Housing Isn’t Going To Rebound
January housing numbers have been pretty terrible. Recent articles discuss the “unexpected” downturn in home sales:
With that said, I don’t really pay too much attention to month by month numbers. That goes for any economic indicator. For example, are we really suprised to the upside and downside every thursday morning with jobless claims numbers? It’s ridiculous.
I’m bearish on housing because I take a step back and look at it from a high level. What I see is that home buyers a finite supply. We pulled out every stop conceivable to increase that pool of buyers. During the boom, it was horrible lending standards, and during the bust, it was government paying people to buy homes. The reality is that there just aren’t any new buyers. Unless government starts putting down a 20% deposit for new buyers (isn’t unreasonable), then I just can’t see how we get an influx of buying in order to boost home values. Factor in the enormous supply and foreclosures happening, and housing is not going to rebound.
Look, I own a home. I want my value to shoot through the roof, but I am not naive enough to think that “the market is going to turn around” just because all markets turn around. Maybe real estate peaked a couple years ago for decades or forever?
Oh yeah, we haven’t even mentioned the idea of higher interest rates either, which will happen eventually. How will that impact housing? Duh.
Do you disagree with me? I’d love to hear your thoughts and reasoning for why housing is going to rebound (honestly!).