An interesting article from Time on the US housing slump. While I think we're in a bit of a unique situation here, lots of lessons to be learned here. I found this interesting though:
He and real estate specialist Case then teamed up to show that home prices are even more subject to booms and busts than stocks. They did it by measuring repeat sales, which give a better picture of price movements than the figures published by the real estate industry. In 1991 they turned this into the business that supplied the price data used in this article.
After publishing a best-selling critique of the stock bubble, Irrational Exuberance, just as the market peaked in March 2000, Shiller set to work adding a chapter on real estate for the second edition. As part of that effort, he cobbled together an inflation-adjusted index of home prices going back to 1890, which showed that a) the price runup from 1997 to 2006 was by far the biggest on record and b) home prices can fall for decades. Put those two together, Shiller argues, and it's at least possible that we're due for an epic decline in prices.
I think real estate in Calgary is seen somewhat as a "can't lose" proposition - and I think this article does well to show otherwise.
I've often heard that real estate is a superior investment to land, and found this interesting:
Shiller allows that the scarcity of property near the coasts might mean prices there will remain high, but then notes, "We can't make any more of the land, but we can build huge high-rises on the beach." Huge high-rises on the beach, in fact, played a major role in Florida's boom and bust. There are 40,000 condominium units being built right now in greater Miami, and consultant Lewis Goodkin estimates it will take five to seven years just to work through all that inventory. That's five to seven years of downward pressure on local housing prices, construction employment and the like.
Interesting works given the glut of condos scheduled to come online in the next 1-3 years. I think we should be hoping for nominal increases of 4% a year.... it's steady appreciation you want, not 40% annually.
http://www.time.com/time/magazine/ar...661682,00.html