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Excellent update in The Economist, with a global perspective:

http://www.economist.com/finance/displayStory.cfm?story_id=4079027
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looking at chart #3 in the article, Japanese house prices are barely above 1980 price levels 25 years later, a period encompassing both boom and bust. Extrapolating similar price movements in the U.S. implies that prices could be barely higher here in the year 2020 (measuring the boom from 1995).

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Wow. Did you know that "[in the U.S.] national average house prices have never fallen for a full year since modern statistics began?" As a whole, the U.S. market looks downright stable compared to Britain & Australia!

Puss
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"[in the U.S.] national average house prices have never fallen for a full year since modern statistics began?"

What about adjusted for inflation?
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Umh, do you realize the date on this is June 2005. Any predictions of impeding doom were incorrect so far.
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Umh, do you realize the date on this is June 2005. Any predictions of impeding doom were incorrect so far.

The Economist has been talking about the global housing boom for years. There's certainly merit to their discussion, and there could easily be some pockets of pain (SoCal, S.F., Boston, D.C.) in the U.S., but I think most likely is a slow period with flat-to-slightly-increasing prices and a shift to a buyer's market in many areas.

Puss
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There's certainly merit to their discussion, and there could easily be some pockets of pain (SoCal, S.F., Boston, D.C.) in the U.S., but I think most likely is a slow period with flat-to-slightly-increasing prices and a shift to a buyer's market in many areas.

Inventory is way up, in many locations. That's just what I expect to see, first. A prelude to quite a lot more than three pockets?

Eg, see the following to track some impressive inventory rises:

http://www.benengebreth.org/housingtracker/
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Eg, see the following to track some impressive inventory rises

Inventory #'s are pretty useless w/o context. E.g. How does % inventory compare to previous U.S. housing crashes?

Puss
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Hi pussinboots1,

Inventory #'s are pretty useless w/o context. E.g. How does % inventory compare to previous U.S. housing crashes?

Well, I wouldn't call it a crash, yet. High inventory is evidence of more sellers than buyers, and a rush to exit by RE investors. Comparisons with previous periods may not be useful, as I don't know if other periods had such a high number of speculative RE investors as this one.

There's certainly merit to their discussion, and there could easily be some pockets of pain (SoCal, S.F., Boston, D.C.) in the U.S., but I think most likely is a slow period with flat-to-slightly-increasing prices and a shift to a buyer's market in many areas.

What more useful evidence do you have for an up-coming slow period with flat-to-slightly-increasing prices ... in many areas, except that you believe that that is what is going to happen?

Regards, rog
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High inventory is evidence of more sellers than buyers

W/o context, it's impossible to know what "high" means. Inventory is going up, but does that mean we're moving from too much demand to a more balanced scenario, or are we moving from a balance to an oversupply? History helps us answer those questions.

What more useful evidence do you have for an up-coming slow period with flat-to-slightly-increasing prices ... in many areas, except that you believe that that is what is going to happen?

The fact that the U.S. has never seen country-wide year-to-year average prices fall. The fact that long-term rates remain near historic lows. And, the fact that short-term rates are as high or higher than long-term rates---speculative demand only thrives when short-term rates are much lower than long-term rates.

Puss
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The fact that the U.S. has never seen country-wide year-to-year average prices fall.

Do you mean nominal price falls, or real price falls?

You might also want to consider the relationship of house prices with rents, and with real incomes.

Also, it's necessary to take account of the fact that the US market is not really one market, but is many different local markets. Your 'likely' prediction of an 'up-coming slow period with flat-to-slightly-increasing prices' will probably be true of some local markets. I'd be surprised if it wasn't!
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Umh, do you realize the date on this is June 2005. Any predictions of impeding doom were incorrect so far.

The doomsayers were predicting the dot-com debacle as early as beginning 1999. They were "wrong" for about two years and then it finally came true in 2001.

A bubble can inflate for quite some time, usually longer than anyone thinks.
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Do you mean nominal price falls, or real price falls?

Prices in U.S. Dollars. I.e. nominal or non-inflation-adjusted prices.

Also, it's necessary to take account of the fact that the US market is not really one market

My prediction was for US simple average sale prices. I.e. sum up all sales within the US for a particular year, divide by the number of homes sold.

Puss
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