In Miami this weekend, where there are lots of houses for sale and even more condos. On Miami Beaches’ upscale La Gorce drive there is a “for sale” sign in front of literally ever other home. Prices have slipped a bit, but with the unsold inventory piling up, you’d think folks, especially long-time owners with lots of appreciation would be slashing prices to move their units.
Check out this graphic to the left, from today’s New York Times which tracks housing price trends by market segment. The bubble right now, according to the Times report is concentrated in the “middle-segment” properties in the $600-800K range. The high-end is up. “Weakness in the housing market has been concentrated in certain segments,” Mark Sandi a leading housing economist told the Times. We’re not witnessing the entire housing market caving in.”
Roger Lowenstein provides some perspective in a must-read piece in the same special real estate section of the Times Sunday Magazine. After reviewing Robert Schiller and Karl Case’s empirical forecasts of outsized housing values and an impending real estate crash, Lowenstein weighs in:
“This is the problem I have with the real-estate-equals-dot-com
argument. Most homeowners buy to have a place to live. If prices fall,
they react precisely unlike stock traders; rather than bail out, they
stay put longer. Every share of Cisco may be for sale every day, but
every house is not. Case, Shiller’s partner, tracked 628 home listings
in the Boston area during 2006, as prices began to fall. After four
months, the majority remained unsold, but the sellers lowered their
asking prices by only 3 to 4 percent. While Case says this demonstrates
that real estate is “stickier” than financial assets, Shiller says it
proves that owners are delusional — unwilling to admit that real estate
goes down as well as up.”
And there’s a flips-side to this, as Wharton Real Estate economist, Joesph Gyourko told the Times in a separate story on Saturday: ” “Too much homeownership might
restrict mobility, and that may not be a good thing.”
To me, all of this points to the same thing - the spiky nature of the US and global economies, the growing divide between regions as well as well as classes, and most of all the diverging life-chances of the mobile and the stuck. The enormous implications of this new set of faultilines for our economy, politics and culture are enormous as they are just beginning to become evident.
November 17th, 2009 at 4:42 pm
Hello, just stopping by and dropping you a note to say that I enjoyed your Blog. Keep up with the good work!