Real Estate Marketing & Beyond
There are a litany of factors that have aggravated the housing crisis since it's early beginnings in 2006 - 2007. Among the many issues cited for the ongoing crisis are the high rates of foreclosure, the resulting excess of vacant properties on the market, and the impact this has had by lowering appraised values. While all of these have definitely aggravated the problem, the data indicate that these are more the results than the fundamental cause of the housing crisis.
Housing can't pick itself up by itself © Air0ne - Fotolia.com
While the politicians argue over whether we should reduce loan balances for those homeowners who are "most deserving", or refinance existing mortgages from 5% down to 4%, or "let the free market work", these are all merely addressing the symptoms of the problem not the root cause. It's sort of like treating a cold and flu epidemic by having the government provide everyone with free aspirin and tissues, while ignoring the reasons why colds spread in the first place.
The fact is, the data is pretty clear in showing that the root cause of this epidemic had it's beginnings many years ago. To establish the case for this, lets look at some basic data provided by a variety of analytical sources.
Household Incomes Continue To Fall:
Household Incomes Have Not Kept Pace With Housing Prices
Combine the above data with the U.S. Census Bureau Analysis of Real Median Household Income, which shows that real median income increased only $9,345 from 1967 to 2010!
On the other hand, there are a number of sources with housing data, that show that housing prices have increased about 6.3% PER YEAR, since the 1960's. Over the years there were long periods of relatively stable prices, with small increases. The really big increases began in the 1990's and by the early 2000's, they had gotten into double digits, largely due to easy access to mortgage financing.
I believe the big picture here also tends to strongly suggest that government policies and finance programs tend to drive housing prices higher, even as other government policies have had a negative impact on income and employment. Home prices are simply searching for an affordable balance between ownership costs and real income.
By the time you take taxes into account, and look at the impact that current monetary policy is having on the value of the dollar, it's no wonder that housing prices have fallen and they can't get up. As long as real income is not increasing, there is no reason to assume that home prices will either.
