Opaque Crystal Balls
No, the title of this post (above) isn’t the real headline of a recent article forecasting what’s next for the U.S. housing market — or a send-up by The Onion.
This is the article’s actual title, from The New York Times (4/22/2021):
U.S. Home Sales Are Surging. When Does the Music Stop?”
So, when does the music stop?
According to the NYT article, “rising mortgage rates and incredibly tight inventory in some markets . . . will likely keep demand strong through the rest of 2021, even as price growth moderates.”
Broken Clocks & Housing Pundits
Of course, to point out the obvious, almost no one — in or out of the housing market — predicted that a Pandemic would paralyze the U.S. and global economy starting early last year.
Meanwhile, the handful of experts who did forecast an imminent pandemic also forecast one in 2019, 2018, 2017, 2016, etc. (sort of like stock market perma-bears who perpetually predict “The BIG One. . . Soon!“).
Even if someone knew there was going to be a pandemic and that the economy was going to fall off a cliff (at least temporarily), how many would have forecast a raging Seller’s market and 20% appreciation the past year??
As Yogi Berra observed, “It’s tough to make predictions . . . especially about the future.”
“Your Mileage May Vary”
In fact, the M.O. for the vast majority of pundits — housing and otherwise — seems to be to extrapolate current conditions, then add a modest wrinkle or two.
Meanwhile, to give themselves wiggle room, they sprinkle in qualifiers such as “likely” and “depending on”; use broad ranges; and/or push their forecasts far into the future (evoking John Maynard Keynes’ observation about the really long term: “We’re all dead”).
Or combine all three.
For example, “Home prices will likely appreciate nationally 5% to 15% the next five years, depending on interest rates and inventory.”
Anyone considering acting on such forecasts (if that’s even possible) might want to consider one more quote: “The trend is your friend . . . until the bend.”