patrick.net

bgamall4 says

How does Kyle Bass come to the conclusion that the world faces a global credit meltdown but that the US housing market will perk back up in a couple of years?

Well, I think he's looking at absorption rate, household formations etc. regarding the housing data, and adding the fact that the .gov and banks will do anything to support the housing market. I think it'll continue to be in a stasis and we will muddle through.

Kyle Bass is not a housing guy. In this interview, he states just that. http://www.youtube.com/embed/5V3kpKzd-Yw

The single family housing cycle is 18 years. Nine years up, nine years down. Bass thinks it's a 14 year cycle.

Robert Shiller, Professor of Economics at Yale University, predicted that there was a very real possibility that the US would be plunged into a Japan-style slump, with house prices declining for years.

"Because housing ran up so high, it may take much longer than 9 years to bottom," says Robert Shiller.

Susan S says

Nine years up, nine years down. Bass thinks it's a 14 year cycle.

Well, starting 1998 is when house prices started really accelerating and they almost went bazooka beginning 2003. Topped out in 06 timeframe. So I would say 8 years up, at least 8 years down. Which puts us in 2014 for a bottom.

Real estate prices can vary quite a bit based on locality, so some places could have already bottomed out and just be muddling through - like Arizona, Nevada etc. Not to say they won't go down, but there's probably less likelihood for a further massive downside.

Susan S says

"Because housing ran up so high, it may take much longer than 9 years to bottom," says Robert Shiller.

Shiller could be right too, I think his prediction is probably taking the human psychology factor into account as well. Lot of people have lost houses, which has a reinforcing negative impact on the overall society. So we won't see housing optimism anytime in the next 3-5 years.