I need to go out and do some marketing now and look for those motivated sellers and FSBO's.

In relation to the housing market, do you think the stock market experienced a comparable degree of capitulation?

It fell dramatically after the 2008 collapse of Lehman Bros. but it has returned to lofty levels without real economic recovery. That is why the market has sold off over the last few months and it is why (in my opinion) it has a ways to go. In fact, I won't be surprised to see a massive sell-off occur this week now that 3rd qtr window dressing is complete. I think capitulation will arrive soon and it will include a 500 - 1000 point loss day. Traders can make great money in that type of market; investors can't and it has parallels to the real estate market.

for shedding a bit of light on us again; my only comment is that I would like to see how many respondents took part on the survey and some more details; the bankers who took part in the survey, what positions do they hold; also, according to the article, it states that 49% don't expect levels to rise for 9 years; 21% believe it will be less than 9 yrs? what about the other 30%-uncertain?
Also, the part where the respondents say that they expect the credit card balance to increase in the next six months- it doesn't take a banker to tell me that-the holidays are coming!
Good article-I just wished it had been expanded a bit, and given us more information of the survey, including details from the earlier survey (were these bankers the same group or different respondents?)

Learning and progressing every day,
Valerie

I don't think the stock market experienced the same degree of capitulation. I don't recall it getting to the point where people said "I don't want to ever see another stock." Maybe it was because they were resigned to the fact that someone else was managing their money in a mutual fund or they bought the long term story. Now in the housing market, people are saying they are never going to buy again and it's better to rent than buy. That is the public perception. We know it is different because people are buying houses that cash flow every day.