Why would home prices keep declining


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Why would home prices keep declining

  1. 1. Why Would Home Prices Keep Declining?<br />1. DECEMBER 2010 | POSTED IN NUUKO OPEN BLOG | BY DOUG PORETZ<br />In today’s issue of  HYPERLINK "http://www.seekingalpha.com/" SeekingAlpha, which I consider one of the world’s great sources for ideas and insights without the influence of “crazies,” there is an article titled “Is Housing In Trouble, Again?” written by James Picerno, who among other credentials has a popular blog Capital Spectator.<br />In today’s article, Picerno doesn’t quite predict but cautions that home prices may continue to deteriorate, perhaps even at an increased pace. One of his conclusions: “At the very least, the latest dip in the Case-Shiller national index creates more pressure for good news in the next batch of economic reports. The crowd needs encouraging data points to temper the disappointing housing update.” In other words: don’t panic but stay cautious.<br />His article got my mind going in the direction (again) of a theme I have been thinking about (and have given a speech or two about) for a few years: the prospect that we are in the early stages of a major cultural transformation (in fact, I think  HYPERLINK "http://www.nuuko.com/" NuuKo in many ways is based on transformative cultural trends). In response, I posted the following comments – you can see them at the link by scrolling down (mine is the 5th comment). If you prefer not to link, I’ve re-posted my thoughts here.<br />I thought this post was very good. I’d like to add a few comments:<br />“Recovery” and “return” are not synonyms. Somewhere along the line, there will be an overall bottom, although segments will hit their individual bottoms and start their recoveries at different times and with different degrees of strength.<br />It is likely that the eventual recovery will bring with it a “new normal,” not simply because of the scope and depth of this recession (or whatever it should be called) but also because the new normal will emerge in a newly and increasingly global economy that has been changed by a true revolution in how we communicate (which is no small thing).<br />The question then arises: What will this new normal look like? It may be much easier to ask: What will this new normal NOT look like? Well, the current normal has been shaped, in my opinion, largely by the messaging that has hit people since the Post WWII Period — the entire lives of the Baby Boomers (fair disclosure: until my most recent venture, NuuKo.com, I spent four decades in the communications business). The key messaging that has shaped their lives (and the generations since) has been simple: Buy. Buy new. Buy bigger. Buy more tech. Buy more impressive. Buy a second one. Buy. In response to this messaging, we have become buyers and the nation’s economy has become a consumer economy. What if that message changed? What if that message morphed from “it’s important what you show off” to something that people can do without money: “it’s important what you think and how you live and how active you are in support of that.” If that happened we’d change from a consumer society to a “supporter” economy. Of course, if that happened, dire predictions about home prices might very well come true.<br />So then ask: Could that be happening? Could there be a change in the basic messaging that is shaping our culture? What would we look for? Maybe we’d look for strange new political organizations that coalesce quickly, grow virally, and exert significant influence. Maybe we’d look for the emergence of more advertising that pushes “support this movement or this legislation” rather than asks you to actually go buy something. Maybe we’d see a great deal of erratic shifts in what people prefer politically, so that within a two-year span they can both support and then detest the same political principles. We’d see passionate conflict between those who do not want the cultural (and economic) change and those who are anxious for it. That conflict might look like class war. Some people The people might take to the streets, maybe protesting increases in college tuition by rallies in public spaces or protesting the loss of social benefits by getting on tractors and blocking roads. Others may become more avaricious than ever, reaping their rewards while they can, as they envision a shift away from capitalism to socialism.<br />Could those things actually be happening? Could we be in the midst of a cultural change that could be so massive as to move the economy in very new and unpredictable ways? And, if so, where do values go?<br />