Author’s reasons for believing why housing will bounce back big time (IT ALL BOILS DOWN TO DEMOGRAPHICS AND SUPPLY vs DEMAND) :
* Continued public preference for single-family homes, suburbs and the notion of owning a “piece” of the American dream. Four out of every five homes built in America over the past few decades, have less to do with government policy than “with buyers’ preferences, that is, What People Want.”
* What we are going through now is not a sea change but a correction from insane government and business practices. Home values need to readjust historic balance between incomes and prices AND IT IS ALREADY HAPPENING. Sooner than later, things will stabilize.
* THE AFFORDABILITY NUMBERS ARE TELLING US SOMETHING.
The affordability number for Los Angeles is now 34%, 17 times better than two years ago, while Riverside is now near 70%. Miami’s affordability picture has improved to over 60% while in Las Vegas, it’s back over 80%.
These lower prices–not Wall Street or federal gimmickry–will lure new buyers to the places that some new urbanists have predicted will be “the next slums.” Already there’s evidence in places like Miami of a renewed interest in now-affordable suburban single-family homes while condos stay empty or become rentals.
* Oer the long run, Americans will seek to purchase homes –whatever the geography. Increasingly this will be less a casino gamble, and more a long-term lifestyle choice. As America adds upwards of 100 million more Americans by 2050, the demand will stare us in the face.
* Two big groups that will drive housing will be the young Millenial generation born after 1983 as well as immigrants and their offspring. Sixty million strong, the millenials are just now entering their late 20s. They are just beginning to start hunting for houses and places to establish roots.
* Contrary to the anonymity predicted by most futurists, your chosen place is becoming more important, as evidenced by numerous suburban and small town downtown revivals as well as growing local volunteerism. With the rise of new technologies allowing for dispersed work, the single family home increasingly houses not only residents, but part and full-time offices.
THIS IS WITH SOME CAVEATS -—
* The government does not socialize housing the way it is trying to for healthcare.
* The government does not succumb to ectreme environmentalism which will curb single-family home construction in favor of denser neighborhoods.
* We don’t have a long-term permanent recession.
Aye, there's the rub. The baby boomers are retiring and going into smaller homes, the "booming" population is made up of low wage illiterate and unskilled illegal aliens, the professional classes are having their wages eroded by H1Bs and the blue collar types continue to sink into service jobs (where available) as their jobs go overseas - that's hardly a base to bring housing back.
And then we have the "phantom inventory" (bank-owned houses not on the market.)