Property Values Set to Fall 43% from Current Depressed Levels

"would crash down faster than a big rock dropped into a shallow puddle. "

A big rock in a shallow puddle doesn't drop down very far. And as I recall my physics, the speed of rocks dropping doesn't have much to with their size, terminal velocity and all that.

That's very true, modern, if there were no friction. Depending on the shape, a big rock would likely have more friction, unless it were shaped like an egg.

read the posting................einstein

update:
http://seekingalpha.com/article/171462-property-values-set-to-fall-from-bubble-peak-to-long-run-average

deflation. friend or foe. depends on circumstances.

having said that, i'm all in favor of housing prices that are in line with rents and incomes.

"values would crash down faster than a big rock dropped into a shallow puddle."

the quote refers to a period of time, not to the speed of the rock. the period of time it refers to is the instant between the rock's penetration of the surface and the collision with the ground. it is a short period of time.

thank you for your interest in the article. mdw

Comment Of The Day

"having said that, i'm all in favor of housing prices that are in line with rents and incomes."

while such a decline is possible -- the analyses the seekingalpha guy presents are worse than amateurish

the basic point that affordability and trends are an issue is correct, but the actual analyses he performs are not worth spending time thinking about.

you could do a similar analysis with many things and come up with quite ridiculous conclusions

Notice that the guy who wrote the article has all of 59 followers on SeekingAlpha. Doesn't exactly inspire credibility, nor does posting it on this web site.

sisyphus, it's an interesting chart. it is true that seekingalpha isn't always the best source.

about - I like SeekingAlpha and use it as a resource. My point is simply that any fool or sage can claim himself an expert with articles there. Some are well-respected and have hundreds or thousands of followers. Mr. White does not appear to be one of them.

sisyphus, i agree entirely. but it's not necessarily an easy site for the uninitiated.

An often overlooked point is the fact that as interest rates rise housing prices fall.
Not hard to realize that a guy buying a $500K house with a 5% loan has a certain payment (you can do the math if you like) - but when interest rates go to 7 or 8% the payment is significantly higher for someone wanting to buy a $500K home. People qualify for loans based on their ability to make monthly payments. Higher rates mean bigger payments. Bigger payments means fewer can and even want to pay the larger payments. As the rates creep back up there will be significant downward pressure on prices.
An interest rate move from 5% to 7% is a 40% increase in rates. I'd love for someone to show me a chart where in history interest rates went up by 40% at the same time housing prices went up.
People need to face the music. Housing prices aren't going back up for a long time. Eventually so little new supply will get built (and old homes will be demolished etc - nationally we actually lose about 800,000 homes annually to demolition) and hopefully new households will be created and need housing - we work our way through this, but it's going to take a long time.
Then, the longer it takes people who are underwater get discouraged and strategically default putting more downward pressure on prices.
The only real question is how much pent-up demand is out there. We'll need a lot of it.

Jazzman "Housing prices aren't going back up for a long time." Does that apply to nyc as well. Dinner last night we finance type rubbing his hands about expected big bonus, expecting that he and others will put it into real estate.....Just one viewpoint. I think logically nyc prices ought to fall a lot, but logic and events are not always in tandem.

How do you put a deferred stock bonus into real estate?

not to mention, even the most rosy bonus projections are 8 billion short of peak bonuses