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Yes, the real estate is a market of demand and with high prices, you decrease demand... as we have more economic turmoil you will see less buying because they don't have the money for it... unfortunately the government is trying to "price-fix" the home values which means even with inflation driving down home prices (less disposable income), it won't drive it down to affordable levels until the government gets the heck out and stop their price-fixing...
The bailout is only going to extend the pain and increase the damage when the final crash happens. The housing market is still way overvalued in many areas, and this will not help. Wages have to increase to two or three times current levels to increase the buying power in 1960. With the financial mess I cannot imagine anyone giving mortgages without 20% down anymore. It will be impossible to sell homes at current values. Other than prime properties for the wealthy, everything else will continue to fall. When the final crash happens, it will be even more painful.
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Quote:
Originally Posted by Lulu101
so I'm assuming you do not think this bailout is going to fix the housing market anytime soon?
No. Which is great from my point of view. Finally we just may see real affordable housing come our way. I guessing a further drop of 25% - 30% over the next 2 years for a lot of big markets. Now keep in mind some areas of the county gained 200% to 300% in a a decade. So honestly my number really aren't that out of whack.
BTW. If you bought your house 10 years ago at a reasonable price and didn't refi out. Really did you lose anything from where you started from? No not really.
It is the folk that 1. decided that they too could flip houses. 2. Panicked and bought a home from 2003- 2006 3. Refinanced themselves to the hilt that are in trouble on the housing front. And to be quite honest with you. I don't feel a bit of sympathy for the people in 1 or 3. But the poor sucker in 2. Well guys all I can personally say is better luck next time......and make sure you learn your lesson from this housing debacle.
Real inflation will effect house prices. Real inflation will involve increases in wages.
So far there is little indication that inflation is getting out of control. Although the dramatic raise in Gas prices certainly leads people to think it has.
Home price increases are related to increases in income, if wage growth trails inflation then real income is declining which has been the case for the last few years. This causes home prices to drop even more because affordability decreases.
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