Pragmatic Capitalism

Practical Views on Money, Finance & Life


U.S. housing prices are trending almost perfectly in-line with Japanese real estate prices in the early 90’s.   There have been a lot of housing bottom calls in recent weeks from people who overlook seasonality and the unbelievable amount of inventory on the market.  The stock market is clearly excited about the news that the housing market has bottomed, but my housing outlook hasn’t changed one bit. I still think the overhangs of inventory combined with a jobless and indebted consumer will keep a lid on home prices for years to come.  Does it mean things are likely to get far worse from here?  Not necessarily, but it almost guarantees a long L-shaped economic recovery.


For more on my house price projections click here.  What is scary about the Japanee scenario is that nominal GDP continued to accelerate throughout the housing downturn.   The 6 major cities actually declined 87%.  And this was at a time when the U.S. and many other countries were in the midst of the greatest economic boom in decades.  I don’t think the U.S. will necessarily enter a depression like Japan did, but the likelihood of a V-shaped recovery is not good.


Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC.Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services.He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.
Cullen Roche

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