01/29/10 Stockholm, Sweden – For all the ink spilled in the mainstream media over up and down fluctuations in real estate, the idea of a coming lost decade in the housing market finally sounds about right.
From the Washington Post:
“Even after the housing market stabilizes, it will take years for some owners to see the value of their homes appreciate. About 25 percent of homeowners owe more than their home is worth, according to data from First American CoreLogic, a research firm.
“While it has historically taken five to 10 years for home prices to regain losses after a major downturn, analysts said, it is likely to take much longer this time, particularly in parts of the country that have seen the steepest declines.
“‘In California, Florida, in the ground-zero zones, it could take 15 years to fully recover,’ said Lawrence Yun, chief economist for the National Association of Realtors.”
Whether it’s five to ten years, or perhaps fifteen, the housing market will require a great deal of time before showing sustainable improvement. For more details from this article, see the Washington Post’s coverage of how the housing recovery could take a decade.
Rocky Vega
Rocky Vega is publisher of The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.
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Just a side comment, but I sort of take issue with the whole ‘lost decade’ terminology. If you’re born, live your life, but then suddenly die at age 80, does that mean you just had a ‘lost life’ of 80 years? What happens in the middle is important, not just the end points. A lost decade in stocks is only really ‘lost’ if you followed ‘buy once and hold forever’ strategy, which very few investors are.