As I sit here in my rental, throwing my money away and not benefiting from the fabulous benefits of home "ownership", I bring you this piece of news to chew on...in a nutshell the housing market crash is just warming up. The person saying this is just Robert Shiller, a Yale economist with a PhD. He's just the guy who pretty much called the .com bubble perfectly and predicted the housing bubble would pop about a year before it did when everyone else was convinced a shitbox 3 bedroom home in Riverside was really worth $450,000.
I know he's not as qualified as a real estate agent or mortgage broker who took a 3 week seminar at the local community college. Still we might want to listen to what he has to say.
- Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s. With prices already down almost 20%, it's not a stretch to think we might exceed that drop this time around.
- There are about 10 million homeowners whose debt is higher than their home value, which has broad implications for how Americans feel about their wealth and spending habits (read: more pressure on consumer spending).
- The current hopeful consensus -- that house prices will bottom soon and then begin to recover -- is most likely a dream. Housing markets don't usually have "V-shaped" recoveries. And even if house prices stabilize in nominal terms, after adjusting for inflation, most homeowners will continue to lose money.
- Now is a great time to buy
- Owning a home is the American Dream
- Real estate never goes down
- Renting is throwing my money away
- If I don't buy now, I will be priced out forever
Hmmm, I wonder whose advice I should take. Let me sleep on it and I'll get back to you with my decision.