On The Other Hand – After The Plunge, Nobody Wants To Buy

From ‘Americans Shun Cheapest Homes in 40 Years as Ownership Fades’, bloomberg.com, 19 Apr 2011
“Victoria Pauli signed a one-year lease last week to stay in her rental home in Fair Oaks, California. She had considered buying in the area, where property prices have slumped 57 percent since a 2005 peak.
In the end, she decided it wasn’t worth it.
“I know people who have watched their home values get cut in half, and I know people who are losing their homes,” said Pauli, 31, who works as a property manager for a real estate company. “It’s part of the American dream to want to own your own home, and I used to feel that way, but now I tell myself: Be careful what you wish for.”
The most affordable real estate in a generation is failing to lure buyers as Americans like Pauli sour on the idea of home ownership. At the end of 2010, the fourth year of the housing collapse, the share of people who said a home was a safe investment dropped to 64 percent from 70 percent in the first quarter. The December figure was the lowest in a survey that goes back to 2003, when it was 83 percent.
“The magnitude of the housing crash caused permanent changes in the way some people view home ownership,” said Michael Lea, a finance professor at San Diego State University. “Even as the economy improves, there are some who will never buy a home because their confidence in real estate is gone.”

So:
Sky-rocketing prices -> “Where do I line-up to sign?”
After the plunge -> “Sorry, not worth it..”
Amazing, eh? Aren’t we humans fascinating?
Not only because this happens once (which would be fascinating enough), but because this happens time and again, in all markets, during and after all speculative manias. Groups have no memory.
– vreaa

9 responses to “On The Other Hand – After The Plunge, Nobody Wants To Buy

  1. …and both conditions can coexist not but a few dozen kms away from each other.

    Notice the woman’s line of work. If I were in her industry I’d be thinking twice about buying too.

  2. the US has become a nation of “market timers” looking for the bottom of the real estate dip. Not surprising, this is probably the greediest, most self-serving collection of citizens in the world.

    • And they breed them differently in the USA lol.
      We are all cut from the same cloth my friend some just prettier than others, no offense.
      But all exhibit greed and fear all the same.

    • Where is the “market timing” or “greed” in this? It’s all about how people are afraid to own real estate because either they or people they know lost big $ in the housing crash. No-one wants to buy. There’s no greed, just fear.

  3. pricedoutfornow

    Just waiting for the inlaws to say to me “Real estate is a bad investment” rather than “You such an idiot for not buying”
    Then I will know that it’s time to buy.

  4. granite countertop

    On the other hand, the Vancouver bubble isn’t the worst real estate bubble in the history of the world, and VREAA/VCI/greaterfool etc exist. If we had no conception of a real estate bubble, it would be worse, and the bear blogs wouldn’t be here.

    • Bubbles have always come and gone but the web allows like minded individuals to identify and discuss them.
      DESPITE that they continue to ‘blow’ and implode. Interesting, eh?
      Will we come to a point where information is so freely available and disseminated that bubbles are ‘nipped in the bud’?
      For the sake of society, I hope so. But it’ll still take a generation or two.

  5. vreaa,
    Just because you preceive a bubble does not make it so. Bubbles are only identified only after they’ve burst. Or do you define a bubble as a real estate market where you personally cannot afford to buy? What is your “pre burst” definition?

  6. Pingback: Open Reply to Rusty – Blogs for Houses

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