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The Fall of the real estate after 2013.

Great correction continues .. . especially for real estate by Bill Bonner

Friday, January 28, 2011

▪ According to the Associated Press, United States, "last year was the lowest recorded number of purchases of new homes for 47 years ".

"Sales in all of 2010 totaled 321,000 units in total, a drop of 14.4% from 375,000 units sold in 2009, announced Wednesday the U.S. Commerce Department. This is the fifth year consecutive decline in sales, which reached record highs during the past five years, while the housing market was booming. "

"The year ended on a stronger note. Purchases of new homes hit rate (with seasonal adjustment) 329 000 units in December, an increase of 17.5% compared to the rate recorded in November. Economists, however, announce it could be years before sales only reach a healthy rate, to 600,000 units per year.

Neither the estate nor employment showed signs of recovery. Nearly four years after collapse of Countrywide - the largest subprime lender in the United States - real estate continues to decline.

far will he? Gary Shilling says it will take another 20% drop in prices real estate for them back into line with their historical trend. The real estate generally rises with the economy - neither more nor less. To return to the level of the economy, housing prices must fall .

▪ And if they were going too far?

Yes, it's a risk too. Market bubbles tend not to return immediately to levels "normal".

First, the owners think it's only a temporary disruption in a rising trend. They take good ... hoping to catch a new bullish move. Then they gradually become resigned to a long downturn, but remain convinced that "we can not go wrong with real estate - not the long term."

Then property prices continue to fall. Other owners leave. Some sell. Some are missing. New seizures weigh more on prices.

The summit, in terms of seizures, should not be achieved before March 2013 to the United States. When it arrives - five years after the crisis began - most owners will be ready to throw in the towel. "Real estate climbs may be long term," they will say, "but this decline could last longer than me."

prices likely to fall below their historic average. Owners tell their children: "do not bother to buy a house. Rent. Real Estate, it does not lose that. It does not climb."

Then, with property prices perhaps 25% to 40% lower at their current level, the U.S. has found its floor.

When? Real estate markets are changing slowly. This could happen in 2015 ... Maybe 2020 ...