“but was never sustainable by the sheer demographics.”
The demographics are exactly what sustaines the market long term. For example, our population is growing from 300 million. People need to live somewhere. Therefore, we will always need new housing. On the average most economists state we need to build 1,4 million NEW homes every year just to keep up with population growth of 300 million. Plus, houses need to be replaced every 75 years on the average(they burn down, tornados, floods,hurricanes,etc.).
However, our population is aging so more are moving into multifamily housing of some sort. Also, the southern part of the country is growing faster than the northern. Therefore, long term there will be more demand for housing in AZ & TX than there will be in MI & NY.
What we are in is still a correction from the biggest real estate boom EVER. Hence, the biggest correction ever. What people lost sight of is that real estate is a LONG TERM INVESTMENT. There were too many “Flip This House” purchases between 1999-2005. Also, all real estate is local. The Washington, DC metro area had about a 15% correction in real estate values. Phoenix, LA & Miami had substantially more.
What was not sustainable were the unprecidented increase in real estate values and the volume(2 million) that was built. What we are slowly going back to is a normal real estate market that grows 6% a year on the average and you need to put 20% down. However, some areas like Phoenix are up substantially from the bottom because it has attracted investors buying houses to rent out and snowbirds buying retirement homes from the north, especially Canada. This is also happening in Florida too, where Quebecers are flying down to buy because of the favorable exchange rate.
In reality we had a very steep 50% adjustment!
We recovered some of that before too terribly many people went belly up. My own neighborhood had a 30% foreclosure rate ~ fairly typical for DC's Virginia suburbs BTW. We've recovered to the price levels seen in 2005.
Our Hispanics are being rapidly replaced by legal Russian immigrants (most of whom have been here 10 or more years).
“What was not sustainable were the unprecidented increase in real estate values and the volume(2 million) that was built.”
That was my point.