BluefoxToday blog : Six Reasons Why the Housing Market Peaks Can Not Return

Six Reasons Why the Housing Market Peaks Can Not Return

housing market trendRecent conflicting reports about the housing market and whether or not it is truly in recovery have left consumers as well as those in the real estate business more than a bit confused; those whose business plan is dependent upon a full or quick recovery should proceed with caution. I believe the housing market is far from recovered, and, in fact, will not return to the levels of the past decade for many years—if ever. I see six reasons why the housing market peaks can not return, that it will never regain its past “glory days.”


● Robust home sales are dependent upon consumer confidence in the economy. Consumers must feel that both their personal economy as well as that of the nation is on sound footing before committing to such a major, long-term purchase, especially on the heels of the longest recession in more than half a century. Thus far, consumers are far from confident.

● A vigorous recovery of the housing market cannot occur as long as we have unusually high unemployment. While there is much disagreement on when and how our recovery will occur, the financial experts all agree that unemployment will remain at higher than normal levels for several years, and some projections do not indicate a recovery to “full” employment for as much as ten years. With at least 20 million unemployed or underemployed, and with awareness that many of the jobs lost will never return, a high rate of joblessness could possibly become the norm.

● The dramatic loss of home equity will significantly limit the pool of available move-up buyers. In the past, move-up buyers used the equity from their former home to help them purchase a larger/more expensive one; however, declining home values with the associated loss of trillions in equity means fewer sellers will have the resources to purchase another home.

● A continued high rate of foreclosures will depress both the housing market and the hopes of many potential buyers. The millions who have experienced foreclosure will be automatically ousted from the buying pool. For some, several years of damage to their credit rating will be the defining factor; and others will become permanent renters, avoiding the potential for further pain and the trauma associated with foreclosure.

● A slow increase in mortgage rates will reduce the number of qualified buyers. As we experience the higher mortgage payments associated with rising interest rates, many will fail to qualify for loans on the homes of their choice. Others, having been “spoiled” by the low rates of the past decade, will stay out of the market hoping for a return to those rates.

● Tighter lending restrictions will also result in fewer buyers qualifying for home loans. And the restrictions, combined with the declines in credit scores experienced by millions of consumers will only further reduce the number of buyers.


Additionally, there are other factors such as: high levels of consumer debt, changing demographics, and a diminishing of the appeal of home ownership as a result of experiences during the current recession, will only serve to dramatically alter the housing market for the foreseeable future. While there will always be a group committed to home ownership and will always be homes available for them to purchase, an expectation that the housing market will soon recoup its losses and regain its momentum, for me, seems extremely unlikely.


The Housing Guru: The one source for all your housing questions

Comment balloon 183 commentsJohn Mulkey • February 25 2010 03:01PM


John, I cannot agree with you more. I want to be optimistic for soon recovery. Even though the Government tries to activate the Buyers with tax credits, a lot of them are not "budging".  

Posted by Irina Riley, GRI, SFR, CNE, e-PRO, SRES (American Dream Colorado) about 10 years ago

Irina - I'd like to present some great, positive news, but the reality is something quite different.

Posted by John Mulkey, Housing Guru ( about 10 years ago

John, I agree with you 100%.  We are years away from recovery, if we ever recover.  In my opinion, unfortunately, we are headed into an avoidable currency crash given everthing that's going on in the current economy.  I posted a blog yesterday giving my basic overview of what is happening.

Posted by Radmila Khamzina (First World Mortgage) about 10 years ago

Radmila - While I'm not (yet) predicting an economic collapse, we're certainly treading on dangerous and unfamiliar ground.  I'll have to check out your post.

Posted by John Mulkey, Housing Guru ( about 10 years ago

"The dramatic loss of home equity will significantly limit the pool of available move-up buyers."

Hasn't anyone else realized that this is 25% of the housing market????

I hate to be a wet blanket when prognosticating about the housing industry, but I know I'm not the only one.  Neither Congress, the WH or the FED has even noticed.


Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley,, MD & VA Homes and Real Estate) about 10 years ago

Lenn - And I dislike continually posting negative information, but I feel I must to make everyone aware of what lies ahead.  We cannot properly plan for our business or personal lives if we have an unreasonable or inaccurate expectation of the future.

Posted by John Mulkey, Housing Guru ( about 10 years ago

John, if it was not for all the negative information on the Internet and papers the recovery may be quicker. However, it doesn't really matter. We may as well acknowledge that the market we are presently in is today's "normal" market.


Posted by Ted Tyndall, I will help You find the Home YOU want to Buy (Davidson Realty Inc.) about 10 years ago


Excellent post, all of those factors will have a big impact over most likely the next decade.  It will be exciting, to say the least:-)

All the best, Michelle

Posted by Michelle Francis, Realtor, Buckhead Atlanta Homes for Sale & Lease (Tim Francis Realty LLC) about 10 years ago

Ted - I don't think the negative news has created our problems, but do agree that it's  easy to get pulled down by it.

Michelle - I agree that the future will be exciting, different in many ways, but still filled with opportunities.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Hi John - I don't see a fast recovery coming soon, but I do believe people are still going to buy houses no matter what happens in the economy. The problem I see with your opinions is the fact that people need places to live. If they don't have a home to live in they will most certainly litter the streets, people won't put up with being homeless, they just won't.

One thing you forgot to mention in your post is the resiliency of the American people. Whether or not the government gets their act together, the American people will come through on job creation, new ideas, and new ways to make sure their families are secure in the future. It's the beauty of the free market. People will only put up with so much before their backs are against the wall, and then they adapt to the new environments bestowed before them. When this happens, you can bet the American people will do what's necessary to secure their families well being. Which is, in my opinion, the key to a recovery.

I like that you feel your being honest about the facts, but I truly believe we have no idea what people are capable of in drastic situations. I am excited to see how this recession is going to create a new American ideal, new ways of thinking, and a renewed spirit that can't be held back by a sloppy government. 

Posted by Lisa Udy, Logan Utah Realtor ( Platinum Real Estate Group) about 10 years ago

Thanks for the post today, I think we have a ways to go before recovery in the market.


Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) about 10 years ago

Lisa - I agree that those who need and have the resources to purchase will purchase a home.  The market isn't going away; it's just not returning to the artificial highs of the past decade. And I also agree that the recession will transform our thinking in many ways, most of them positive, but I also know that millions of unemployed and millions of foreclosures will continue to create a drag on the economy.

Patricia - Thanks for stopping by!

Posted by John Mulkey, Housing Guru ( about 10 years ago


I try to always look on the sunny side of the street, but I have to admit that you make great points and ones that can't be argued with.  What do you think we as professionals can do?

Posted by Lia Gerke (Inspire Realty) about 10 years ago

Lia - As Lisa Udy pointed out in her comment, there will always be homes sold, it's just that the pool is being reduced. Success in the coming years will go to those who work both hard and smart, and it will require seeing the market differently and capitalizing on those sometimes subtle opportunities that arise.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Connecticut real estate took a beating in the recession of 1991-96, then bounced back to all time highs. It takes a while to work through all the foreclosures and job losses. We will overcome this recession, but not soon. We need jobs for our residents and to attract new people to the state.  With jobs come confidence and renewed spending.

Posted by Millie C. Legenhausen, CRS, GRI, CIPS, MBA, Realtor (Calcagni Real Estate, Hamden, Connecticut) about 10 years ago

Hi John -- I agree with you.  I think we are in a fundamental shift and will be for quite some time -- at least locally in my neck of the woods, being largely manufacturing based.  If the experts don't know, I certainly don't either, but it sure seems probable.

Posted by Chris Olsen, Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty) about 10 years ago

Stop it, you Pollyanna, you. We just want the bad news.

Posted by Gregory Bain, For Homes on the Jersey Shore (Mezzina Real Estate & Insurance) about 10 years ago

Millie - With the numbers of foreclosures and job losses we have today it will take a long while.

Chris - I'm also concerned by the "frailty" of our economy; any significant jolt could send it into a nosedive.

Gregory - Tomorrow I'll post the "bad" news  :  )

Posted by John Mulkey, Housing Guru ( about 10 years ago

And today people groaned when I said "recovery in 10 years".  I think anything less would be a miracle.

Posted by Jenna Dixon, Empowers You With a Better Real Estate Experience (DRA Homes | Cobb County Real Estate ) about 10 years ago

 Jenna - The truth is what it is. Those expecting a quick recovery will be disappointed.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Very interesting John. Lots to chew on, but I do hope and pray you have missed it on this one.

Posted by Peggy Givens, Professional Home Stager, Home Staging in the Tulsa Oklahoma Area (Staging Tulsa) about 10 years ago


Home equity loss is one of the biggies slowing down the expected real estate recovery, which would also result in a healthier mortgage finance arena.

Posted by Esko Kiuru about 10 years ago

We are perpetuating a vicous cycle, we need the real estae recovery to get the economy going, but all things you mention are keeping that from happening.

Posted by Michael Eisenberg, Bellingham Real Estate Guy (eXp Realty) about 10 years ago

Always conflicting numbers and opinions on those numbers makes it hard to judge who's right and who's - well asleep at the wheel!  I'm not sure how things will turn out but you are right about consumer confidence, there is none.  High unemployment - with dangers of loosing your job, people are holding back on purchasing. That's if they can purchase. Great post.

Posted by Lyn Sims, Schaumburg Real Estate (RE/MAX Suburban) about 10 years ago

I feel so often we're supposed to drink the Kool-aid. I want to know the truth, and I agree that it ain't going to be like the good old days anytime soon.

Posted by Crockett Keech about 10 years ago

Hi, John. Congratulations ofn the feature...the comments come so quickly that it's hard to keep up with the, isn't it.

I see why this post was singled out. Everything you have pointed out is so true, and so terrifying. It's better to have a realistic view and to plan accordingly, though, than to believe politicians' pie-in-the-sky platitudes.

Posted by Leslie Helm, Real Estate For Trail Riders (Tennessee Recreational Properties) about 10 years ago

Peggy - I'll "hope" so too : )

Esko - The loss of equity has been estimated to be $5 trillion, money that is now unavailable for down payments.

Michael - I agree that we're stuck, and I'm afraid no one yet has shown us the way out.

Lyn - Thanks for your input.

Crockett - Probably not in my lifetime--but then I'm older than most.


Posted by John Mulkey, Housing Guru ( about 10 years ago

Leslie - I try to present the facts as I see them in order to help us all prepare for the future. Of course, my assessment can always be wrong.

Posted by John Mulkey, Housing Guru ( about 10 years ago


I too agree with you. I don't think anything will help in the near future. Perhaps if the Feds had put some type of conditions and squeeze on bailout funds to the Bank before they lend it to them. Obviously, most bank don't want to part away from the money that was given to them. I understand it was a loan, never the lessl, they should've been held accountable to the funds those are lend to them from the tax payers.

Posted by Dave Gill, Broker/Realtor, Las Vegas, Henderson, Nevada (Realty ONE Group) about 10 years ago

Dave - You point out just one example of how the government's "efforts" to restore the economy were both ill planned and poorly implemented.  We've spent trillions with seemingly little benefit to those who actually need it.  However, Wall Street is doing just fine. 

Posted by John Mulkey, Housing Guru ( about 10 years ago

When I work expires I often hear from the seller that they are going to wait until the market improves to list their home again, and when I inquiry as to when do they see this happening I get a number of different answers, like two years, four years. etc. The sad truth is that no one knows for sure what direction the real  market is going to go in.

Here in San Diego we have a shortage of homes that are priced under $400,000 ---- we have more buyers than there are homes available. FHA & VA offers do not stand a chance, unless you have cash or are a conventional buyer, its almost impossible to get an FHA or VA accepted.


Posted by Lorraine or Loretta Kratz, Certified Negotiation Consultants (Crescent Moon Realty, Inc. & Land N Sea Auctions.) about 10 years ago

Definitely good points. I would like to think more optimistically, however, in reality, I think we have a long time for recovery.

Another LARGE factor, in my opinion, is that the appraisers are not making any adjustments for "non-distressed" properties vs. "distressed" properties. There is a definite value difference if buyers will pay more for a non-short sale so they can close quicker.  There is value difference.. Until the short sales and foreclosures stop chasing the price down to compete with each other, recovery will be difficult at best.


Posted by Don Wixom, "Looking out for your next move..."tm (RE/MAX Executives Nampa, ID) about 10 years ago

Lorraine & Loretta - I agree that all we or the experts can do is speculate about how the recovery will take place, but I do think we have some "real" obstacles that must be overcome.  As for your particular market, it sounds as if it's in better shape than most.

Don - Unfortunately continued waves of foreclosures will plague the market for some time.

Posted by John Mulkey, Housing Guru ( about 10 years ago

I believe we are selling more units than "the boom" but more units keep coming online.  Even though our inventory is low major lender overlays + a high percentage of cash purchases are preventing appreciation.

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) about 10 years ago

John I think you are correct. I do not think sales will get back like they were during "the boom" anytime soon if ever. That may not be all bad. Do we really want to go back to as one lender said to me "it is easier to get a home loan than a cell phone"

Posted by Tom Bailey (Margaret Rudd & Associates Inc.) about 10 years ago

Great points, but...

First are you talking the peak of the sales per month, or the peak prices?

  1. Activity will increase, as jobs return, but when they will return to their highs?
  2. Prices will not reach their highs of late 2006 (here in AZ) until wages increase to the levels that brokers were "helping" buyers to use as stated incomes, to support loans. Wages won't be rising until the unemployment rates drop back to below 6%, at least.

Second, activity will be depressed because many of the investors of 2006 will never again buy investment real estate, or at least won't buy again until the foreclosures they racked up in 2007/08/09 fall back on their credit report to 4 years in their past, at least.


Posted by John Neibich (Home Savings of America) about 10 years ago

It used to be that the Realtors were considered over-enthusiastic cheerleaders, and now when we're just stickin' to the facts we're the Negative Nellies.

Thanks for a good post, I won't reblog but do I have your permission to forward by email?



Posted by Leslie Ebersole, I help brokers build businesses they love. (Swanepoel T3 Group) about 10 years ago

I would like to say you are being pessismistic, but I am afraid that you are accurate in your assessment.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) about 10 years ago

John, Wasn't there a movie entitled "never say never again?" If an unforseen shift occurs in our nations economics or demographics, these assumptions could go out the window.

Posted by Matt Grohe, Serving the metro since 2003 (RE/MAX Concepts) about 10 years ago

I don't believe as you suggest that the market may never get back to previous highs.  That flies in the face of history.  I would be a fortune with anyone that the previous highs will not only be surpassed but they will be surpassed many times over.  Old adage, real estate doubles very 10 to 15 years.  Bet you the adage is not DOA.

Posted by Frank Castaldini, Realtor - Homes for Sale in San Francisco (Compass) about 10 years ago

Renee - While there are some areas that are doing better than others, I'm looking at the national picture; and it's still pretty bleak.

Tom - The artificial market we created was impossible to sustain. We don't need that sort of market.

John - Actually, I'm referring to both activity and prices; I don't expect either to return (nationally) in the foreseeable future. I do have a caveat on pricing however, and that is inflation. High inflation will raise prices--not in true value, but in dollars.

Leslie - Feel free to forward. Thanks.

Christine - While my predictions aren't necessarily positive, they don't mean that business will stop; there will just be less of it.  There will still be plenty of opportunities for success.

Matt - Of course you are correct. That's why the predictions from anyone must be taken with the proverbial "grain."

Frank - I'm basing my projections in terms of real dollars, not inflated ones. And of course, it's impossible to factor in events or circumstances the possibility of which hasn't been considered. But I do believe that the housing market has changed significantly, and that the future market, whatever that may be, will not just be a return to "business as usual."

Posted by John Mulkey, Housing Guru ( about 10 years ago

Bravo John

I am encouraged to read an agent accepting this reality, unwelcome as it may be. All good points.

A few more...

  1. In areas experiencing the biggest bubbles, the recent buyer pool is heavy with investors. Investors = landlords. The pool of available rentals has increased. This increases rental price competition. Lower rental prices = more people choose renting over buying.       #12, has there been some dramatic increase in homeless people where you live? Most foreclosed owners do not litter the streets. They rent or live with family or friends. There is nothing wrong with renting.
  2. Times of high unemployment are not easily forgotten. Right now, many have lost jobs or are in fear of losing their job. A homeowner's job opportunities are far more limited than a renter because he has to find a buyer for his current home in order to go outside his commute zone in his job search. Some of those who experience this dilemma or know others who experience it will be reluctant to own in the future.
  3. Artificial highs of the last decade. Thank you John for pointing this out in post #14. The crash has clarified that those artificially high prices were out of sync with incomes. It will be a long time before buyers accept such rapid and unwarranted price inflation. Prices will rise slowly, in line with incomes. Right now incomes are deflating.

Have a great day.

Posted by Sam (homeowner) about 10 years ago

Sam - Thanks for your comments. You're right, there is currently a glut of rental units, driving rents to the lowest in years.  There are many factors that point to a less robust housing market in the future; and in many ways, I believe, that will be a good thing.

Posted by John Mulkey, Housing Guru ( about 10 years ago

John, you called it as I see it too. Until our government realizes that nothing happens until the real estate market is on the mend we will have to grin and bare it!  I am happy for the bankers making boat loads of money but what about the everyday guy who lost his job, is loosing is house and has no savings left?  I think our elected officials should focus on what is hurting the most amount of people. When and if that happens we have a chance at a slow recovery. 

Posted by Gail Nyman, Every House Has A Story (Re/Max United Real Estate) about 10 years ago

Remembered from my Econ 101 class, many years ago:  "The primary determinant of economic performance is...consumer expectations!"  I agree that until this returns, we are in for a long slow go of it.

Also remembered from Sales 101, many years ago and still true today:  "The winners will keep on finding ways to win."

Thanks for an excellent post.

Posted by Jim O'Dowd about 10 years ago

I'm in the Eureka Springs, AR area.............we've lost quite a few agents this past year here because in general housing sales have not been as in years past.  However, many of the folks buying here are in their retirement years and come from other parts of the country; many are seeking lakeview and lakefront homes on Beaver Lake.  Also an hour from Branson, MO area and an hour from the big NW AR area of Bentonville/Fayetteville/Springdale, so our % of sales have not been as bad as other areas of the country.

However, saying all that, IF JOBS (and I think a different economy i.e. "green" thinking will develop that to make new jobs come about to replace the ones that are simply NOT going to come back.....which, though, folks in both white and blue collar fields will have to be trained and educated for these new avenues) don't come back, there may not be the retirees of the future to fuel our area toward sales.  JOBS to make it possible for folks to make their mortgages must be available!  No sense have our children come out of college/occupation apprenticeships/training.......if there aren't jobs for them!

I believe, though, this tough recession is making folks think more about where they are putting their money and hopefully not taking on so much debt.


Posted by Judy Rauber about 10 years ago

A truly excellent summary - you've earned your 'guru' title once again!

Posted by Joetta Fort, Independent Broker, Homes Denver to Boulder (The DiGiorgio Group) about 10 years ago

I hereby appoint you the new head economist of're certainly more in touch than that Bozo!!!

Posted by Anonymous about 10 years ago

Wow! What a gloomy thread! 

Maybe it's just because I'm in Southern California.

Maybe it's just because I've been a Realtor for 33+ years.

Maybe it's because I learned long ago to NEVER say never.

In our area the median price lost about 30-40% depending on neighborhood.

Since January of last year, the median has gained, or should I say re-gained 10%

So, in 3 similar years, which - for MY area - seems feasible, we will have come back to the former peak.          ( Actually, my expectation would be within 5 years.)

It's just that this time it will be gradual, and without "fog the mirror" financing.

The glass is half full, people.  You'll cheer up in the springtime.

Posted by Bob Phillips, CDPE, SFR, South Orange Co., CA (Realty ONE Group) about 10 years ago

This market is going to be around for awhile and too much time spent wishing and hoping for better times is a great way to go out of business. 

Posted by Norma Toering Broker for Palos Verdes and Beach Cities, Palos Verdes Luxury Homes in L.A. (Charlemagne International Properties) about 10 years ago

John this is the reality that many need to face.  I still hear potential sellers say, I will wait 6 month because the market will come back.  Newflash you might me waiting a very long time.

Posted by Jennifer Fivelsdal, Mid Hudson Valley real estate connection ( JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571) about 10 years ago

Let's just get used to it and do the best we can. Be happy for the buyers we have that can go the distance and actually CLOSE! Be happy for any sellers we have that are NOT under water! Be ECSTATIC when we actually close a SHORT SALE!

Have a great weekend all over the country! I heard somebody on the radio here in metro Detroit give a date for an event that is being held in APRIL and I was thrilled! APRIL??? Why, that's almost SPRING!!!

Posted by Michele Lundgren about 10 years ago


You have some great points. Consumer confidence, and confidence in likely continued employment are biggies. I sense an increased emphasis in paying down of personal debt and an increase in personal savings for future financial cushions. This redirection of funds takes money that would have been used for the purchase of a house in earlier times.

Posted by Wayne Johnson, San Antonio REALTOR, San Antonio Homes For Sale (Coldwell Banker D'Ann Harper REALTORS®) about 10 years ago

John - all good points..

The highs that we experienced in the last 10 yeas were not based on realistic value. We were in an economic (or speculative) bubble. The loan programs and main street to wall street mind set that allowed irresponsible borrowing for speculative gains will not appear again in our lifetime. All of the points you make show that we are now in the reverse of a bubble..we are in the middle of a bust.

it took us 8-10 year (or longer) to get into this mess and it will take at least as long to get out of it.

Posted by Lee Walsh, Executive Talent Scout for Mortgage Professionals (SecurityNational Mortgage) about 10 years ago

John, I do agree with you that these are all good reasons that we are in the present state we are in.  However, I believe that eventually we will bounce back and within 10 years, people will have forgotten all about what happened, population will continue to increase and younger people who never experienced this will drive demand up again. 

Living in California for 15 years, I saw dramatic housing spikes over the years.  People are always trying to get rich quick and some just want the American dream of owning their home.  History always seems to repeat itself! 

Posted by Julie Vrigian about 10 years ago

Gail - DC has been ignoring Main Street.

Jim - Your comment, "The winners will keep on finding ways to win." is exactly right.

Judy - I agree that the recession is causing many to rethink the way they spend and save.

Joetta - Thanks for your comments and support.

Anonymous - Thanks, but I'll pass on the job opportunity. The NAR is much better at providing a bit of comic relief.

Bob - Of course markets are "local," but the national trends aren't following your area.

Norma - Yes, the time should be spent seeking out those sometimes subtle opportunities for success.


Posted by John Mulkey, Housing Guru ( about 10 years ago

John-thanks for putting it in easy to read and understand terms. I can now explain it to my clients more rationally.

Posted by Teri Pytel (Hunter's Fairway Sotheby's International Realty) about 10 years ago

Jennifer - Buyers who need to buy and sellers who need to sell should move ahead.  There's no way to predict the timing of the market's return.

Michele - There will always be opportunities for those who can see them and who are willing to do what it takes to create their own success.

Wayne - And paying down debt and saving is a good thing in the long run.

Lee - There are no "quick fixes" for this market.

Julie - I'm not sure we'll forget this recession, just as our parents and grandparents were forever changed by the Great Depression.  I believe that the way we view money, savings, and value will be significantly changed.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Teri - Thanks for stopping by!

Posted by John Mulkey, Housing Guru ( about 10 years ago

John, thanks for the great posting - I completely agree with you. It's nice to see the facts laid out so well and concisely.

Posted by Stephanie Hofman (Coldwell Banker, Highland Park, IL) about 10 years ago

Thanks for sharing. I think you hit the nail on the head. You addressed the key points of what a true recovery will take and what will slow it down. Thanks for sharing.

Posted by Raylene Estabrook (Signature Homes Real Estate Group) about 10 years ago


     I think your scenario is dead on ,  and even with the realization that all real estate activity is basically locally driven, and that there will be extremes at both ends of the spectrum, what concerns me is the tipping point that might be reached as more and more people walk away from their homes due to negative equity. At some point if and when it becomes acceptable  understandable to walk away from one's committements, what damage and/or seachange does that portend for our future? Isn't there an incredibly caustic effect to our society for the ensuing cynicism that would result?

Posted by Gary W. Oakes, GRI, ABR, e-PRO (Crye-Leike Realtors) about 10 years ago

Hi John, I couldn't agree with you more and you put it in easy to understand terms. If you do not mind I would like to re-blog your well written post.

Posted by Eunice Waller, Working Together, We Can Do Great Things (Berkshire Hathaway HomeServices Simpson Realtors) about 10 years ago


I think you've really hit the nail on the head with this one.  I wish things were different.


Posted by Cathy Mackenzie about 10 years ago

Good post, John.  We are now in the new normal for years to come.  We all want things to be back like they were, but that can only happen if lenders go back to the same practices, and I don't think that is going to happen.  I will continue to adapt and survive.

Posted by Steve Moore (Steve Moore/David Massey Real Estate) about 10 years ago

Totally agree and this is what I have seen as the reality out here in the trenches. When I watch the news, I have to wonder if we are on the same planet as the people putting out these news reports! I too hate to be a bearer of negatives but reality is reality. We must adjust, cope and remember forewarned is forearmed!

Posted by Dick and Dixie Sells, Realtors, Tampa Bay Florida Homes For Sale (Sells Real Estate, LLC) about 10 years ago

People still prefer the stay in the dark rather than hearing the truth which the call negative news.

The overoptimisim and greed that we lived by for so many years got us to where we are today . It is time to wake up and face the reality. Nothing is wrong with that!!


Posted by Roula Fawaz about 10 years ago

I think that we were spoiled by the easy credit, low interest rates and quick money which drove the market up at a crazy rate. What we should hope for is a normal market.....just normal people who can afford their homes, have decent credit and jobs. That would be great.

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) about 10 years ago

I couldn't agree less - things will take a looooong time to get better.  Look at it guys:  we have no national product!!!!  In the 90's they were talking about the american jobs being in services.  Services to what?  Has anyone noticed that even in our industry there are dozens upon dozens of "marketers" trying to sell US services on how to market?  Where's the beef?  they have nothing to offer - hot air maybe.  How many new jobs will be created by the "going green"?   and then what?  I'm still "scootin" right along in real estate but OMG there is still alot of denial about what is going on.   This global economy thing will take alot of time to" settle out" - we have never, ever in the past epxerienced "sharing" with the world.  And this "sharing" with the rest of the world is the direct result of the stock market.  Think about it:  as "shareholders" we want profit, so the investors are going to go where the money is and that is GLOBAL.   Back to the point that we have to have something of "value" in are borders to "trade" out there in the global market - I just don't know what that is.  Now back to negotiating this contract I've been working on!

Posted by deanna dibble about 10 years ago

Stephanie - Thanks for the support!

Raylene - Thanks for stopping by.

Gary - I suspect we'll see changes in the coming years that we cannot yet imagine.

Eunice - I appreciate both your comments and the re-blog.

Cathy - It is a difficult time and will remain so for an extended period, but there are also opportunities.

Steve - And a return to the ways of the past that created the bubble would only set us up for an even greater fall.

Dick & Dixie - Thanks for your input.

Roula - We've entered a new dimension in both the real estate market and the overall economy. We can adjust or ignore, but we'll deal with the consequences of our choice.

Karen - Perhaps we'll one day discover those "normal" circumstances.


Posted by John Mulkey, Housing Guru ( about 10 years ago

Deanna - Good luck with your contract!

Posted by John Mulkey, Housing Guru ( about 10 years ago

John: These are great points. Although we're all hopeful, most of us know that any kind of a boom is at least a couple years away. I'm not sure there will ever be a boom like before but I expect the Pacific Northwest to get pretty healthy by 2012. People want to live here. I don't think interest rates play too much into a buyer's thinking. When a person is ready to buy, they figure out a way to do it. Thanks again for the great post!

Posted by Paul McFadden, Pest Control, Seattle, WA. (Paratex) about 10 years ago

John, your points are well taken and make so much sense. However, if history proves itself, greed and keeping up with the Jones's will start again!


Posted by Ty Lacroix (Envelope Real Estate Brokerage Inc) about 10 years ago

Paul - I think you're in an area that will suffer less than most. I might consider moving there myself at some point.

Ty - We'll always have greed, and while folks may want to out-do their neighbors, many may be unable to do so.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Hi John,

You have good and valid bullet points for a near and mid term handle on where the market is going and a ultimatum-like longterm title on the post. In other words, never say never and always look for the inverse bubble as the opportunity for big future equity gains.

Posted by Kevin Comerford (Coldwell Banker Preferred) about 10 years ago

I am glad you finally put in writing what no one else will admit.  As realtors, we are not responsible for the market, but we ARE responsible for interpreting it for our clients.  There are great opportunities in every market.  It is our job to find them for our clients.

Posted by Nancy Tallman about 10 years ago


Great post, I think there is a parrallel here with the stock market in the dot com era. I always point to Cisco which at one point was @$150 a share, and now howers in the teens and 20's.  Same great company before and after. The valuation was unreasonable.  In the commercial market in the 90's in Beverly Hills, the value of the buildings were overinflated to the point that a the most affluent tenant could not make ends meet by being in the prestige high rise building, and the landlord could not get the asking prices to support the loans, let alone the building maintenance.

While living in Napa, we saw shacks sell for over a million dollars.  I think there is a re evaluation accross the board with the question "Is it worth it?", and what never made sense to me was how homes in other areas built with the same materials and same labor costs were so much less.  Given you had some glam factor for an inflated price, the limit has been reached, and I don't believe Cisco will ever be at $150 a share again, nor will shacks or substandard homes be inflated at the same rate again.  All the best.

Posted by Ron and Alexandra Seigel, Luxury Real Estate Branding, Marketing & Strategy (Napa Consultants) about 10 years ago

Kevin - As we have an economy built upon creating "bubbles," we'll just have to see where the next one will be created.  I doubt it will be in housing.

Nancy - There are great opportunities in every market. It is our job to find them for our clients.  That sums it up!

Posted by John Mulkey, Housing Guru ( about 10 years ago

John, telling like it is can be painful, distasteful and often unpopular but someone's gotta do it. I think you just did it.

I agree with your points and believe any real growth will depend primarily on Jobs and consumer debt.

Debt levels grow as unemployment grows (or stays where it is today) which dries up the buyer pool while vanishing equity dries up the "Move Up" pool. I don't know exactly what these two components add up to as a percentage but I'm certainly feeling what they add up to in terms of how much impact these two missing components have on the market over all.

Thanks for posting!

Posted by Pete Buckley (Independent Broker/Realtor, North San Diego County CA.) about 10 years ago

John, I too think you are right on.  I have been in the real estate business since 2004, but before that in the Financial Planning business (branch manager) and saw the commentary and reaction to the dot com bubble.  There too, people got on the band wagon late and for all the wrong reasons.  It's emotional isn't it.

I am also old enough, 68, to have seen the various cycles and observe that they are all different.  This real estate down cycle is much more complex.  I have seen many charts for my area, a luxury marketplace, and conclude that buyers who can will take advantage of the opportunity, buyers who have jobs and are transferring, will, but others continue to wait because they fear losing any equity they may have invested in a new purchase-you know all of this of course.  Sellers are now very active but, for the most part, still to optomistic with prices.  Government solutions can't overcome emotion.  Foreclosures and short-sales are far from the bottom.  Economic stimulus is misdirected, over optomistic, and has a very long lead time to impact.  As people see the negative news in the commercial market, they will become more cautious.  The charts I have seen would indicate that we have at least another six years of downward or flat markets assuming the pattern follows past ones-I, for one think this is different enough that the cycle will take longer.  Our prices are getting into the 2003-2004 range and I think we will see them get to the 2000-2001 range.  Prices will then increase slowly unless....(we can't predict the future).  Creative, thinking, hard working agents who stay on top of there markets, technology, and all of the changes we will continue to see will survive and have sound practices.  The others will find other work, eventually.

Posted by Ron Titus about 10 years ago

John, your points are obvious to anyone who has been in the business more than a year or two.  I tell people the housing recovery is an eveloution not a reveloution. While I am not expecting a return to the 2005-2006 market, I do see the market in my area imporving. Even though 2009 was a bad year in the Charlottesville area, we did see an increase by the end of the year over 2008.  I cannot agree with you that we will never be back. We are on our way back even as I write this. It is just going to be a bumpy road.

Posted by Dolores Rogers (Better Homes and Gardens/Real Estate III, Inc.) about 10 years ago

Ron & Alexandra - Great points. Thanks for visiting.

Posted by John Mulkey, Housing Guru ( about 10 years ago

I disagree to a point. yes the values may not skyrocket like they did but the number of units sold will still increase. The population will still grow. there will be more needs for homes..there is only so much land. 

I have 3 contracts this week and 5 for the month..only 2 our DSF the other 3 are investment condo's. As long as there are wheelers and dealers there will always be a market.. YES you will just make a bit less per deal but there still should be plenty of deals for a good hard working agent to survive.


Why does everyone always write negitive stuff about our business?? and the agents are the worse and most harming to our Industry. peopel see doubt in what the agents say they take that more to heart then what the econimist say

Posted by Joel Jadofsky, One of the Top Realtors in Panama City Beach Area (Keller Williams - homes for sale - Florida - Gulf - Beach ) about 10 years ago


You have most definetly hit the "nail on the head".  This market will not pass quickly nor did it truly arrive quickly.  History showed we should have hit this in 2003 and then government along with lending created a "false market" with the "Everyone deserves to have a Home" by government and lenders creating financing that was certain to cause dowfall eventually .... so it just slowed this process by 4-5 years.  NOT everyone can have a home - the world is not "fair".

Many factors will have to straighten out and this will not happen overnight!


Posted by Barbara about 10 years ago

John, You are very correct about yesterday's market and the events and conditions of yesterday.  I have learned to keep sight people that have their mind set on home ownership and address their needs. I was surprised that one of your reasons was not someone else is providing shelter.

Posted by CLAUDE DUNCAN about 10 years ago

Speaking my own words again John!  You always amaze me, and thank you for continuing to keep evrerything in perspective ~ brad

Posted by Brad Calef (Coco Plum Realtors) about 10 years ago

"if ever" is a tad extreem...

This is just part of the life of the Business Cycle.  I don't see any accounting for foreign investment.  As Real Estate in China shows signs of Bubble as it's hitting it's peaks, once it pops, the money will have to go somewhere.  Greece (soon to be followed by Spain), as it brings down the EU and the Euro, the American dollar will look more attractive, and so will American Real Estate as a vehicle for investment in the dollar.

Inflation, we've been printing so much money, that even if prices flatten out, most Americans are going to be hit by the invisible doom of inflation (just watch naysayers), and their housing values will decrease while their prices stay the same.   On the flip side, the value of their Debt to the Bank will also decrease, while average incomes rise, the increased spending power will eventually lead to another peak.  I say about 7 years for another peak... Business Cycle my friend...

Posted by Jon Ernest about 10 years ago

I'm sorry, but anytime I hear someone talk about the "Housing Market" I immediately tune them out. There is no such thing as the "Housing Market," all real estate markets are local! Believe it or not, there are areas of the country that never experienced the housing bubble. There are areas where jobs are plentiful for qualified applicants and there are areas where there is still a strong demand and buyer competition. When you, the NAR and others try to talk about a national "Housing Market," either in a positive or negative way, you do all of us a dis-service and instill unrealistic expectations in buyers and sellers. If you really want to be "The Housing Guru" qualify your observations to your local market.

Posted by Anonymous about 10 years ago

Hey John...  Excellent Post

A book I read in the late 80's was a book named "The Great Depression of 1990".  The basic premise of the book was that the world economy goes through a depression every 70 years.  Of course since the last Great Depression we have more aggressive faster stimulus that can be applied to the economy which is what has taken place for the last number of years with low interest rates, a flood of money into the economy to keep it afloat and a few wars to keep spending going in at least one area of the economy.

If the Piper has to be paid every 70 years or so this is definitely that time.  If we use the stock market peak in 2008 as the beginning of the long term correction we are into maybe year two of a 10 - 15 year correction.

The upside to this is that if you recognize this as being the new reality then you can build a business plan around it and succeed, however if one doesn't accept the reality of what we are in and it is a long term correction it will be extremely painful for all involved.

Obviously most people don't plan and as a result fail from a lack of planning, however even those who do plan need to work their plan with an assumption that the economy may not come back anytime soon and as a result continue to ratchet back expenses and essentially work harder for the deals they do get.

Posted by Glenn Sanford (eXp Realty & Working The Magic, LLC) about 10 years ago

I also, unfortunately,  completely agree wit you, your points are right on.

Posted by Jill Nelson, Interior Design (Jill Nelson Design Services) about 10 years ago

#6 is the big one in my mind.  the recent run up was fueled by folks that couldn't buy lunch without a cosigner and they are gone forever. add to that the fact that many were able to purchase with 100% LTV loan packages and their No-Skin-In-the-Game status made the house of cards even shakier.  add to that  the easy cashout loans and the table was set for the walkaways that will continue for years to come.

the demand was entirely artificial and now that the "buyers" who had no money, and had to lie to get loans have been thrown off the bus their component of demand is forever absent.  the Cisco example cited by by ron and alexandra, #79, is an excellent analogy.  when everyone and their brother is chasing a commodity,  that unusual demand causes distortions to  the equilibrium. 

comment #90, you have a weak understanding of finance.  the "Housing Market" is dependent on financing and  that is most certainly not local.

Posted by Michael Ford, California+Hawaii+Oregon about 10 years ago

" A slow increase in mortgage rates will reduce the number of qualified buyers. As we experience the higher mortgage payments associated with rising interest rates, many will fail to qualify for loans on the homes of their choice. Others, having been “spoiled” by the low rates of the past decade, will stay out of the market hoping for a return to those rates."

SO true ~ as the govt stops buying mortgage backed securities and inflation affects the market more, rates will slowly climb. The public feels they missed the boat and have a tendency to wait out until they hear 4.75% again, which in reality, anything under 7% is golden in the long view of rates.

While a slow rise of rates is inevitable, the govt could at least learn fom past mistakes of over regulating and over tightening, to help the issues a little, but they won't. HVCC and the new GFE are only the beginning...

Shelly Whitworth

Posted by Shelly Whitworth ( about 10 years ago

Joel - As I've mentioned several times, markets are local, but the national economy depends upon a robust housing market, something we're unlikely to see for some time.

Claude - I could have listed several more reasons, but I chose to limit my post.

Brad - Thanks for the support.

Jon - All either of us can do is project based upon the facts at hand and our experience. The future will allow us to see which scenario is correct (I'd guess there will be some surprises along the way for both of us).

Anonymous - I'm not sure the purpose of the comment if you "tuned me out."  And your denial of a "housing market" seems to be more of an argument of semantics.  What term would you use to describe national home sales? Finally, my comments are not limited to my local market; most of my posts address national conditions; and while you may not think that appropriate, others find the information helpful.


Posted by John Mulkey, Housing Guru ( about 10 years ago

John, I'd like to buy your crystal ball! Looks like yours works better than mine.

If any of you can predict the intricate web of interacting events that determine housing demand, I'd like to hire you as my principal financial advisor.

Remids me of an old story about a stock broker:

1. He sent 1,000 letters to his clients. 500 prediceted IBM stock would go up, 500 predicted it would go down.

2. IBM stock went up next month. Now he sent only those 500 to those he predicted it would go up another letter. 250 predicted Apple would go up, 250 predicted it would go down.

3. The following month Apple went down. He then send only those 250 where he predicted it would go down, 125 letters to say Dell would go up and 125 where he predicted Dell would go down.

4. The next month Dell went up. Now all 125 investors who received the letter predicting that Dell would go up were so convinced about the stock broker's ability to call the market, they invested their life savings, mortgaged their house, emptied their 401k, cashed out their kids' 529 college fund to buy whatever the broker recommended, earning him a huge commission. The rest is history.


Posted by Peter Rozsa (Cupertino, CA) about 10 years ago

I think you are right on target.  We have a long way to go before we ever get back to the boom days.  Way too many negative factors in this economy are still greatly affecting the marketplace.

Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) about 10 years ago

We can't change the wind, but we can trim our sails and still have a pleasant voyage.

Posted by Greg and Beth Hostetter, Rochester Minnesota (REMAX Results) about 10 years ago

Well John; I read that you have pushed a few folks "buttons"! Good for you!

All real estate markets are indeed local; does any Realtor out there work in a market that had continuous price increases (no decreases) in the past five years? Hello?

Keep up the good work John.

Posted by Robert Ott (Century21 Beal Inc.) about 10 years ago

Yeah John --  very realistic post..  Good job --  I know it hurts but it is reality ....  thanks tom

Posted by thomas dineen (RE/MAX House Values 4) about 10 years ago

I have 10 reasons why this is the most stupid article ever written ... lets talk about the obvious

Posted by Scott about 10 years ago

We are so grateful to be working in Southern California as well.  We are not expecting an overnight fix but things here are getting better every sale.  Investors are snapping up blocks of great investment opportunities and if we had the means....I'd buy 10 homes today (in my market area though :-)!

Posted by Gary & April Greer, Real Estate Professionals (Century 21 Wright) about 10 years ago

Whereas I could not agree more with your thoughtful analysis, you did overlook one "positive" aspect of our current economic dilemma and our government's awkward solutions thereof.

Real estate will quickly become an inflation hedge, much like precious metals or other storehouses of value.  With the obscene amounts of fiat currency that the Fed intends to force into circulation, inflation cannot be avoided.  When inflation begins in earnest, you will see proportionate increases in property values.  It will not take more than a couple of years to inflate property values to well above pre-bubble levels.  On the other hand, this is not actually good news.  Inflation is merely the result of government's tampering with once-free markets, and the harsh reality of too much money chasing too few goods.

Furthermore, absurd Home Buyer Tax Credit schemes and other government economic "incentives" (including artificial interest rates) are not sustainable -- and inflationary in and of themselves.  They all must stop if we are to regain control of our out-of-control economy.

Of course real estate will not be the only thing going up in price.  Taxes, wages, food, fuel, clothing, rents, and just about everything else will cost more and more and more.  The net result translates into a loss in buying power to everyone who has not attempted to insulate themselves against this eventuality through the purchase of sundry inflation hedges.  Real estate is simply one such hedge.

Just remember one thing:  inflation is the cruelest tax of all.  

It is pretty darned sad when the Communist Chinese begin lecturing our government on the principles of capitalism.  And has anyone but me noticed that the Chinese have begun dumping U.S. debt instruments?

Posted by Scott D about 10 years ago

Thanks, John, for your article.  I agree with part of what you said and do not expect US housing markets to return to great health soon, and it won't recoup all losses for many years.  However, there remains a strong desire by people in America to buy and own their homes and property, so this decision making process will always be a positive driver and source of optimism for the real estate business.

Posted by Harrison K. Long, REALTOR , GRI, Broker associate, Attorney (HomeSmart, Evergreen Realty) about 10 years ago

Glenn - . . . if you recognize this as being the new reality then you can build a business plan around it and succeed  Ultimately that's the key.

Jill - Thanks for your comments.

Michael - #6 will be with us for a long time.

Shelly - We'll never keep the government from meddling. That's why we ultimately can't know what the future holds.

Peter - Of course, no one, including all the financial experts, can tell us with certainty what the future holds.  If they could, the current crisis could have easily been avoided.  However, we can look at current conditions and make assumptions based upon past experience.  The indicators I mention have significant potential to alter the housing market; we'll see if something else is thrown into the mix.

Rob - And today's news of existing home sales just confirms that we have a long way to go.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Greg & Beth - I agree and like your analogy.

Robert - Thanks for stopping by!

Scott - I always appreciate well thought out comments that contribute to the discussion. As always I welcome your keen insight.

Gary & April - There are some "hot spots" and are bargains in almost every market. The overall trend, however, isn't positive.

Scott D - Inflation will be the factor that causes home prices to recover, yet in real terms, the values will grow slowly.

Harrison - Of course, I'm not predicting that the housing market will vanish, just that it won't be the same as before; and I say that to inform those who are basing buying/selling decisions on a return of the market.

Posted by John Mulkey, Housing Guru ( about 10 years ago

In the short run you are right, but in the long run prices will again rise and make new highs.  Home prices generally track inflation (except during the bubble years) so they will at some point begin to slowly rise again.  It certainly won't be quick though.  10 to 15 years from now most markets will be making new highs.  In the most overvalued markets of the bubble era, it will take even longer.

Posted by CHRIS HAYNES, The Mortgage Man (Peoples Home Equity Inc.) about 10 years ago

Two things I would add is increasing insurance rates and increasing taxes personal, sales, and property. It limits the money you can spend on a home.

Posted by Jim Whatley (Uber Realty) about 10 years ago

and energy.

Posted by Jim Whatley (Uber Realty) about 10 years ago

Ones perception becomes their reality.  If we, as Real Estate Professionals, continue to beat the drum of gloom and doom and reinforce the public perception that the bottom has not arrived this recovery may drag on for decades.  What will it take to turn the market around?  Increased demand.  What will increase demand?  A belief among the consumers that the market is poised for a recovery.  If someone asked me if now is a good time to buy I simply say that prices are dramatically lower but showing signs of leveling off, there are lots of homes to choose from, and that interest rates are near all time lows.  All true.  John if I tell them anything like what is in your post I may as well tell them to go find a rental where they will stay for the rest of their lives. 

Come on people.  Are we Realtors going to be part of the problem or part of the solution?

Posted by Lucien Vaillancourt, Jacksonville Florida Real Estate (Native Sun Realty, Inc.) about 10 years ago

John, you points are well taken. They just make me want to live right here, right now, in this moment, because there are no guarantees in life or real estate. In spite of all the doom and gloom, I try to think of five things I am grateful for every day. We still are very fortunate in spite of our current situation.

Boulder City Steve

Posted by Steve Andrascik (Lake Mead Area Realty) about 10 years ago

I agree with Chris - you've cited 6 short term reason and reached a long term conclusion. While all your reasons are valid, they ignore the historical nature of real estate. If you've been in the real estate business any length of time you know that 'never again' is a term that should be avoided like the plague.

In SoCal we dropped 45% off our pices between 91 and 96. People said the market would never come back. We were back to a break even by 2001 and by 2006 we had tripled or quadrupled values. Even dropping 50% in this latest fiasco we're still ahead of where we were in 2001 and double where we were in 91. Our 2008 sales were the highest our region has ever seen and 2009 sales were robust only constrained by limited inventory - we're down to under 2 months in many areas.Prices have stabilized and 1st to 4th quarter prices were up by 4 & 5% in several cities in my area. It's not the 35% growth we experienced in 2004 but it's a bounce.

You may be right about your part of the country, though I doubt it, but in SoCal our market goes through regular boom & bust cycles and this one is no different than the previous 3 or 4. It will take a while but this too will be a distant memory in a few short years and people who buy today will be reaping the rewards.

Posted by Gene Wunderlich, Realtor & Legislative Liaison (1st Action Real Estate) about 10 years ago


I agree with all the points in your post and feel that it is going to take a number of years before the housing market is healthier.  I believe, that once unemployment rates decrease, the housing market will rebound. Once employment is stablized, people will begin to spend money again which will, in turn, change the economic conditions. I also agree with your point regarding the loss of equity in current residences which doesn't allow 'move up' buying/selling.

There will always be people who need to move but will it be enough to sustain our job market?

Posted by Catherine Marrone, West Newbury MA real estate, Essex County (Integrity Residential Brokerage LLC) about 10 years ago

Thanks! And, I agree with you on your points. I, as many others posting, have lived my very long Realtor life through several recessions and in different local markets (Manhattan, CT and now Florida). But, this depression recession takes the cake both in its depth and breadth.

Here's a snapshot of my local market: I am selling property as much as 65% less than the highs of '05 and '06.  I am even selling property now at the same price they sold for in 1979! We have well-respected national and more local but equally well-respected home builders here starting new developments or taking over defunct/bankrupt ones with the same product (actually, they are offering more "upgrades" --lake lots,granite, stainless -- then they did before) as the ones they built within the past 10 years or less & just 8 miles or less away. No real surprise and can't say I blame them that some of my buyers are opting for the new and shiny for equal or less money than the resales asking prices. This is further dragging down my market vis a vis excess inventory to be absorbed.

Until there is a robust national economic recovery we cannot and should not promote or predict that we are at the end of it and that housing prices will increase. Actually, speaking as a residential Realtor, I never ever "sold" a buyer on the notion that the value of their home will increase. I, and we, sell homes to live in, to enjoy, to raise a family or to retire to and not as an investment or investment vehicle. That there was a boom so be it. That there was a bust so be it. When we recover (and we will!) and consumer confidence returns and if prices remain flat so be it. People will always want to own their own home or condo and we will be there to serve them ethically and honestly.

Posted by Joan Lorberbaum Moore (Lang Realty) about 10 years ago

Chris - I agree that inflation will cause home prices to rise, and it's possible the rise could at some point be dramatic, but I don't see them exceeding the rate of inflation for some time. That's what I was referencing with my post.

Jim - You add some some valid factors.

Lucien - I also tell people that there are bargains in today's market, and for those who need a home and have the means to purchase one it may be a great time to buy. However, I also warn consumers not to expect the returns of our recent past.  I'm not selling homes, and only offer my opinions based upon 4 decades in the housing industry in order to help people make the most prudent decision.  I do believe it's important to analyze all the facts prior to making a purchase.

The current recession is not typical of past recessions; in many ways it is more severe than any we have experienced in our lifetimes.  And the recovery, when it comes, will not be the same as those of recent years.  To ignore the reality we face is to expose ourselves to the potential for even greater suffering.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Steve - I'm grateful for each morning I awaken, and have many things for which I'm thankful.  My post doesn't predict Armageddon, only a new paradigm for which, I believe, we must prepare.

Gene - While I realize the differences in markets, I also understand the severe problems we face that far exceed those of recent recessions.  And I've been in the business for 40 years.

Catherine - It will take a decade of reasonable growth to integrate all those out of work and underemployed back into full employment; and that will significantly impact consumer confidence and home sales. 



Posted by John Mulkey, Housing Guru ( about 10 years ago

Joan - I'm not all gloom and doom as some seem to feel.  I recently did a post Home Values Have Remained Unchanged, in which I highlighted the reasons beyond investment for owning a home.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Great post - I agree wholeheartedly, but deep down, am an optimist, so I will go with a slow recovery over the next ten years.   I also feel that the American people will figure out a way to create a new economy. 

Posted by Dagny Eason, Fairfield County CT, CDPE Homes For Sale and Condo (Dagny's Real Estate) about 10 years ago

The three points I discussed with my investor last night at dinner.


1. Income ratios

2. Unemployment levels

3. Consumer Confidence

Posted by Keith Shoemaker, Keith Shoemaker (Florida Homes Realty and Mortgage) about 10 years ago

Very realistic post John,

Like someone has already mentioned we need to adapt to what's going on. While it's true that the truth hurts right now, we need to learn from history that things are cyclical and there will be light at the end. Our job is to stay positive and realistic at the same time. Other wise we might as well change jobs and become...that's right...every job place is experiencing similar issues.  

Here is something I like to look at when things around me look gloomy.

Thank you for a great post.

Posted by Dimitri Matsis-REALTOR® (818) 599-6083 (Troop Real Estate Inc. Westlake Village CA) about 10 years ago

LOL....good one John, you won me over ...kudos

Posted by Scott about 10 years ago

Frank said, "Old adage, real estate doubles very 10 to 15 years." But "old" is relative to say, post world war.  Obviously, that adage had its limits.

The "old adage" required there to be on average 5% - 7.5% annual rate of increase over the 10 to 15 year period.

Expectations that that annual rate of return would be maintained for generations has been one of the many variables which has contributed to the collapse. Both the micro and macro economy could not sustain those kinds of returns forever.

It is safer to want and/or expect returns of 1% - 3.5% and celebrate if you actually get more than that.

I tend to be an optimist, but I am good with a calculator, too.

In assessing current "real" value information for my buying clients, I am looking at not just recent sales or last sales info on a property, but what did it sale for two or three sales ago. The current prices are dropping to the more reasonable annual rates of increase over a longer period of time.

(resubmitted after log in)

Posted by Charlene Gwin (Weichert Realtors Advantage Plus) about 10 years ago

Dagny - I'm an optimist too, but I want to know what conditions exist that I will have to contend with.

Keith - Significant issues.

Dimitri - One thing I do know is that conditions can change beyond anything we can imagine, and hopefully, those changes will be of benefit to our economy.

Charlene - I agree that the inflation rate may become the new expectation for returns in housing, but I also know that "shrewd" purchases, will always have the opportunity to exceed that number.

Posted by John Mulkey, Housing Guru ( about 10 years ago


I could not agree more.  More to the point, I believe we need to educate our clients to the real possibility of a much slower recovery to the higher price points of yesteryear or that prices will even come close.

Posted by Eugene Adan, Carlsbad Real Estate (Adan Properties, Carlsbad, CA (760) 720-9710) about 10 years ago

John, Good post and you hit the nail directly on the head. A couple of other issues for you to add to the reasons why it won't come back soon. One is our true unemployment rate which the government doesn't feed to the media, but is public information, is pushing 20%.  This includes people the DOL stopped counting, those who have given up on finding a job(U-6 report calls them marginally detached) and those who have taken part-time work until they find full-time(underemployed).  That is almost great depression level unemployment and is still rising. It took about 8 years to get out of that one. In addition, the US used to be a manufacturing powerhouse back then and now we don't produce much but we consume a massive amount of what others produce. 

The government is trying to spend their way into recovery when excessive spending is what got us here. Its like a heroin addict reasoning that they will start using cocaine to try to kick their heroin habit. The economy is going to react just like the addict when he or she finally decides to quit or is forced to quit cold turkey. Severe pain and sickness, but its necessary to get well.  Its going to hurt like heck for a while but we will eventually recover.  The government is feeding us methadone (printed money bailouts) right now until we finally have to stop spending money fresh off the printing press cold turkey and truly start to recover. 

The past three years have just been a warm up for the downturn that is coming sometime in the next 18 months or so.  The fake foundation that has been slid under the economy will break down when the dollar corrects because other governments won't hold it in reserve.  China is already encouraging their financial system to move out of the dollar and into gold.  The worldwide devaluation of the dollar will force the Fed to raise interest rates to slow the fall which gets us into an inflationary economy.  So if you are lucky and have a job your money will buy less and less.  I remember the 80's when I signed up for a student loan for college and the interest rate was only 8 or 9%.  What were mortgage rates when 8% interest seemed like free money?

I apologize for adding to the negativity, but I don't really see it as negativity. I'm a positive person but also a realist.  This economic situation is no fun but it may be exactly what the sleeping American public needs to wake up that resiliency that Lisa spoke of in an earlier comment and fix the nonsense that our government is STILL perpetuating. 

If the economic problems weren't overwhelming enough, everyone really has to add at least one more rally point to the pending Tea Party.  Its the way our elected officials walk all over and constantly violate The Constitution like no one ever gave their life to pave the way for that document to be written.  Its a hindrance to their agendas so they ignore it. When that's exactly what it was designed to do. It was to stop them from being unfair and corrupt.  Its been going on so long now it doesn't even seem so wrong anymore. That's for another discussion.

The good news is that us regular folk are being forced to learn to sift through the BS to find whats right  and put up some resistance to their wagging of the dog.  Even though its late its not too late. 

We just may have to change the the real estate investing theory to "don't have the biggest tent in the tent city, have the smallest and the larger ones will bring the value of your tent up closer to the more expensive ones" or "if you live in a tent then location, location, location, doesnt really come into play." Will I get my money back if I put wood floors and granite countertops in my tent?


Posted by Jim Reeves (Equity RE Services) about 10 years ago


Thanks for understanding the point I was trying to make in my above post and thank you for directing me to your older blog post "Home Values Have Remained Unchanged."  Is it available on AR for reblogging because I sure would like to do that!!!

Posted by Joan Lorberbaum Moore (Lang Realty) about 10 years ago

i'm with eugene, #126, i just do not see the values hitting the highs we experienced, now that we are back to fully underwritten loans in all cases.   the ONLY thing that allowed the prices to climb as they did was that the lenders did not limit the purchasers to loans they could afford.  the issue of affordability is inescapable.

it's important to bear in mind that we on the coast saw some truly incredible sales to persons who definitely could not afford them.  example...a house cleaner and her landscaper husband buying a house for $620,000 with no money down.  the income was a combined 58,000.    the fully indexed payment was $4,600 including taxes.  using the 45% debt to income ratio fannie likes, and assuming NO CONSUMER DEBT,  the income needed is $122,500 a year.

while the rest of the nation saw a run up as well, the numbers here were so ridiculous that they were through  the looking glass.  we commonly saw debt ratios in  the 80% level.

Posted by Michael Ford, California+Hawaii+Oregon about 10 years ago

I am surprised that so many agree with such a gloom and doom outlook.  While I will agree that we are definitely not in a recovery and that the expectation of one in the near term is not realistic, but ay that the "glory days" will never return is a bit fatalistic.  The fact is that the economy is cyclical in nature.  Over time, market forces and/or government intervention will resolve the negative effects of all six of the issues that you cite as a hinderance to recovery.  In the midst of the S&L crisis of the mid-eighties, one would have thought that the "glory days" of recent past would would never have happened.  The market will recover.  And because in the excitement of the recovery we tend to forget the lessons of the past, there will be another bubble.  Another correction.  And another guru predicting that the "glory" days are gone for good.

Posted by Eura Miles (K & N Realty Company) about 10 years ago

Well,  John. I definitely agree with you. But I think it is a great, positive news, the reality is just  something quite different from what what we think is good. There is no way the housing market always on the peak. If that is the case, we got worry even more. So I think it still a great news. 

Posted by Joshua Bai, Realtor, SFR, Maryland Real Estate (BMI Realtors) about 10 years ago

We'd have a better real estate marketing, and economy, if we did away with "move up" buyers using the equity in their home for that purpose, or buying a new car or a new plasma television. We need home buyers to buy a home, live in that home, raise a family in that home, remodel that home, retire in that home, and die in that home. Then the home could be sold. Of course, we Realtors would lose all the commissions from those multiple sales for just one person, and that, of course, we just can't have!

Posted by Jim Frimmer, Realtor & CDPE, Mission Valley specialist (HomeSmart Realty West) about 10 years ago

Real Estate professionals:

We have to address the reality of the now and with humility project ourselves into the near future. John (and others) are quick to point out that generally speaking, we broke the mechanism known as the American dream, but it is not broken beyond repair. Another thing we must all consider is the Real Estate cycles that run our business. There have been 17 previous cycles that show us how it works. A monkey wrench was thrown in with the 9-11 terrorist attack. However, the cycle picked up and continued on. It has been projected that the current cycle should peak at 2019 suggesting that it is still wise to jump in and purchase Real Estate. For investors wanting to turn a buck, bailing out around 2016 and not looking back would be the way to go. Furthermore, prices have been rolling back to affordable levels which when the cycle peaks, people will find that they did not buy more house than they can afford. Consequently, they may be able to whether the storm or even rent their unit out without having to sell or lose the home. The cycle we are in is a correcting cycle if we let it play out. The government intervening is necessary, but risky as it throws off water seeking its own level (Real Estate prices aka supply and demand). Lastly, the system does work. That is buying an affordable home for a long term investment still makes sense. You have to live somewhere and owning is a way to make a return on "rent". Let us not forget that there are also exceptions and by this I mean pockets of Real Estate that are not infected. These exceptions continue to perform. All in all, owning affordable Real Estate makes sense and it will be around for our life times. 

Posted by Richie about 10 years ago

You make very good points; however, we just have to adjust our business plan to what the market is doing. We can't change the circumstances of the economy so we have to change our way of doing business.
In St. Augustine, FL we have been hit hard, but prices are stabilizing and activity has picked up dramatically. Many people do feel it is a great time to buy with great values in properties, low interest rates and many qualifying for the tax credits. 

Posted by Sherry Davidson (Davidson Realty, Inc.) about 10 years ago

Hi John,

I could not agree with you more.  Everything you say makes sense.  I am sure it must apply to my market here in Essex and Morris Counties NJ.  I am, however, puzzling why in the last two weeks there are multiple offers on every good house which comes on the market.  I showed 4 homes last week in Millburn, NJ and 3 of the four had contracts by the following Tuesday.  The last one had 7 offers.  Homes are selling in less than a week.  I am talking about a price range of $850,000 plus.

Wondering how long this will continue.  Perhaps the new homes will come on higher and then not have the multiple offers.  It will be a very interesting spring.



Posted by Trudy Sarver, Montville NJ Realtor, Morris & Essex County New Jersey Homes (RE/MAX HOME CONNECTION) about 10 years ago

Hi John - I agree with your points, and the need to change and diversify in the current environment we operate in. Well done!

Posted by Karen Cooper, Helping Homeowners w/Home Loans in 27 US States (Karen Cooper | Sr Retail Loan Originator ! NMLS # 223305 | 360 Mortgage Group LLC Austin Texas) about 10 years ago

You've certainly highlighted six reasons and heck there are probably a lot more.  I hope we get a bit of recovery before 10 years, but it does seem far out and unlikely.

Posted by David Monsour, ABR - (Keller Williams Keystone Realty) about 10 years ago

Anyone with a calculator and a 5th-grade education could have predicted the housing crash.  And... the same tools and education will bring you to the conclusion that we will never return to the ridiculous price peaks of 05 & 06. It was a speculative phenomena, not the need for housing, that caused the bubble and the ensuing crash.

The lesson... people will only spend so much of their available resources for a place to live. We are about to discover what that is. The market will show us. The notion that prices, as a percentage of buyer's income, can go up forever is as silly as thinking that we'll pay off the national debt.

Posted by Ray Wood about 10 years ago

I an optomist, but these are facts, the US lost more than a trillion dollars of equity since 2007, so this is a great sum up.

I anticipate a decade of flat sales, and possibly worse... we have a generation of young people who DON"T consider housing a good "investment." 

A lot has been written about all the bad mortgages and "bad borrowers." But there are lots of folks who worked hard, saved their money, and bought at an inflated price, and now are 30% underwater, and the economically rational decision is to walk away.

We need jobs, and not a few, but millions. For each 2 jobs created, demand for one house is created, this is well known.  It is the only way out.




Posted by Terry McDonald about 10 years ago

I must agree with these 6 things. And I must say that we will never see a return to the stellar years of robust sales. We will have some great years, but nothing like we did in the "good ole' times"

Posted by Anonymous about 10 years ago

I remember reading similar comments in the mid 70's, the late 80's and the mid 90's when the housing market tanked and many thought that the world was coming to an end.

It didn't then, and it won't now. There will be differences to be sure, but the housing market will not only rise again, but will surpass its previous peaks. Timing is uncertain, but as we say when we haven't a clue, "time will tell'.

Posted by Thomas McCombs (Century 21 HomeStar) about 10 years ago

As Mark Twain said "Buy land, they're not making it anymore".  While I agree it will take some time but in time real estate will once again reach those high points. Unfortunately I might add.   In 1932 I don't think any one then ever expected to see another boom either but human nature seems to be replete with failure to retain past lessons.

In the near term I agree with you.  In the long term your points won't stand-up. Reasons: 1. They're not making any more land. 2. They are still making babies. 3. The American Dream is still to own your own home.

Someplace between pessimism and optimism is reality.

Posted by Rick Fifer, Broker/Owner, Vintage Homes Realty (Vintage Homes Realty) about 10 years ago


You touched on several really good points, but one big concern of minre is the willingness of this administration to interfer in the market place. Here in California we have had at least two moratoriums,on foreclosures. Then the  some of the same people that tell the banks they can't foreclose on defaulted loans give the First Time Homebuyer's an $8000.00 dollar credit. Then right after the first moratorium expired, and the exsisting inventory was depleted, they came up with another moratorium to help homeowner's stay in there homes. In my area this left short sales as the only option for many FTHB. and as we know there are almost never approved in a timely fashion. We now have Buyer's fighting over inventory, and bidding wars on properties that will not appraise for the offer price. And on another note, I know of several Seller's who property is in default, they have move out of the house the property has been vacant for over a year, an NOD was filed, then the sale date was postponed again and again due to government interference.  Some of these people could already have their credit repaired, or built up  enough to buy a new home, car or be the consumer the economy needs to begin a real recovery.

Posted by Anonymous about 10 years ago

Eugene - It's all about having the best information so we can make good decisions.

Jim - I did address unemployment in point #2, and I've blogged several times about the difficulty of housing recovering until we have stable employment.  You do make several good points and there are still others neither of us included.  It will be a long and slow recovery.

Joan - Of course I'd love to have you re-blog the previous posts.  All of my posts are available for re-blog.

Michael - Lending will take some different turns in the coming years.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Eura - I agree that the economy is cyclical, but we've entered a cycle for which there is no recent comparison.

Joshua - I find good news every day, and won't miss the days of artificially induced prices.

Jim - I don't think many would choose to stay in their home forever; we are in different times.  However, I expect many will stay much longer than in the past; and that's the point of my post. Things have changed.

Pat - I'm sure Vegas and other areas will recover from the current levels; but I'm not sure we'll return to housing appreciating at a rate that far exceeds inflation for many, many years.

Richie - You make some valid points, but I'm not sure we can predict what will happen in 2019.  If we can, many will become rich. 

Davidson - We can't change the circumstances of the economy so we have to change our way of doing business. That's the purpose of my post.



Posted by John Mulkey, Housing Guru ( about 10 years ago

Perhaps you are right; however, I recall Fortune Magazine predicting in 1989 in the depths of our last big recession that "California will never again see prices as high as they have been".  Just a few years later they were three times as high.  We have ongoing population growth, yet for years, we have not  built as much housing as we have needed each year.  Lots of families right now that are sharing houses with other families. I just read an article that Poway, CA ranks number four in the nation at 27 percent increase in house prices over last year. I suspect fortunes are being made right now. 

Posted by Ernie about 10 years ago , John Fiorelli, Realtor Richmond, VA , , Search Richmond homes, Search Chesterfield homes, Search Midlothian homes, Search Henrico homes, Search Glen Allen Homes,


Posted by John Fiorelli, REALTOR Richmond, VA aka (Premier Realty) about 10 years ago

Trudy - Sounds as if you've entered a pocket of good times. Hope you are able to take advantage of it.

Karen - Thanks for your comments.

David - I actually do have several more reasons but decided to use the first that came to mind.

Ray - Unfortunately most of the "experts," even those with a PhD, didn't have one of your calculators.

Terry - Unfortunately the number of jobs we need will take a long time to create, especially since we're still going backward.

Thomas - The difference between this recession and others of the recent past is that this one extends far deeper, will extend much longer, and the levels of debt created are far greater.  There are a multitude of reasons why the recovery will not resemble those of the past. And while I haven't predicted anything resembling the end of the world, I do believe we've seen the end of an era in real estate.

Of course homes will continue to be sold, but a recovery to the levels of pricing and volume of five years ago will take much longer than most will admit.  

Rick - Obviously I have no abilty to see into the future any more than anyone else. I make predictions based upon what I know to be true and what I've observed during 4 decades of home building.  Eventually, inflation will drive up prices.  I didn't predict that homes would never sell again, only that it would take many years to achieve the levels of growth experienced during the past decade.




Posted by John Mulkey, Housing Guru ( about 10 years ago

Ernie - There will always be opportunities and fortunes made by those who recognize how to take advantage of them. That's the reason for my posts, to help folks make prudent decisions.  

John - You asked, "IF THE MARKET IS SOOOOO BAD AND NOT RECOVERING OR GOING TO RECOVER THAN WHAT TYPE OF BUSINESS DECISION ARE YOU MAKING STAYING IN THE BUSINESS."  I'm not in the business. I closed my construction company more than two years ago after winding it down over a five year period.

Since you obviously didn't bother checking my profile or reading any of my previous posts before jumping to conclusions, such as: I WOULD LIKE TO KNOW YOUR THOUGHTS BECAUSE I FEEL USERS OF A/R WHO MAKE BLOGS PUBLIC ARE USING THE SHOCK FACTOR TO ATTRACT BUSINESS,  I'll try to fill you in.  I'm not promoting a business--any business, but simply share the knowledge gained during my 40 year career.  I do so in order to help consumers, interested Realtors, and others make sound business decisions about the real estate market.  I also provide tips to home buyers and sellers to help them make the best choices possible, and spend several hours each day researching and compiling information for my posts.

If you'd followed my blog, you would see that I do offer constructive advice.  Check this POST, for instance.  In a little more than a year blogging on AR I've posted almost 400 times, many of which are vastly different from this one, but I fell it necessary to present the facts as I see them, regardless of how "negative" they may appear.  We can hide our heads in the sand and wish the economy would get better, but such action will not only fail ro restore economic stability, it will blind us to the best options for our future. 

I'm happy that your market is doing well, but not all markets are so lucky.  Most are struggling with continuing foreclosures and high unemployment.

Posted by John Mulkey, Housing Guru ( about 10 years ago , John Fiorelli, Realtor Richmond, VA , , Search Richmond homes, Search Chesterfield homes, Search Midlothian homes, Search Henrico homes, Search Glen Allen Homes, Thank you for your response... I've replied to a feature post and did not take the time to read your 400+ posts before forming an opinion.
With that said, you say you do this to help consumers and agents alike.
First you are not helping agents with negativity, Sales professionals whether selling a home or appliances or shoes or whatever else need to be motivated, confident and believe in there product.
Second the only advice for the consumer (as untrue as it is. Considering if it is a terrible time to sell logic says it's a great time to buy!!)is that they shouldn't purchase because there investment now will at best flat-line.. And they don't have any hopes of achieving wealth through home ownership.

My summation is, if I am Joe or Jane potential homebuyer reading this in cyber space: I'm better off renting!

I guess we have to different outlooks on what's going on. That's fine, that's the AMERICAN WAY...

Posted by John Fiorelli, REALTOR Richmond, VA aka (Premier Realty) about 10 years ago

After reading your post and all the negative comments there seems to be a lot of doom and gloom among us for the US. I'm going to make a bold statement here stay positive because that is what this country needs.

It may take some time to fully recover but it will and we will have Booms and dips, big and small. History may not repeat it self exactly but 30 yrs from now we will all be talking about a new historical event that rocked the Real state industry. Mark my words. Call me in 30 yrs and tell me I was right. ;)

Posted by Brett Dalbeth, Laguna Agent (iPro Real Estate) about 10 years ago

John - You're right we can disagree.  And many of the Realtors who have commented here have disagreed with your comment, Sales professionals whether selling a home or appliances or shoes or whatever else need to be motivated, confident and believe in there product.  They, like me, believe that knowledge is truly power, that we can only help people when we have all the facts.  And, many of those same Realtors continue to be very successful.  I do appreciate your position--that's why they make Fords and Chevrolets--we don't all see things the same; and ultimately that's a good thing.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Brett - You may, of course, be correct; but my post really doesn't address the distant future.  With nearly $100 trillion in unfunded liabilities, both the U.S. economy and the taxpayers will probably see lots of unexpected historical events 30 years from now. But, I'll try to remember to call you, although I'll be ninety years old.

Posted by John Mulkey, Housing Guru ( about 10 years ago

And for those who think I'm implying that no homes will ever again be sold, I'm not, and would refer you to a POST by Steve Wagner on why the market must return to a more "reasoned" level.

Posted by John Mulkey, Housing Guru ( about 10 years ago , John Fiorelli, Realtor Richmond, VA , , Search Richmond homes, Search Chesterfield homes, Search Midlothian homes, Search Henrico homes, Search Glen Allen Homes,

 Perhaps you should read your comments because many disagree with you as well...Like the one right above you reply!!! I continue to be very being P O S I T I V E....


IN ORDER TO EDUCATE YOU MUST HEAR AND GIVE ALL SIDES... YA THINK!!! THAT'S MY POINT OF ALL YOU DOOM AND GLOOMERS!!!! I hope you don' take offense but I'm going to go out on a limb and guess you are a very liberal democrat???? One huge earmark is you only want "your" opinion being publicized!!!
Another earmark is while I was writing this you posted contridictory statements... Don't waffle... The sky has fell and there is no hope(see your title for this post) It didn't say may not it says:"CAN NOT RETURN"
Am I wrong?

Posted by John Fiorelli, REALTOR Richmond, VA aka (Premier Realty) about 10 years ago


The 10 year trend for housing appreciation looks like it is right-back-on-track after removing the housing bubble.

I hardily agree with two of your comments:

  • Jobs are necessary for housing and the economy to revive. That doesn't matter whether people buy or rent.
  • Consumer confidence is vital to economic vitality.

A lack of confidence will lead a successful person into failure.

Confidence will lead a person into success. JMHO

Here's To Success!!!



Posted by Steve, Joel & Steve A. Chain (Chain Real Estate Investments & Mortgage, Steve & Joel Chain) about 10 years ago

John, I agree in that the more knowledgeable the agent, the better he/she can advise and provide consultation to the buyer or seller. The perfect storm is coming and will culminate with the 'Shadow Inventory' which will raise inventory levels and bring home values down even further. This being said, real estate still and will always remain as the best return on your investment. Right now during these difficult times, buyers and sellers can still come out as winners if they are realistic, motivated and advised properly by their agent.


Posted by Anonymous about 10 years ago

John - I'm sorry, it's obvious you are continuing to comment on my position without taking time to research it.  You are, as we say, off base. And NO, I have no obligation to present opposing views. Those who disagree do it for me, and I allow their comments to be considered by all.  And yes you've gone out on a limb and cut it off when you speculate on my political beliefs--one more reason you might choose to research before "shooting from the hip."

Steve - I agree. Confidence and knowledge can lead to incredible success. Have a great 2010.


Posted by John Mulkey, Housing Guru ( about 10 years ago

Anonymous - I'm working on a post that mirrors your last statement.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Great post, sad but true. It will be like this for years to come. We as Realtors need to adapt or get out, there is no boom to be waiting for.

Posted by Scott Strang, Licenced RE Broker and Realtor Office in MA&NH (Scott Gregory Group) about 10 years ago

Scott - Adapting and looking for/creating opportunities will allow those who are dedicated to thrive.

Posted by John Mulkey, Housing Guru ( about 10 years ago

In the long run the prices will return, but how long is the issue.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) about 10 years ago

With your scenario, apartment buildings should be in higher demand.

Posted by Debbie Durkee, ALC, CRS -- Land & Country Estates near Tulsa (RE/MAX T-town) about 10 years ago


Well said, and unfortunately you are spot on. 

No more artificial temporary stimulus props, keep interest rates low and let the market find it's own bottom. 

Posted by Keith Bochner, (Coldwell Banker Residential Brokerage) about 10 years ago

I am working on cutting and pasting Dimitri's post. We are not at the end of life as we know it, that comes in 2012.(only kidding) Seriously there has never been a better time to buy real estate, and if I had loose investment dollars that is where I would go for the future returns. You make profit when you purchase real estate not when you sell it. The sale just brings the profit of your wise purchase to fruition.

Posted by Vincent Tedeschi (Weichert,Realtors) about 10 years ago

Gene - Time is the question; and government interference/programs will make a difference.

Debbie - There is a glut of rental units because of this crisis.  Many investors who bought with the hope of selling at a better price have been forced to hold and rent. Rents in some areas are at all time lows.

Keith - So far the government has been in an "extend and pretend" mode, trying to postpone the inevitable.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Vincent - There are bargains in most every market, but the best returns require some research and planning for future trends.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Ok John :), I will put it in my smart ph and give you a call hows that.

Posted by Brett Dalbeth, Laguna Agent (iPro Real Estate) about 10 years ago

To all those who have disagreed with my analysis of the current market, I would direct you to a more recent POST  that tries to explain my position  in more detail than is possible in this comments section.  And to all who have participated in the discussion, I appreciate your input and opinions.


Posted by John Mulkey, Housing Guru ( about 10 years ago

I hate reading the truth when it means that all the equity in my properties just went poof.  No more retirement!  If only I was 30 years old, I would not care so much.

Posted by Jirius Isaac, Real Estate & loans in Kenmore, WA (Isaac Real Estate &TriStar Mortgage) about 10 years ago

Absolutely true! Along with a healthy dose of skepticism for our economic policies and banking system whether we agree with this or not. Younger people seem to have different goals then their parents at their age. It seems a moderate priced home is sufficient so they have money for hobbies, trips or just some extra money to enjoy dinner and a movie. The economy settling out to sensible would be just fine and probably much more sustainable than the ROLLER COASTER we have all been on for TOO long.

Posted by SUSAN GOUGH (HOMETOWNE REAL ESTATE) about 10 years ago

Jirius - It's a disaster for many who are too old to recoup their losses.

Susan - Sensible would be a very nice change.

Posted by John Mulkey, Housing Guru ( about 10 years ago


Such negativity.  Actually, I've been predicting the housing market for nearly 20 years and I'll be doing my next analysis at the Real Estate Today conference held by Lehigh University the first week in May.  We'll have some great individuals showing up from around the country if anyone's interested in attending.

You have some valid points and some points that not completely true.  Sadly, it looks like most of the readers of your column are taking the same doom and gloom view.

First, you are correct that it will take a long time for prices to recover, particularly in those areas of the country where the market was most over-inflated.  This is simply the law of supply and demand.  Too much inventory, not enough buyers.  Even once buyers start coming back into the marketplace more strongly, it will take a while for inventory to be reabsorbed. 

However, it WILL happen.  It always does.  We always have cycles, and I remember writing a column about the market coming back way back in 1991 and getting hate mail for 2 months from people who said we'd NEVER EVER see the prices of 1988 again.  I was an idiot for even suggesting that prices might again hit those 1988 levels.  Hmmmm.

Regarding unemployment - that is a lagging indicator.  Unemployment USUALLY follows an improvement in the real estate market.  How's that possible, you might ask?  Only 7-10% of the population of the U.S. buys a home in any given year.  If that 7-10% feel that prices have bottomed out, have some strong consumer confidence, feel rates are good, and feel secure enough in their jobs, they WILL purchase in order to take advantage of the prices.

In other words, for the real estate market to improve, only a fraction of the country has to feel good about buying. 

When the real estate market picks back up, and inventory declines, builders start building, manufacturers make kitchen cabinets, carpeting and toilets and birds sing happily everywhere.  Those back to work in the construction industry buy stuff which helps other segments of the economy.  Perhaps an oversimplification, but it's accurate.  If you look at the most recent recessions, jobs came back after the real estate market.

Where you and I DO agree is that the high foreclosure rate not only dumps additional inventory on the market, helping to erode home prices, but also negatively impacts FAR too many individual's credit, which will make it more difficult in the future to obtain mortgages. 

Tighter lending restrictions and credit tightening in general reduces the buyer pool as well, although this is also fluctuates over time.  Restrictions and limitations will ease at some point (We all have short memories).  Hyper inflation could very well damage us and send us spiraling back down if everyone starts dumping our bonds, however.

One other positive note about demographics that everyone seems to miss - a large percentage of our first time homebuyers are immigrants, and that trend is continuing, which may also significantly help the market over time.

Overall, I thought it was a well written article, but I also believe consumer confidence will rise this year (despite last month's tumble), and I believe we'll see stronger sales in 2010 than we did in 2009.  It will be a long time until we see significantly higher prices... but we will someday.

It's not the end of the world, it's just the bottom of the roller coaster.  It shall rise again!

Loren Keim
Author - "How to Sell Your Home in ANY Market" and "Real Estate Prospecting: The Ultimate Resource"

President - Century 21 Keim Eastern Pennsylvania
Adjunct Professor - Lehigh University Goodman Center for Real Estate Studies



Posted by Loren Keim (Century 21 Keim) about 10 years ago

Loren - Thanks for your thoughtful comments.  Some seem to think I predicted the end of the world--I did not.  What I predicted was that prices will not return to the levels of the past decade for many years—if ever, and by that I meant the market would not return to the peaks--the accelerated appreciation and buying frenzy experienced in 2005 - 2006.  The intention of my post was to make those buyers/sellers who expect a quick turn-around aware of the likelihood that such will not soon occur. 

You said, You have some valid points and some points that not completely true.  I disagree.  While you may disagree with the six points I made, they are not inherently untrue.  You further stated, In other words, for the real estate market to improve, only a fraction of the country has to feel good about buying. My post was not intended to address an improvement in the market; indeed, some areas have already seen improvement.  My post was outlining the reasons that we would not soon see the robust market of 5 years ago.

What we do know is that inflation will continue to drive prices upward, but that isn't a real increase in value, as that experienced during the boom when appreciation far exceeded the inflation rate.  Of course none of us know with certainty what the future holds; there are just too many factors that impact our economy.  What we do know however, is that the depth of this recession is far worse than previous recessions and that a traditional recovery may be neither quick nor certain.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Sir John, I 100% concur.

#51 Bob, with all due respect, so those outside of Southern California do not think we are completely crazy here with our prices. I am sure with your thirty-three years under the belt you would remember how long it took the L.A./Orange County area to recoup from the 15-20% drop from the highs back in 1990, an average of seven/eight years, not until around 1998. Eight years to recoup 15-20%.

Qualifying median income to debt service ratios based on values of 2007 highs won't bear for another 15-20 years. Market was steaming hot with 60k a year first time buyers with 0%down/stated income/pick-a-payment loans purchasing $500,000 entry level homes pushing "Move-Up" homes to around $750,000-$800,000. Not going to happen for a long, long time. Not even in pricey Coto. Fools gold on the bump up these twelve months, sideways for awhile of 4-5 years before any real appreciation.

Posted by Steve Sandoval about 10 years ago

John, I didn't read all the comments...too many. But, I will just say this, it will eventually stabalize but it will NOT come up to those record highs for years.

We typically had a 3-4% increase in property values historically in the U.S.

It rose to will recover but not anywhere near that.

Right now a 3-4% increase sounds darn good.

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) about 10 years ago

Steve - Thanks for your comments.

Missy - Normal appreciation would be great, but we don't need a return to hyper-appreciation.

Posted by John Mulkey, Housing Guru ( about 10 years ago


            What is interesting to me are all of the supposed "proffessionals" posting here that are basically postulating that you dont know what your talking about. These are probably the same people that were telling people to "buy now" or they would be priced out of a housing market that was going to the moon and never coming back!  All the positive news in the world is not going to change the fact that the economy is in the tank, debts are out of control and this real estate bust will be burned into the minds of all the people losing their homes and their friends and families, which basically makes up the entire North American CONTINENT! This is a cycle that will affect real estate for the next 60 years (like the great depression did to my grandparents) people will talk about this market like they do the great depression.  Things are not going back to "business" as usuall.

Posted by Yanduk about 10 years ago

Yanduk - You've summed up conditions pretty well.  The bubble market, I believe, is gone forever.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Thank you for the post today. Yes we are in a challenging and unfamiliar market; however, people still want to buy homes and sell homes and that will never change.  This market place, I feel demands more of the sales agents to be absolutely more informed and our responsibility to get new educational materials almost on a daily basis is a necessity.  I've been in 3 previous r/e cycles, this one is different from the years past.  I won't even try to predict the future comeback, but If Real Estate is your Business you adjust to the change and keep workin it with creativity!



Posted by Toni Labrum, "Client First Philosophy" (Labrum Real Estate) about 10 years ago

Toni - "Keep working it with creativity."  Good advice, regardless of what we face.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Very prudent post.  Science states for every action, there is an equal and opposite reaction.  If that is true------. 

I say do not dwell on the actions that brought us here but instead think and create the positive reactions that can bring us to where we need to be.

For example, someone said the "Green" movement.  Our area of the Hudson Valley in upstate New York is seeing an influx of "green" people to our area and seeing our area start to become the green capitol as far as new businesses, groups, collective thinking.  One of the young Realtors in our office has just formed a partnership with one of his former clients to open a company installing very new "green" energy products for homes.  He is doing well enough to now just refer to his old RE partner and sustain himself and his family on his "green" company.  By the way he really did not know a lot about his new profession but he was open to change and I think that is what it is about.  Get out of your box and think innovative even when it comes to the way we do business in real estate.  How can we reinvent ourselves.  I suggest we form think tanks with our mls's to see how we can contribute positively to our future.  How can we change and grow into being able to be of service and be viable in this "new" economy.




Posted by sandy reid, period homes, second home market (Westwood Metes & Bounds) about 10 years ago

Sandy - Great suggestions.  While my post points out the reasons I believe the market has made a significant change in direction, I encourage those in the housing business to look for the new opportunities that will continue to appear as the market evolves.

Posted by John Mulkey, Housing Guru ( about 10 years ago

Hopefully the government will let the tax credits die this spring and let the market shake itself out.  Bailing out the banks and giving credits to buyers will only prolong the time it takes to reach a true bottom. 

Posted by Steven Pahl, Real Estate Consultant Tampa, FL 813-319-6423 (Keller Williams Tampa Properties) about 10 years ago

Steven -  I agree.

Posted by John Mulkey, Housing Guru ( about 10 years ago

IN MY are 1/2 and 1/2 right or wrong....

  • ● Robust home sales are dependent upon consumer confidence in the economy......the public will forget about this over time....I.E.....the the gas shortage of 1970's...everyone quite driving V8's...but they forgot about that in the 2000' s and bought V8 SUV's

  • A vigorous recovery of the housing market cannot occur as long as we have unusually high unemployment....I agree, right-on....we need jobs for Americans

  • A slow increase in mortgage rates will reduce the number of qualified buyers......rate ain't goin up, they are going down, Econ class 101 supply and demand for housing rates must come down

  • ● Tighter lending restrictions will also result in fewer buyers qualifying for home loans.....they are not tighter, they are just back where they should be, you don't get a home loan unless you have a job,paycheck, w2, and down payment

Posted by Dana Devine (Charles Rutenberg Realty) over 9 years ago

Dana - #1 I don't agree. The situation now is not comparable to the the gas shortage of the 70's.  Consumer can't just forget having less income--one or both spouses out of work or underemployed, combined with the loss of a good portion of their wealth.  I think consumer attitudes will be changed for years to come, just as the Depression changed the attitudes of our parents and grandparents. 

#3 You're right about rates in the short-term, and I think many have been surprised by the depth of rate cuts.  However, we'll have to adjust rates upwards over time, unless we continue to slog along in a deflationary period, which of course, would also be a drag on home sales.

#4 I agree that we had ridiculously lax lending standards for far too long, but regardless of where they should have been, going back to the old standards removes many from the market.

This post was written six months ago and some things have changed.  One thing we do know is that we can only guess about the future; sometimes we get it right; sometimes not.  There are just too many variables to KNOW what will occur.  If I or anyone else could know with certainty, we could rule the world--and that's probably why we can only guess.

Thanks for your thoughtful comments.

Posted by John Mulkey, Housing Guru ( over 9 years ago