A Possible Future for Housing
Robert Loftus submits:Many authors and commenters on SA and in the wider media have been predicting continued declines in the housing market. This author in particular has been suggesting for some time (in comments on other articles) that Case-Schiller Index figures will likely reach the 90 to 110 range in the majority of major markets before too much longer. The reasoning behind this logic is clear:
- High unemployment: Even if you could still get a loan you can't service debt maintenance obligations without a steady source of income;
- Reduced income security for many working Americans as the results of layoffs, annual salary adjustment freezes and furloughs amongst state and non-profit agency employer;
- High numbers of underwater mortgages are leading to a growing trend of strategic defaults as homeowners decide they are not bound by any higher moral standard than Wall Street.
What is less common are authors suggesting possible futures for home-building and housing markets. In a previous instablog post, I discussed the potential for the formation of property aggregating firms that could acquire real properties and convert them to rental use. Growth of such firms offers great potential for stabilizing the cost of real property ownership, as a management firm that controls multiple properties is able to employ significant economies of scale related to property accounting and maintenance which the average homeowner does not have access to.Complete Story »