A couple of days ago I mentioned a comment I overhead. The one about how “everybody” is having to short sale their homes so “everybody’s” credit will be affected by the housing market. I also mentioned at the very end of the post (if anyone actually read to the very end) how I predicted 4 years ago that the housing market wouldn’t keep rising. My main reason for this prediction was that the houses in my area were selling for astronomical prices. Prices that didn’t match salaries. I knew that something wasn’t right. When a couple grosses $75,000 but is able to purchase a house for $550,000 there’s something fishy going on. (That’s over 7 times their income!)

However, our mortgage broker friends tried to convince us that prices would keep rising because there were all these new kinds of loans available for buyers that would make the monthly affordable. Still, I didn’t buy it. Though the monthly was affordable, as little as I knew about finances and real estate, the payment wasn’t even covering the interest.

Now my initial prediction wasn’t that the market was going to tank (though secretly I sort of hoped it would as someone sitting on the sidelines realizing I couldn’t afford a house. -No harm meant to those in this situation – I just wanted to purchase an affordable house.) I thought it would level off for many, many years until salaries caught up with the tremendous housing prices.

Now that I’ve seen the housing market crash and the outcomes thus far, I have a few new predictions to make. Just to protect my ass-ets; I’m not a financial analyst, genius, true psychic or real estate agent. Just a very realistic, hard-working person who is still renting!

  • The housing market will continue to scrape along the bottom for at least another 18 months.
  • Some areas that weren’t hit as hard will do just fine and may see a market more similar to a “historic norm”. Others, like the Southwest will see even more foreclosures.
  • The government will try again to boost home ownership by offering incentives, perhaps in the form of taxes or some other incentives in conjunction with banks, within the next 18 months.
  • The housing market will not be the industry to kick start our economy. (If I were a real psychic, I could predict what will!)

Obviously none of these predictions require Mensa abilities. They are just realistic statements given the current facts. I don’t want to predict farther than a couple of years, since I do think that the market will eventually stabilize and get back to a more normal flow. Well, I guess I can say that this is my prediction for 5-years out – a more normal housing cycle (smaller increases and decreases over time. Click here for a historical housing graph – it appears that an 8-9% increase over 20 years is “normal”.) I don’t think we’ll see this roller coaster housing market again for a very long time; it left too many people with an ill-taste in their mouth.

Do you think my predictions are out of whack? Do you have any predictions about the housing market? What pattern did you see in your area that signaled a “red flag”?


  1. I agree too, although I don’t think the government is going to play much of a factor. I think they are done! Mainly, because they need money for other reasons!
    .-= Money Reasons´s last blog ..4 Common Styles of Lifestyle Spending- Always- Early- Later- Never =-.

  2. Sandy @ yesiamcheap Reply

    People were crazy when it came to real estate. I live in NYC and the prices are always crazy but when someone told me that I could buy a 400K house when I made 50K I knew that they were out of their minds. There was no way in hell.

    And did you hear crickets when the idiot that recited that comment closed their mouth? Because I wouldn’t know what to say to such an inane comment. Nothing good to say, I just walk away.
    .-= Sandy @ yesiamcheap´s last blog ..Decoding the Robo-Signing Foreclosure Freeze Mess =-.

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