At Agora, Barry Rithollz had a bunch of charts much like this one and they were saying that this recent correction has taken us to within 15% of the median line for value.

However, given that the run up was so insane, it’s almost a guarantee that the correction won’t end without a severe overshooting of that line which means we probably still have another 35-40% correction coming in the housing market.

15% to get back to break even, then another 20-25% to take us undervalue.

Obviously some areas will be hit harder than others, but I tend to agree that it’s not over in the housing market and there will be some bargains to be had.

In fact, Barry also advised people to start looking at real estate as an investment now in some areas that have been especially hit hard, ie, Florida, because you’re never going to pick the top or the bottom in any market.

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I asked Steve to update Shiller’s NYT chart, now that much of the government intervention has run its course. There is still massive Federal Reserve subsidies in the form of record low rates. But the short term bounce caused by HAMP, Foreclosure abatements and first time home buyers tax credits are mostly over.

  blog it


6 Responses to “Home Values Still Have Downside Risk”

  1. Frank Says:

    It will be interesting to see if Canadian home prices correct as well.

  2. Abdul Rahim Says:

    Vancouver is the most favourite city for Hong Kong residents seeking to settle overseas. The city name was mention in many Hong Kong made movies. I happen to also like to see Chinese movies. That may be the reason why local resident find it hard to purchase a home there.

  3. Sunz Says:

    Jeff, it doesn’t matter if the locals can’t buy, Vancouver is like a dream for anyone in the world to live in…location and price go hand in hand…

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