Nor is excess supply the only reason prices still have a way to fall. Nationwide, homes may not be overvalued by much. But in some cities, including New York, San Francisco, Los Angeles, Boston, Chicago and Miami, they remain very expensive. So while Mr. Hatzius and his Goldman colleagues are somewhat more pessimistic than most forecasters, the difference isn’t enormous.
I’ll confess that this bearish picture isn’t exactly what I had hoped to find. A year ago, as part of a move from New York to Washington, my wife and I bought our first house. We did so fully expecting prices to continue falling (though perhaps not as much as they ultimately will, given the severity of the financial crisis). But we decided they had fallen enough for us to take the plunge. We preferred buying before the bottom of the market instead of renting and having to move again in a year or two.
Still, when I wrote about that decision last spring, I argued that anyone who didn’t have to move probably should not buy yet. Prices still had a way to fall.
They don’t have as far to fall today, but the great real estate crash is not over, either. So if you are part of the 30 percent of American households who rent and you’re trying to decide when to buy, relax.
The more vigorously government tries to ‘fix’ the housing market, the longer we will wait for the solution to arrive. When it comes to ‘fixing’ markets, government is good only at producing various iterations of The Law of Unintended Consequences.
Good politics is bad economics and vice versa.
Elections (General AND Primary) produce consequences. We are now living the consequences visited upon us by the 53% of voters who bought Obama’s HopenChange’ bilge. God help us.
There is a fascinating article in the present (May) edition of [i]First Things[/i] that speaks directly to this: Demographics & Depression by David P Goldman, pp.23-28.
It is available (fortunately) at http://www.firstthings.com/article.php3?id_article=6564
Unfortunately, it does see any real turn around soon for important demographic reasons … no turn at all for quite a while …
Oops! That shld read: does NOT see any real turn around
This article on boomer demographics from almost two years (Nov 2007) ago acurately foretold the current problem of excess housing:
The United States Housing Crisis and Its Demographic Future –
http://kgcdirect.squarespace.com/journal/2007/11/3/the-united-states-housing-crisis-and-its-demographic-future.html
Without sustained immigration, who is going to buy all the houses?
Sorry elfs. Seems the url was stripped out:
http://kgcdirect.squarespace.com/journal/2007/11/3/the-united-states-housing-crisis-and-its-demographic-future.html