CHESSNOID

The housing market bust is what caused us to go into the recession and until this issue gets resolved any type of recovery will only be temporary. I purchased a Bank REO as a home to live in because of my personal situation, but I expect the value to fall further.  It’s just like shopping for anything else.  You shop around and do your research to get the lowest price, but a week or month later you find it that same item on sale.

In a year or two, I do expect the real housing bottom to occur.  The relationship between housing mortgage payments and rental payments will contribute to future demand of buying a house or not.  That old mentality that TV exploited about flipping houses 6 months later for 50 or a 100 thousand dollar profit is gone.  As a matter of fact, all the bad loans that banks issued back then no longer exist.  The banks deserve to go bankrupt and should be taken over by the FDIC to be properly restructured.   Government bailouts prevent the system from fixing itself and waste taxpayer money.

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Because, in his view, house prices are still too expensive.  Price-to-rent ratios, Alpert says, have fallen only 75% as far as they need to to get back to normal levels.  To make matters worse, rents are now falling, which will further inflate price-to-rent ratios, suggesting that they could fall even further.

The main problem, Alpert says, is that we built too many houses.  Speculators are jumping in and buying houses to rent, and the increase in rental inventory is putting pressure on rents.  This, in turn, is making it more attractive to rent instead of buy, which puts pressure on house prices.  This oversupply, Alpert thinks, will pressure prices and rents for years.