Bank lending will take 1-2 years to return to normal, and asset prices need as much as 18 months to stabilise, Barclays (BARC.L) Chief Executive John Varley said in an interview released on Saturday.
This economic mess will simply take time to work through but work through we must:
"I think that we will see the process of reduced borrowing play out over at least the course of the next 12 months ... maybe 24 months," he said.
"That is a painful process, it's a process through which the world absolutely has to go," he said.
Stating the obvious:
"As soon as asset prices stabilize, then we will see the financial economy recover. And when will that occur? That will occur some time over the course of the next 18 months," he said.
It took years to get to this point. Really, no surprise that it has already taken some time and will continue to do so before a solid recovery takes place. This housing and economic mess is like a clogged drain. Slowly, over time and with major neglect, the clog gets worse until one day it becomes completely clogged and only a major effort will fix what could have been prevented with simple basic measures. If only ...
National home prices, driven lower by a flood of foreclosures, plummeted in the third quarter by a record 9% year-over-year, according to a report issued Tuesday.
The median price of a single-family home fell in four out of five states, the National Association of Realtors reported. The national median price was $200,500, down 2.9% from the second quarter of 2008.
The California housing market:
Three California markets recorded the steepest year-over-year declines in median prices: Riverside-San Bernardino, east of Los Angeles, where the median price plunged 39.4% to $227,200; Sacramento, down 36.8% to $212,000; and San Diego, down 36% to $377,300.
The high volume of sales in California and other bubble-bust states may indicate a healthy trend, according to Lawrence Yun, NAR's chief economist.
"We have seen cases of multiple bidders on properties in California," he said. "That suggests that future price declines may be minimal."
But while California saw significant declines, fully 79% of all metro areas recorded price drops for the quarter, according to Mike Larson, a real estate analyst at Weiss Research.
The Regional housing markets:
Regionally, single family home prices were the most stable in the South, where they fell just 3.7% to $174,200. They dropped 5.5% in the Midwest to $159,900 and 6.5% in the Northeast to $267,700. In the West, the median price fell 21.4% to $266,300.
If you've been following the housing market (if you haven't, have you been hiding in a cave?), these numbers are no surprise. Perhaps a bit on the bright side, report after recent report, it does look like there are a fair number of buyers cherry-picking discounted properties. After all, the prices have tanked. Home prices couldn't continue to go up forever and they can't continue to drop forever.
If you can time the bottom perfectly, we'd love to hear from you!
Housing market predictions, housing boom, housing bubble, housing crash, economic recession. Some did get it right!
In a previous post (Housing Predictions) we highlighted a round-table housing market discussion which included Peter Schiff as one of the leading "housing expert" analysts. Schiff, despite being ridiculed by other panelist, was spot on in his analysis. In fact, as we stated before, his comments regarding the housing boom, housing bubble, and eminent housing crash were nearly prophetic in nature.
Paul Krugman, on the record getting the housing boom, housing bubble, housing crash extremely right as well:
The signs are almost always there if you're willing to listen and you know what you're looking for. The problem. Few people are willing to listen and even fewer people know what they're looking for.
