Opinion: When will the Real Estate market reach bottom

[dmpi]

Aside from that point, adopting a contrarian approach usually serves one well and now is no exception....."when everyone thinks alike, everyone is bound to be wrong". 

A true contrarian would be renting, having sold his house years ago.

 

[wabmester]

I just took a look at the Austrialian housing market.   They had a similar run-up to the US, but their market peaked in 2003.    Their fed believes the slowdown in housing there would have cause a recession, but they were rescued by the boom in commodities.

Anyway, prices have been slowly dropping for the last 2 years in most parts of Australia.    I expect the US bubble to play out similarly.

It's interesting to read articles about the Australian market as sort of a look into the future of the US.    For example, it's often argued here that people will simply keep their houses rather than sell if prices drop.     The psychology in Australia seems to be that people are OK with taking a loss when they upgrade, since they know the house they are buying is also being sold at a "discount."  The bigger the upgrade, the bigger the discount, so they can easily rationalize the selling decision.

Austrailia:

 

[SecondCor521]

I just took a look at the Austrialian housing market. They had a similar run-up to the US, but their market peaked in 2003. Their fed believes the slowdown in housing there would have cause a recession, but they were rescued by the boom in commodities.

Anyway, prices have been slowly dropping for the last 2 years in most parts of Australia. I expect the US bubble to play out similarly.

It's interesting to read articles about the Australian market as sort of a look into the future of the US. For example, it's often argued here that people will simply keep their houses rather than sell if prices drop. The psychology in Australia seems to be that people are OK with taking a loss when they upgrade, since they know the house they are buying is also being sold at a "discount." The bigger the upgrade, the bigger the discount, so they can easily rationalize the selling decision.

I wonder what is the average percentage of equity for home loans in Australia. I would think that if a person had to bring a check to the closing table to sell their house that would be a deterrent to the psychology you describe.

2Cor521