Picking up on the news that housing starts–ie, the start of construction of new buildings and homes–picked up in August, rising to the biggest levels seen November, Fortune says the housing market “is still far from recovery” but also points out its on “bullish take on the housing market,” a piece centered largely around a 2009 paper by economist Bill Wheaton at the Massachusetts Institute of Technology‘s Center for Real Estate. Yes, stop all those stories about how the days of seeing our homes as money-generating nest eggs are over. In short, Wheaton thinks the market will come roaring back, partly because so little construction is going on. Via Fortune: “The crux of Wheaton’s argument lies in the rate of residential construction today. It’s been historically low – so low that he believes demand is actually exceeding the level of building going on. This helps set the grooves for a relatively large comeback in residential investment. Here’s how Wheaton backs the imbalance of demand for housing units and residential construction. He estimates that housing demand in 2009 was at about 1.1 million units – more than twice construction at the time. At this rate, the excess inventory will eventually be absorbed. “It’s going to be a long time before construction picks up with demand,” Wheaton says, adding that this should help housing prices.”
· Housing market shows glimmer of hope [Fortune]
· A housing rebound? Yes, it’s possible [Fortune]
The OFHEO has come out with its latest house price data. Remember that these cover much more of the US than the 20 cities of the Case-Shiller report, but are based home sales only with conventional mortgages. Anyway, we can see the data for Oregon cities, Oregon and the USA.
Here (a bit messy) is the raw data since Q1 of 2004:
Here (even more messy) is the quarter to quarter % change in home values:
Here is the overall depreciation (so positive numbers are bad in the sense that they represent loss of value) since Q1 of 2007 when the market in Oregon really turned:
Overall, it is bad, especially for Bend and Medford which are seeing collapses of California proportions, but overall the state is not doing too badly in relative terms.
Here is a nice picture from their summary report that shows the national picture. Oregon is the 35th best state in terms of home value appreciation (or limited depreciation):