Our reader Stormin sent in this link to a guy who he has followed for years and says he is solid:
Here is an excerpt:
“I believe house prices in America will soar beyond what anyone can imagine.”
He’s not putting a price or percentage on it, so take it with a grain of salt.
But when we are already seeing local prices getting back to – or above - the peak levels, it does make you scratch your head.
How high could our local real estate prices go?
Here is my wild guess.
In boom years, home appreciation averages around 1% per month – and in the craziest year of all, 2003, prices went up 2% per month (I’m using round numbers).
This year will be our 2003, and NSDCC detached homes will see rampant appreciation at our current pace – let’s call it 2% per month.
Amazingly, today’s cash buyers don’t seem to care about recent sales, and don’t mind paying wildly above comps – and I see it everywhere. This will contribute greatly to the 2% per month appreciation this year.
We need to satisfy the demand of all the rich people first – they are at the front of the line, and until they get all the real estate they can handle, the financed buyers will have to wait around.
But we should hit a point in June/July where it becomes obvious that the market is totally out of control. The evidence will be the glut forming of over-priced turkeys whose owners still think we’re in the selling season and their lucky sale is right around the corner so they refuse to lower their price.
The ego of cash buyers will start demanding better deals, and when spoiled sellers don’t comply, it will open the door for financed buyers who will jump at the chance to get in the game. Hence, the 2% per month lasts all year as more financed deals filter in.
Once we get into 2014, the Fed starts backing off the QE-Forever, and banks will start rasiing mortgage rates whether the market demands it or not.
Financed buyers go crazy at the thought of losing their bragging rights around the barbeque about getting the lowest rate, and the frenzy stays hot for another year – but at the 1% per month rate because it is already built on top of the previous year’s 2% per month.
By the time we get to 2015, exhaustion is setting in – both physically and financially – and more sellers are rushing to market. Let’s cut it back to 0.5% per month.
2013 = 24%
2014 = 12%
2015 = 6%
Total = 42% above 2012 pricing.
That’s the maximum – is that beyond what anyone could imagine?