When will house prices go up again?

That’s the question, worded in various ways, that I’m frequently asked by my neighbors, who happen to know that I write about real estate for a living.

My answer, always the same, is: I have no idea, and neither does anyone else.

There are plenty of forecasts of what may happen to house prices. Up. Down. Flat. U-shaped. V-shaped. L-shaped. Even W-shaped. But personally, I don’t think any of the forecasts are all that reliable. After all, hardly anyone predicted the housing boom or the collapse with any reliable degree of specificity about the exact nature or timing of events.

And if anyone could really truly predict the future, well, a lot of things in our world probably would be quite different than they are. Sure, one or more of today’s forecasts may prove to be on the money, but which one?

That’s not to say forecasts aren’t useful, especially if they offer insights into the state of housing and homeowners. One such recent report, "The State of the Nation’s Housing 2009," by the Joint Center for Housing Studies at Harvard University, is well worth reading in full for that purpose.

Here’s a summary of what I gleaned from this report about U.S. homeowners:

We’re less wealthy than we thought we were. Home equity, on a quarterly basis and adjusted for inflation, declined a whopping 41 percent from the peak of the housing boom to the last quarter of last year. Approximately $6 trillion of equity disappeared from 2001 to 2007, $2.5 trillion of it in the most recent of those years and another $2.5 trillion last year.

More money was lost in stocks and mutual funds, but because homeownership is broader-based than Wall Street investment is, more of us lost out in the home equity crash than had bad luck in the stock market.

We’re tapped out. While much of that equity evaporated as home values declined, a large chunk was extracted from our homes when we refinanced and took out cash. In fact, homeowners who had conventional prime loans took out $1.8 trillion of equity from 2001 to 2007. But now that’s over: 14 million of us now owe more than our homes are worth, according to one estimate cited in the Harvard report. …CONTINUED

We’re not moving. Homeowners hate to sell their home for less than they think it should be worth, regardless of market conditions. That means many people who would like to sell — but aren’t pressured to do so due to a life event, financial setback or job relocation — have decided to stay put. Those who must move are more likely to face a short-sale situation.

The poorest among us have the heaviest burdens. In 2007, 43 percent of lower-income homeowners spent at least half of their monthly income on housing costs, and nearly 23 percent spent more than 40 percent of their income on total debt payments. That second figure declined from approximately 26 percent six years earlier, but the average amount of debt per lower-income homeowner ballooned by nearly 63 percent during that period.

As if that weren’t misery enough, poorer homeowners have been most hurt by lower home prices because they’re more likely to live in towns that have been hard-hit by foreclosures.

Our ranks, as a percentage of the population, have diminished. Approximately 67 percent of the nation’s households were homeowners in the first quarter of 2009, the same percentage as in 2000. The homeownership rate, which was significantly higher during the housing boom, may rebound as the broader economy improves, but isn’t likely to recover all of its losses any time soon.

We’re betting on the next generation to bail us out. Future housing demand depends, as it always has, on demographics as well as economics. Two key groups to watch will be the children of the baby boomers and new immigrants to the U.S. The Harvard report suggests that aging echo boomers could be a new source of demand for our homes, but whether future levels of immigration will help us out as well is less certain.

So why does this information matter?

These characteristics tell us who we are — and who we aren’t — as homeowners, and the more we know about ourselves, the better able we will be to look out for our own interests. Despite our woes, we homeowners are still a powerful group and we could still be a strong force for positive change in U.S. housing policy.

Marcie Geffner is a veteran real estate reporter and former managing editor of Inman News. Her news stories, feature articles and columns about home buying, home selling, homeownership and mortgage financing have been published by a long list of real estate Web sites and newspapers. "House Keys," a weekly column about homeownership, is syndicated in print and on the Web by Inman News. Readers are cordially invited to "friend" the author on Facebook.


What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.

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