And for how long? I’m frequently struck by various industry analysts that don’t expect a real estate market recovery until ‘next year’. Brokers, builders and many economists, all say that we can’t realistically expect the recovery until then. OK, but why then?
Let’s take a look at the Los Angeles market. According to the S&P/Case Shiller index, this market begans its ascent in March 1996 and peaked in September 2006. That’s an up cycle of more than 10 years. During that time, the price index increased over 270%.
Prior to that long bull market, Los Angeles had been mired in a downturn which started in June 1990. That down cycle continued for almost 6 years and prices declined by a cumulative total of 27% during that period.
Since September 2006, prices have declined by just 4.3% (as of the last published index value for June 2007). So why is the recovery coming next year? If the past is any guide to the future, the recovery might be several years in the future and prices have a lot further to drop before it arrives.