I found this interesting article while searching for how long houses are staying on the market in the current fiscal reality. It makes for interesting reading. The Rising Tide of Cape Cod Real Estate.
This article dates to 1999 and makes several references to the housing busts of the 80's and early 90's. Of particular interest are the comments about over-building.
A few choice quotes:
"In the giddy mid-’80s, real estate was a monster that gobbled up thousands of properties and spit out high prices and grew and grew until it finally gorged itself to death. "
"The early ’90s saw failures, foreclosures and forlorn homeowners trying desperately to sell their devalued properties without taking too much of a loss."
"He is cautious about these times and fears the market mirrors the late ’80s. 'In the early ’90s, people said we would never have the ’80s again,' he said. 'Now values are just as high and we’re beginning to see some speculation now. Speculation always comes at the end of the market.' "
"Other agents point out the differences between now and then. Interest rates are low, banks are not dabbling in questionable loans, hundred-home subdivisions have disappeared. As long as the stock market remains strong and the economy continues to boom, people will have those few extra dollars for vacation homes on the ever-popular Cape."
Remeber this was 1999, before the sub-prime mortgage fiasco. Hundred home subdivisions may have disappeared here, but not in other parts of the country.
"'I don’t want to go through 1989, ’90, ’91 again. It was hell,' Regan said. 'We have metamorphosed into a more stable business. We learned a lot from that rapid growth. I don't see that happening again.' "
I would suggest that we learned some from the 89-91 time period, but we may not have learned enough. Setting targets for housing growth, especially a target that relies upon a population growth that may not materialize could prolong the current debacle, and perhaps lead to a greater one in the future.
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