Curb Your Enthusiasm

BusinessWeek is usually so pro-housing; immune to negative news and results; always a way to spin things in housing's favor. That's why I was so surprised by this article. It's even in their so-called "Smart Strategies" section of the print version of the magazine. Maybe they figure no one will read it now that we are in the pre-Holiday season. Or maybe their spinning machine is broken. Or maybe they've decided that the truth cannot be ignored any longer.

Housing booms are short and exciting. Housing busts, on the other hand, are long and painful. So don't put much faith in those oft-heard assertions that the worst is already over.

A BusinessWeek analysis of the past three decades shows that if history repeats itself, it's likely to take 15 years or more for many parts of the country to get back to their inflation-adjusted peaks.

The major markets that do least badly will be "revenge of the nerds" cities like Dallas and Houston that the boom bypassed. Even if all they generate is low-single-digit price gains, they will look good by comparison.

Advice to homeowners: If you need to sell and you're not getting much interest, cut the price by an extreme amount. If you make halfhearted cuts, you'll remain overpriced and you'll follow the market all the way to the bottom.

Advice to buyers: Bargain hard. Many sellers are still asking for too much.

...now is not the ideal time to buy or move up, even with the recent price declines.

Housing prices were pushed up in part by get-rich-quick speculation. Now real estate has lost its grip on the public's imagination. Says Richard J. DeKaser, chief economist of National City Corp. in Cleveland: "We're looking at several years of weak home prices. It'll return to the time when no one is talking about real estate." Oh, well. You can still take a flier on Google Inc

And by the way, that "15 years before a recovery" idea isn't theirs or at the very least it is not unique to BusinessWeek -- the same prediction was made by the folks over at iTulip (the same people who called the .com bubble) a long time ago.