An appraiser in nearby Rockland County has done an analysis on the price changes to a typical raised ranch in his town from 1965-2008. You can see the results here on the board's online newsletter. Once you hit the link, scroll down to page 5. The results are very instructive. In the last bust (1987 correction, Savings & Loan crisis, stock market crash of 1987, early 90's recession), it took until 1998 for prices to get back to the prior peak of 1986. Prices declined for 5 years, then rose nil to very little for another 6 years.
This Great Correction is a doozy compared to those times. The drop of prices from 2007-2008 of 11% is historically unprecedented, and I wouldn't be surprised to see another decade of malaise. It is irresponsible to believe that things will be better in 18 months; we still have billions if not trillions of bad debt to wring out of this economy. New York Home sellers need to understand that they are competing with short sales, bank-owned foreclosures and other distressed situations and that their best chance of selling is to price their home as competitively and aggressively as possible.
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J Philip, you may be right. It may be that the little uptick some markets are experiencing is just that - a little uptick to be followed by another downtrend. If the bottom comes in 18 months, it may be years before we recover.
J. Phillip -This is exactly the type of information the consumers need to hear. I know when I moved to Northern Dutchess in the late 80's and then IBM had that big downsizing in the early 90's the market was declining until the 911 event; then there was a dramatic rise which everyone knew would not be sustainable.
All that unsold inventory is going to take a long time to work through and it's hard to imagine prices going up until sometime after that is done. Maybe I'm wrong though and they will shoot through the roof tomorrow?
Hi Phillip,
Interesting info, I remember the early-mid's 80's market very well. In So Cal we peaked in late 1988, we didn't know that however until 3rd quarter 89.
As for our nat'l debt, I doubt that anyone will ever see the end of that, hope I'm wrong but I don't see how at this point.
I remember the last drop clearly, and it seems as nothing concerned to the current one. The drop here in the OC has been around 40%.
I think it is time people bought homes as a place to live and a secure investment for the long haul and those figures show an average appreciation that works out over the years. I have felt for years that families could live in a bit smaller houses and not every child has to have his own bedroom and bathroom. Maybe now people will make do with less.
But J, Jim Cramer is predicting that the housing market will bottom on June 30th? ;)
From what I am looknig at it is entirely possible that home values could fall another 20% over the next two to three years based on the ongoing supply and demand imbalance.