Major Reset Needed in Housing Expectations

Speaking of housing here is a link to a NY Times article on the recent housing report that I think does a better job of covering the situation than the articles Marek was deriding. Furthermore if you want to understand the future prospects for housing consider the following passage from the article:

(From the NY Times) “Some analysts say the scrutiny is well deserved even if it slows borrowing and home sales because it will assure better loans are made and that future gains in homeownership are sustainable. Compared to standards over a long period of time, these people say, lending guidelines are not all that conservative; it is just that the nation became accustomed to credit at very easy terms.

“One could say there is less money available,” said Marc McGree, a real estate consultant outside Washington. “But today’s standards really aren’t so different from eight years ago or so, before the market over-heated.”

In other words: there needs to be a major reset of expectations as the housing market corrections continues to unfold, as it’s unlikely that we’re going to return to real estate market that looks like it did a couple of years ago. The thing that concerns me the most is that it appears that a lot of people are still operating under the assumption that what happened during the boom was “normal”, and that after the crisis is over things will be like they were in the 2003 – 2006 period. The real truth is that we’re going back to go back to the lending standards and slow appreciation rates of the 90s, and it’s a truth I don’t think a lot of people have fully accepted.

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