Not Hardly

The author of the DC housing bubble blog Bubble Meter thinks DC-area houses only have 10-15% further to fall.

Are housing markets bottoming on a national basis?

No. Prices are still falling as indicated by the recent release of the December Case-Shiller Price Index. Despite the new 8,000 home purchasing tax credit and the incredibly low mortgage rates housing prices will continue to fall as there is still a huge overhang in vacant housing units in combination with major job losses. In most markets nominal prices will not bottom until at least early 2010.

What about locally in the Washington, DC area?

In the Washington, DC metro area the majority of the nominal price declines have already occurred. Most areas will see small further price declines ( 5 - 10%). Nominal prices are likely to bottom in late 2009 or early 2010.

I don't agree. It seems to me the declines in the DC area started much later than in many of the hardest-hit regions, and that they will therefore bottom later. While listening to one of his many depressing economics podcasts, John heard mopey investors talking about how maybe they would buy a house in NYC later this year. Don't do it, folks! The same rationale applies in NY, in spades. I'm holding out till 2010, when all the money I have wisely invested will be worth 15 whole entire dollars. Wait, maybe there's a problem here...

Comments

[PG]

I think once a property in NYC hits its Oct.-Dec.2001 price (the point at which the real gains* from the crime decrease were realized, but the i-banker inflation was somewhat countered by 9/11), that's probably a reasonable time to buy. Unless crime goes back up, which there are signs it might.

* I think of "real gains" for housing price to be the increase in value due to an increased quality of life in that area: lower crime, better schools, etc. An increase that isn't attached to better quality of life seems more likely to be bubble and hype. (Bubble and hype sounds like it should be a British dessert somehow.)

[Ken Houghton]

There's a reason those areas are stronger than all those Built-Up Desert Areas (Phoenix, Central CA, Lost Wages): people wanted to live there before and do now.

(Similarly, there has been a much smaller housing price decline in the central Midwest/Nebraska-Kansas-Oklahoma areas--but that's because no one wants to live in those places, so they didn't rise that much, if at all.)