2022….A Seller’s Market?

Sun Rock Properties — Wed, 16 Sep 2009 00:26:47 +0000

What if your property did not appreciate until 2022?

The 90’s in Japan is known as the lost decade. After a real estate bubble from ‘86 to ‘90, the country went through a decade of stagflation.

In 2007 property in Japan appreciated for the first time in 17 years. During the lost decade, the interest rates were cut down to nothing and government spending went rampant.

The U.S. has responded in a similar way with cutting interest rates down to zero, bailing out banks and huge spending bills. Artificially low interest rates and bank bailouts slow down the ride to the bottom.

Real estate continues to be propped up and steadily depreciates as market forces bring it down, instead of just letting in crash, hit bottom and then begin a recovery.

With intervention it could take a very long time for real estate to appreciate again. Could 2022 be the best time to buy right before the bottom? Well, based on what has happened in Japan, 17 years is not as arbitrary as saying “oh, it will get better in 5 years.”

Bradenton Lakewood Ranch Property Manager

photo by kevindooley

Where’s the Bottom?

Sun Rock Properties — Wed, 16 Sep 2009 00:23:53 +0000

It’s been a while since the crash of the housing market, but it is the decline of home values over yet?

If you ask a realtor, mortgage broker or builder, they will tell you it is a great time to buy. That the housing market can not get any lower and that “things” are getting better. I would like to believe them, but I do not see how things can get better when they are propped up, and there are no catalysts to increase demand.

We still have low interest rates. Rates should be higher due to the amount of risk involved with lending money in this economy and depreciating collateral. Interest rates are being kept artificially low by the Federal Reserve. If market forces eventually push rates up to where they should be, then we could hit bottom. Will rates ever go higher?

We still have Fannie Mae and Freddie Mac, they have been bailed out and continue to buy loans on the secondary market. This eliminates risk for banks to lend responsibly and was part of the reason for the bubble in the first place. With government sponsored entities buying up every loan and banks being bailed out, they are not learning from their mistakes. The elimination of risk keeps banks lending and slows the fall to the bottom.

Unemployment has been going up, and I haven’t noticed any new jobs being created. I see a lot of vacant commercial space and people not spending money. In a service-based economy, this is not a good thing.

My guess is that we have a long slow ride to the bottom, which could take 5-10 years (hopefully not 17). Then from there we will see a less volatile market with slow and steady appreciation that keeps pace with population growth and hopefully inflation.

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Photo by coljay72

Sun Rock Property Management » u.s. housing market

2022….A Seller’s Market?

Where’s the Bottom?