Housing Is Not Coming Back Soon
We have a long way to go in housing. It’s interesting to me that the ones who speculate that housing will improve soon and the end is near don’t have any reasons for it. Instead, they just figure it’s been long enough of a decline, and thus, the decline must be over soon. How could it keep going?
Unfortunately, this type of analysis while it might make sense on the surface doesn’t really hold up and doesn’t really mean anything at all.
On the other hand, the folks that look at the actual data for the most part acknowledge that housing is still declining and will continue to do so for a while.
There are some interesting data points I’ve seen recently including:
- 17.5% of homes in Florida (my state) are vacant – that is what you call a glut of supply
- Average time of not making payments for those going through a foreclosure is over 18 months. Yes, 18 months of not paying one’s mortgage
- New home sales hit an all time low recently
If you start looking at anecdotal evidence, the only people I know considering purchasing a home are the recent college graduates / 20-somethings who are looking to get their first home. Anybody who is already in a home is either staying put, or trying to get out of their house. Trying to get out of their current house either takes the shape of a strategic default (stop making payments) or a short sale. Nobody I know my age is able to get out from their home without taking a hit.
You need much more than some 20-somethings entering the housing market to boost this market. First of all, this impact is negated somewhat by those exiting the market (retirees, death, etc.). Second of all, the recent college graduates aren’t exactly a booming demographic right now as there are record graduates that are living at home and record graduates struggling to find full time work post-college.
Trust me. We have years left to unwind this real estate boom that happened a few years back. Be patient and hoard capital. There will be a time to buy/invest at some point. But, we’re definitely not there yet. Patience, patience, patience.