How much do you think the housing market will drop?

[beatle]

I live in the DC/Northern VA area. I've read lots of blogs, looked at prices, etc. and I know stuff is overinflated right now. Everyone does. The trillion dollar question is: how low will it go? I'm guessing income and housing ratios have to line up again like they were a few years ago which would drop prices of moderate starter homes in this area by 20-30% Some people say this is conservative and that we will go through a recession -> depression, etc. Other people say that home prices will remain where they are because of where we are. What do you think?

 

[Slew Foot]

See the 1000+ post threads in the P&N section, we've discussed this to death.

 

[Capt Caveman]

Varies by region.

 

[beatle]

Originally posted by: Slew Foot
See the 1000+ post threads in the P&N section, we've discussed this to death.

Ahh, wrong forum, rgr.

 

[imported_Tango]

Originally posted by: Capt Caveman
Varies by region.

Exactly. There is nothing like a housing market apart from that in the head of clueless journalists. Houses are not fungible goods.

If the OP wants a credible estimate of possible housing prices corrections in his area, then you should look for an economic research think tank in that specific area. That data will obviously be proprietary and thus have a price though.

 

[beatle]

Originally posted by: Tango
If the OP wants a credible estimate of possible housing prices corrections in his area, then you should look for an economic research think tank in that specific area. That data will obviously be proprietary and thus have a price though.

Yeah, I didn't have the bucks to splurge on one of those think tanks so I came here. I figured there were some other people here in my area who had opinions on how much they figured the market would drop.

 

[DrPizza]

That may be true to a degree. However, the media has a huge influence on the market... if they say "prices are expected to drop by 20% over the next 3 years," it'll become a self-fulfilling prophecy because most people will reconsider a purchase.

 

[QED]

Originally posted by: DrPizza
That may be true to a degree. However, the media has a huge influence on the market... if they say "prices are expected to drop by 20% over the next 3 years," it'll become a self-fulfilling prophecy because most people will reconsider a purchase.

This is so true. Perception very often drives reality-- not the other way around.

Everything I need to know about economics, I learned from the movie "Sneakers"....

 

[upsciLLion]

Originally posted by: beatle

Originally posted by: Tango
If the OP wants a credible estimate of possible housing prices corrections in his area, then you should look for an economic research think tank in that specific area. That data will obviously be proprietary and thus have a price though.

Yeah, I didn't have the bucks to splurge on one of those think tanks so I came here. I figured there were some other people here in my area who had opinions on how much they figured the market would drop.

A 40% haircut is about the most that I expect. Whether that happens through sale price reductions, lack of appreciation over many years, or some combination of the two is up to sellers and the Fed.

 

[imported_Tango]

Originally posted by: beatle

Originally posted by: Tango
If the OP wants a credible estimate of possible housing prices corrections in his area, then you should look for an economic research think tank in that specific area. That data will obviously be proprietary and thus have a price though.

Yeah, I didn't have the bucks to splurge on one of those think tanks so I came here. I figured there were some other people here in my area who had opinions on how much they figured the market would drop.

Sometimes it's not a lot of money. For example I use research from Miller Samuel for Manhattan real estate market projections, and they are pretty cheap and also have quite a lot of data available for free.

I'm sure there are many similar companies in your area.

 

[kranky]

When someone with an average income can afford an average home at a cost of about 3x annual salary, then things will settle down. For some areas, that means a large drop in value, other areas will be unaffected.