According to a report in Money News, Yale economics professor Robert Shiller predicts that housing may not rebound "in our lifetime."
The report went on to cast gloom and doom about prices being flat or falling in the 20 metropolitan areas they track. They also cite low "seasonally adjusted" numbers of sales.
(What the heck is a seasonally adjusted number anyway? Does 10 equal 12 in December, or perhaps in May? Or is it the other way around?)
This report got me thinking two things.
First, I don't believe it.
I've read enough posts here on Active Rain saying that sales are going well in many areas of the country. When I read about multiple offers, it tells me that prices have to be inching upward. But of course they can't inch too far or too fast because of the appraisal factor.
Second, do we really want prices to begin skyrocketing again?
Isn't that one of the factors that caused this whole mess?
For many, many years, we expected homes to appreciate at about 5% per year. Some years it was more, some less. It was slow and steady.
Then came 2002 – 2003 when things started to change.
The government and the banks conspired to push home ownership on people who seriously couldn't afford it – offering nothing down with low "teaser" interest rates to lure them in.
The law of supply and demand caused prices to escalate to ridiculous levels, so that in communities like mine, long-time residents could no longer afford to buy homes. The home prices were simply not in sync with the incomes provided by local employment.
I don't know if the majority of locals didn't buy into the "zero down and .99% teaser rates" or if they weren't offered here, but the complaint was that if you worked here, you couldn't buy a home. It was people who had sold out in high-income communities who came here to buy our "cheap" homes and who drove the prices skyward. Quite often, those who sold out in California and other high-dollar areas were able to pay cash when they arrived here, so appraisals didn't enter into the picture.
Now, in many communities, prices have fallen back to their 2002 – 2003 levels. Those who purchased during the boom years have either gone through foreclosure, done a short sale, or are toughing it out, making high payments or having their cash tied up in a house that's worth far less than they paid.
Some are still in one process or another, and more homes will be offered as short sales or REO's. That will affect the law of supply and demand for a while yet and will hold prices down until that supply is exhausted.
On the up-side, people who live and work in communities can once again afford to purchase homes without getting into risky adjustable rate mortgages.
Do we really want that to change?