2006 Compares Favorably to Early '80s, 1991
A report from the National Association of Realtors (R) states that the housing market is similar to what it was back in the early '80s and in 1991. The article is copied below for your edification.
"If you think the housing market is bad this year, you must not remember the first part of the 1980s or 1991.The year 1991 wins the undesirable title of worst year for total housing starts, which tumbled to 1.0139 million. January was the worst month of the year — and of all time — with a seasonally adjusted annual rate of just 798,000.An economic recession in the early 1980s was signaled by falling housing starts in 1981 and 1982, the third- and second-worst years on record, respectively. Interest rates hit an all-time high at this time, approaching 20 percent, as the Federal Reserve Board tightened monetary policy to control the stagflation that characterized the previous decade. There have been seven housing cycles prior to the current cycle, in the time period between 1959 and the present, and the average peak-to-trough decline of these seven cycles is 47.3 percent, according to research by Paul Kasriel, director of economic research at the Northern Trust in Chicago. In the current cycle, housing starts have declined 34 percent from their peak in February 2005 to October 2006, levels. If the peak-to-trough decline in the current cycle were to match the seven-cycle average decline of 47.3 percent, the annualized pace would need to bottom out at 1.166 million units, substantially below the October 2006 seasonally adjusted annual rate of 1.486 million,“I think we're going to at least see an average cycle in terms of starts, and housing is going to have a significant ripple affect on the rest of the economy, slowing down employment growth and consumer spending,” Kasriel says. “Everybody tries to put lipstick on this pig, but it’s a pig.”Source: BusinessWeek Online, Maya Roney (11/27/06)"
