Comments on: The Sun Will Come Out Tomorrow- Or Later, Maybe http://housingdoom.com/2006/08/24/nar-and-recession/ Sat, 11 Feb 2012 01:19:56 +0000 hourly 1 http://wordpress.org/?v= By: John M. http://housingdoom.com/2006/08/24/nar-and-recession/#comment-991 John M. Tue, 29 Aug 2006 02:32:55 +0000 http://housingdoom.com/2006/08/24/nar-and-recession/#comment-991 Todd - Thanks for sharing your thoughts. Note I took the liberty of editing your comment a bit (hopefully not changing the sense you intended). Todd -

Thanks for sharing your thoughts. Note I took the liberty of editing your comment a bit (hopefully not changing the sense you intended).

]]> By: Todd http://housingdoom.com/2006/08/24/nar-and-recession/#comment-990 Todd Tue, 29 Aug 2006 01:54:26 +0000 http://housingdoom.com/2006/08/24/nar-and-recession/#comment-990 I believe will probably stabilize, however, if it is the doomsday everyone is worried about, it will be a great time for bargain hunters. I believe will probably stabilize, however, if it is the doomsday everyone is worried about, it will be a great time for bargain hunters.

]]> By: Mike http://housingdoom.com/2006/08/24/nar-and-recession/#comment-989 Mike Thu, 24 Aug 2006 17:25:13 +0000 http://housingdoom.com/2006/08/24/nar-and-recession/#comment-989 At least some real estate professionals are abandoning their irresponsible "be smart, buy now" rhetoric. Although there are no facts about the future, predictions that we are returning to a "normal housing market" and that "appreciation" may resume during 2007 may be accurate. However, that return to normal will be cold comfort for those who think such predictions mean their homes will be worth what they thoughtthey were worth during 2005-06 and that value will then increase, albiet at a somewhat lower rate. Many markets (like Phoenix and Ft. Lauderdale) were last in a "normal" price/value relationship during 2003-04(Global Insights, June 2006). In a "normal market" price increases are correlated to income growth and buyers can purchase homes at a value 3 or 4 times their annual income, suggesting that absent abnormal circumstances ( millionaires all decide to move to working class neighborhoods in Phoenix) households with $100,000 incomes own homes worth $300,000 to $400,000, not $900,000 to $1.2 million. Finally, in a "normal market" buyers are lucky to resell within 3 years and cover transaction costs. So, a home valued at its 2004 purchase price or 2004"comps" plus about 10% may expect increases similar to inflation or income growth. This is probably not what a nation with a negative savings rate expected, but it is not normal to spend more than your make year after year and expect to make up the difference with your home's appreciation. At least some real estate professionals are abandoning their irresponsible “be smart, buy now” rhetoric. Although there are no facts about the future, predictions that we are returning to a “normal housing market” and that “appreciation” may resume during 2007 may be accurate. However, that return to normal will be cold comfort for those who think such predictions mean their homes will be worth what they thoughtthey were worth during 2005-06 and that value will then increase, albiet at a somewhat lower rate. Many markets (like Phoenix and Ft. Lauderdale) were last in a “normal” price/value relationship during 2003-04(Global Insights, June 2006). In a “normal market” price increases are correlated to income growth and buyers can purchase homes at a value 3 or 4 times their annual income, suggesting that absent abnormal circumstances ( millionaires all decide to move to working class neighborhoods in Phoenix) households with $100,000 incomes own homes worth $300,000 to $400,000, not $900,000 to $1.2 million. Finally, in a “normal market” buyers are lucky to resell within 3 years and cover transaction costs. So, a home valued at its 2004 purchase price or 2004″comps” plus about 10% may expect increases similar to inflation or income growth. This is probably not what a nation with a negative savings rate expected, but it is not normal to spend more than your make year after year and expect to make up the difference with your home’s appreciation.

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