An interesting article I came across on WSJ.com, which covered the slumping housing prices.
I am a data guy, so I like to have arguments backed-up by past events. Over time I have heard several different theories for how long before the housing prices turnaround. According to the article’s data, it could take up to 6 years.
Housing markets don’t tend to turn around quickly. The price slump in California in the early 1990s, for instance, was a long grind. According to the S&P/Case-Shiller home-price indexes, Los Angeles prices peaked in June 1990 and didn’t bottom until March 1996. They didn’t get back to their 1990 peak until 2000.
If this pattern holds truth, then prices wouldn’t begin to head back upwards until 2012 (2006 was peak) and we would not hit 2006 prices till 2016.
Another interesting tidbit of information,
On a national basis, home prices peaked in mid-2006 after rising 86% since January 2000, according to the First American index. Since peaking, that index has fallen 13%.
Considering many of the people in trouble bought their houses between 2004 and 2006, those are percents are a little inflated, in terms of actual harm. That being said, since 2000 home prices are still up 73%. Just something to think about.
Check out the full article on WSJ – Housing Pain Gauge: Nearly 1 in 6 Owners ‘Under Water’