Dueling Housing Predictions: Small is Beautiful vs Bigger is Better
Which of these competing statement about the housing market do you think is true?
During the housing boom, homeowners had no qualms about spending money to commute to distant suburbs carved out of the hinterlands. But frugal home buyers, [Economist Edward Leamer, director of the UCLA Anderson Forecast] said, will be more inclined to look first at homes that are closer to their jobs.
“We’re going to see more multifamily-dwelling units,” Leamer said.
The real estate industry is known for its bigger-is-better attitude, but even some industry pros sense a change.
“We’ll probably be seeing a trend toward smaller, greener, less-costly-to-maintain houses,” said Walter Maloney, spokesman for the National Assn. of Realtors. It’s “a return to basics.”
OR
“People have short memories and just look a couple years ahead,” said San Fernando Valley real estate agent Gary Rapoport, who represents clients generally looking for properties in the $400,000 range. “They just want to buy whether they qualify or not.”
Real estate economist Christopher Thornberg seconds that view. Californians display a sort of amnesia about downturns that affect the housing market, he said, whether caused by financial-market debacles or the collapse of the technology boom. Price slumps in each of the last four decades, he noted, didn’t dispel the perception of residential real estate as a sure-bet investment.
“We’ve been here before,” Thornberg said. “People have a shocking ability to forget the past.”–Chris Jacobs, The Los Angeles Times, “Recession may forge a shift in California housing
Next week I will take another look at this topic and provide a third option.