Interesting Read: 5 Reasons Why Home Prices May Never Come Back

FWIW, a house is rather unique, standing out from other types of assets because 1) value is tied to the cost to DIY 2) value is tied to maintenance / upkeep 3) value is tied not just to location but the value of neighboring houses. RE: DIY... with the exception of lumber, real / true home building costs (not land) have declined since the 70's. In adj $ labor is less: non-union labor is common, tools are cheaper, methods are faster / cheaper. Many (most?) fixtures / supplies have lower cost because of cheap imports & reductions in price markup. Outside of exceptional neighborhoods / locations, those selling new / used houses must compete with the cost to build. Only rampant inflation will loosen these traditional shackles for housing built with old money - otherwise DIY caps any rise in pricing. Maintenance / upkeep are currently at a low, skewing future markets, increasing future costs for repair. One house can lower values for a dozen. The situation is worsened by shoddy building & materials during the boom. Even decent properties will suffer as high repair costs become an expected part of purchase price. That said, the main reason housing prices rose for decades was expected profits from rising prices. While cars got more complex, justifying higher cost, housing is the opposite - as complexity was reduced pricing has risen much more. Buyers overpaid because they expected to be overpaid in turn. They'll overpay again when they have the same expectations.

We're stuck in a time warp for the next year. Think of PITI. Principal, interest, taxes and insurance. Principal - remains dormant since the value of the home is lower than the loan. All of us owe more on our homes than their worth! Interest - can't change because appraisals won't allow homeowners to refinance (appraisers are devaluing properties to the extreme now) We tried.. Taxes - Assessments are a year behind, ie you're always paying on last years value and taxes are killing everyone right now! Insurance - Ins companies won't let you reduce your premium because you HAVE to have a policy on the note value (what you owe on the loan)!! Brian ~ What's the solution? We're stuck and will have to wait things out, which is at least April 2010!

I agree, housing will not--and should not--"come back." Prices were artificially inflated by industry insiders, and consumers were duped into believing the industry hype. Our govt blessed the scheme by pushing home ownership, apparently at any cost. Now we are all paying the price, including those of us who took no part in the bubble at all. The bailout money will go straight into the pockets of the industry, and that is why the industry spends millions a year on lobbying--to ensure that laws favor their endeavors, however unethical, however bad for the country. It's a testament to human greed that so many in this country still think prices should be propped up, including at tax payers expense.

As for speculation, this housing market provides similar opportunities to other distressed market situations. Housing everywhere is going down. but some homes are being devalued far more than appropriate. If you can find the house whose value is down 20% but is priced down by 40%, you have an opportunity. The bottom line with this as with many things is that you can't just make money without expertise. You have to see the value that everyone else is missing, and you have to show that value later to get the profit.

I think the article redefines housing recovery to say that housing will never recover. For many, the idea is "when will I at least have a home with the same cash value as when I bought it?", not when will it have the same purchasing power. Purchasing power is not a simple definition. If collector car pricing is down 40% and your house went down 20%, you have greater purchasing power in your house than before, if you want to purchase collector cars. The bubble is not every dollar of the price increase over the past 10 years. I think history shows that real estate in general appreciates at about a 3% annual rate. So, the housing values as they are now should increase by about that rate from this point, assuming the bubble has fully burst. On the other hand, builder have deeply cut housing starts, so the new construction may not be keeping up with population increase/home destruction/etc. In that case, home values may increase as the supply goes down relative to supply.