It's the weekend, so let's have a little fun. Do you know the Price is Right game "Now...or Then?" In case you don't, the premise is quite simple. The contestant has to decide whether the price provided on certain products is current, or whether it's from a specific date in the past.
We'll do something similar, but with a different twist. Some of the statements below are recent, while others were made in the LA Times in the spring of 1991 - early on in the last real estate downturn. Read each quote and decide for yourself: now...or then?
- “It is going to be a gradual process of bringing the inventory (of unsold homes) down, but things look quite good for a rebound to begin.”
- Brokers say reduced housing prices and low mortgage rates appear to have finally stabilized the real estate market. “The worst is very much over," said Clarence Bales, manager of Century 21 Central Coast Realty…"At the low end…people are attracted by prices that are still soft and by low interest rates," (Fred) Priebe said.
- "I think, but it's just a gut -- there's no data that can prove this to you -- that things will turn around (next year), that prices will stop falling, inventory will start decumulating and prices will come back. But that's a gut.”
- "I'm not seeing the market fall apart. Are we having a correction? Absolutely”…"I don't think this will go on much longer.”
- Speculative home buying is risky in our current market. If you're not planning to hold on to your new acquisition for five years or more, invest your money elsewhere. But, if you're renting and you're tired of paying ever-increasing rent, getting little if any tax break and you have a good income with excellent prospects for continued employment, then I recommend that you consider buying now.
- …Local housing prices just got higher than most buyers could afford or were willing to pay. This happened as investors, builders, landowners, lenders, government regulators and existing homeowners with huge amounts of equity tried to cash in on the boom. The bust then fed on itself, forcing builders to stop construction, sellers to lower prices and lenders to carefully scrutinize loans. These events will help bring supply and demand back into balance, leading again to an improvement in the market.
1 - THEN, Leslie Appleton-Young, chief economist for CAR, March 26, 1991. From the same article: "The modest drop in sales of existing homes from January was the smallest decline in sales locally since August. That showing has some real estate officials saying the slump that has devastated the industry has hit bottom and the worst is over."2 - THEN, April 22, 1991. Funny note: The "low" interest rates they're talking about were 9.5%
3 - NOW, Karl Case on MSN Money. Case also said: "It (the downturn) could go into 2009."
4 - NOW, Long Beach broker Dick Gaylord, who will become the 2008 NAR president, in the OC Register
5 - THEN, Dian Hymer, March 24, 1991. I feel sorry for people who took her advice and bought then but couldn't hold the property long enough, considering prices took another six years or so to rebound.
6 - THEN, John O’Dell Q&A called "What Led to Lag and When Will It End?"March 17, 1991
3 comments:
What scares me is the assumption (by some)that we will be outta this thing in roughly 10 years. It may last 5, then a(false) recovery or hit a plateau - and tank again, or it may be a straight 20 years of actual depression. Whatever it is, it won't be like the recession of '91 for a couple of reasons: No way the price run up was anything like this one. and it wasn't as widespread - look at the sheer volume of bad home buys (some idiots bought 10 homes at inflated prices!). This recession will be the mac daddy compared to the '91-98 one.
Wow that was great thanks!
Anon 9:49:
Someone should tell OCrenter that. Over on BubbleMArket, he is using craiglist rent asking prices to argue that some areas in SoCal on income-positive investments right now.
I mean, at least wait for the January resets before yelling "bottom!"
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