Real Estate Will Recover in ... 2030?

When will collapsed U.S. real estate prices regain their prior peaks? Moody's has out a bleakly amusing new figure showing that California (and Arizona and Florida) is looking at the early 2030s. Of course, given Moody's (MCO) well-documented issues, ahem, on the way into the real estate bubble, maybe we shouldn't have over-much confidence on the collapsing/expanding real estate market's supposed trajectory from here.

Comments

[Joseph L. S...:]

Clearly, Moody's is looking for free publicity. As any PR flack knows, the more outrageous the projection, the more reporters gush to cover it. If anyone at Moody's actually believes this, neglecting to consider, say, Nevada's and Florida's zero income taxes; the nation's demographic shift from North and East to South and West; and what 300 days of sunshine in both states means to physical comfort and future energy trends, I'll be happy to bet them $1000 that they're wrong.

Sep 18 02:51 PM

[Mad Hedge F...:]

fgv Don’t kid yourself into thinking that the real estate collapse is over. Yes, you can be forgiven for thinking so with July new home sales up 10%, the Case-Shiller home price index up two consecutive months, and homebuilder stocks like Toll Brothers (TOL), D.R. Horton (DHI), and Lennar (LEN) through the roof. Nationally, home prices have fallen back to their historic average of 3.2 times earnings. The problem with all of this is that crashes don’t end at the averages, they overshoot. Some cities like Los Angeles, New York, and Washington DC are still historically expensive. Take away the life support of ultra low interest rates, the $8,000 first time buyer tax credit, the $6,000 California tax credit, $1 trillion in Fed purchases of securitized debt, and toss in another five million expected new foreclosures, and that might give you your final bottom. But that isn’t happening this year. Rent, don’t buy.

Sep 18 03:05 PM

[Tony Petroski:]

Why was Minnesota thrown in with the worst of the worst. I've already been waiting 5 years for the market to firm up. Now I have to wait another 22 years? Do I have to join Joseph L. in the sunbelt?

Sep 18 03:26 PM

[Michael Clark:]

When is Portland and Seattle going to join the party? House prices have been pretty stubborn there. We have a saying in the Pacific Northwest: 'We are the tip of the whip." Last to go up; and last to go down.

Sep 18 04:08 PM

[Jasper M:]

Joseph, do you SERiously believe Florida & Nevada will resist the temptation to impose income taxes to maek up the differences in their savaged coffers? Sure, YOU know its a bad idea, and I know it's a bad idea, but governments do not have a particularly good track record for thinking clearly in economic crises.
I acknowledge Moodys' failure to predict on the way up. I expect some stabilization concurrent with whenever financial markets bottom (4 years or so). But between epic inventory overhang, and an imploding money supply, I would not be surprised if Moodys ends up being (more or less accidentally) close to right about this.

Sep 18 08:20 PM

[Rhino Realty:]

Boy SC is looking like the place to buy ! We just need to ship our crazy politicians west to CA and maybe somebody will invest in our State.

Sep 18 10:41 PM

[Ivo P. Jane...:]

The projected end/bottom of the current Kondratieff Long Wave, calculated from 1700s, may not occur until 2028. For details, see link below:
seekingalpha.com/insta...

Sep 19 02:39 PM

[LKofEnglish:]

PacWest "last to go up last to go down"? I remember when Boeing "downsized" and the old saying in Seattle was "last one out turn out the lights." That wasn't that long ago either. Bottom line is all this whining about "absurdly low real estate prices" and "outrageously low housing prices" is RIDICULOUS. That's about the only thing supporting the "consumer" right now and is the only good news to date coming from this crisis. Should the S&P say housing prices will stay "annihilated" for the next 15 years I'd say "good." Maybe somebody will finally use the land for a productive purpose instead of, what did they call it, "HOUSE FLIPPING." In the meantime we're going to find out what this market rally is made of as the dollar collapses and the reality of a debt crisis hits this administration and all these looney lefties like a freight train.

Sep 19 02:50 PM

[Original Sc...:]

Recovery is such a poorly defined term. If the $ continues to crater, inflation will make it look like $ price recovery is under way in the next couple of years. The real recovery will be hard to recognize using any government metric using $s.

The # of unsold units, the backlog of resale units, # of new permits/starts will show reality. Given that the economy is much worse than the govt propaganda implies, I imagine recovery will be announced long before it occurs in reality. As for demographics, I tend to agree with Joseph L. S.

Sep 20 08:51 AM

[Asheville NC:]

Just saw a special on Nostrumdamus projections for 2012 , we won't have to worry about this chart, based on his past forecast he has been better than most economists, media, poloticians etc........
I have a magic 8 ball , that says "no way"

Sep 20 09:35 AM

[JimPritchard:]

Learn more about the best Sun City Real Estate deals at NikolaiRealtor.com

Sep 23 06:02 AM

[cashflowtrader:]

It would not surprise me if it took 10+ years for housing to correct in many of the coastal states and Nevada. I expect the current deficit spending and exit from the baby boomer polulation to be a major drag for the long term. What were we thinking building tons of condos and 5000 sf Mcmansions anyway, and letting education and fiscal displipline fall by the wayside. Now that we built all thiese montrosities we are going undermine the recovery with huge healthcare spending.

Oct 01 11:15 AM