Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.
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?There is no iron law that real estate must appreciate,? said Stan Humphries, chief economist for the real estate site Zillow. ?All those theories advanced during the boom about why housing is special ? that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land ? didn?t hold up.?
Instead, Mr. Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.
Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.
I would still expect some areas will do better than others because of desirability (like SoWal) but with tighter credit and a semi-permanent 10% unemployment level its going to be long slog.
Other than reducing the unemployment level (through the creation of new jobs, rather than by just no longer counting folks who've given up looking for a job) I don't know what can be done to improve the situation.
