Despite upbeat predictions from many in the housing industry, the nationwide slump in home prices could last for a long, long time-especially if you count the toll exacted by inflation. Chief economist Lawrence Yun of the National Association of Realtors predicts that nominal house prices will bottom out by the middle of this year, and then resume a 3%-plus yearly increase. Not bad, on the surface-but possibly no better than inflation. Housing does remain a good hedge against inflation over very long periods of time. If the past is any guide, homes will continue to provide investors with solid protection against inflation for periods of 20 years or more. The problem is, a lot of us may not want to hang on to our homes for two decades. (Gene Epstein of barrons.com.) If the national average for selling or refinancing your home is 3-5 years, home owners are going to need a way to beat inflation costs. Economic reports show that if consumers feel wealthy they will spend more money. For most how much equity they have in their home, is a big part of that. Any comments or ideas on the future of the market?
Posted by Corey Curwick of Project liberty
Source: Stepping Stone Financial Newsletter
Wednesday, July 16, 2008
Real Estate News
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If people think that there is only 3% inflation, then I guess that's good for them.
ReplyDeleteBut, if you look at the CRB index, or any other "traditional" measure of inflation, then 3% is not even close to the real inflation number.
I think everyone should have a "personal residence" it does provide the "family" with peace and security.
But, investment property needs to be watched very closely. At least until the mortgage fiasco get's flushed out. Housing will remain soft until lending criteria loosens up.
So, I think trying to "predict" when that will happen is foolishness. It's better to watch the market and react, rather than try and predict, and bet on a prediction.
I also think that the nation average for refi's WAS 3-5yrs.. But, now if you can't get a loan, that timeframe will definately stretch out a bit. Thus causing more of a situation in the banking sector.
We are definately witnessing some strange times.