Housing slump not nearly over yet? That’s one expert’s opinion
We all hope that our nation’s housing slump is nearing an end, right? The hope is that by the end of 2009, housing prices will begin a slow, steady climb, and that sellers will actually be able to move their residences off the market.
Several industry analysts agree that the above scenario is likely to play out. But not all of them see it the same way. And it’s the naysayers, the analysts who think the housing slump has just begun, that make me nervous, very nervous.
One of these pessimists — or is he a realist? — is author John Talbott. He’s a former investment for Goldman Sachs, and, according to a recent story carried on Bloomberg.com, a believer that the U.S. housing slump is only in its beginning stages.
The bad news is that Talbott can’t be dismissed as simply being overly negative. In some of his previous books, he predicted the housing bubble that officials with the National Association of Realtors so vehemently denied existed. He also predicted the collapse of the tech-stock market before all those once-famous dot.com businesses evaporated.
So when Talbott says that housing prices will continue to fall for four to five years, it’s enough to make any homeowner who wants to sell in the near future think suicidal thoughts.
Now, there are plenty of economists and housing in
dustry pros who disagree with Talbott, and who think that the housing market is due for a rebound much sooner. Problem is, not all of these folks can boast the kind of prediction track record that Talbott can claim.
According to Bloomberg, Talbott isn’t an emotional guy. He deciphers far-off trends simply by looking at the numbers. Today, when he looks at the housing industry, he sees a market where home prices are still way out of kilter when compared to the salaries that most U.S. residents pull in. In other words, homes are too expensive, and they rose in value far too quickly during the housing boom days.
Of course, we can all blame the real estate agents, real estate appraisers and mortgage loan officers for that. No one dared put the brakes on these out-of-control price increases. It was getting to the point where you had to be a millionaire to even think about buying nice homes in markets like San Francisco or New York City.
I probably sound a bit pessimistic myself today. But when faced with Talbott’s sobering prediction — and the thought that he may just be right — it’s hard not to be at least a little gloomy.
