Reply to Why do expert say: Buckle in for a brutal free-fall in home prices

Forum Index » Real Estate

Reply to "Why do expert say: Buckle in for a brutal free-fall in home prices - Housing Bubble"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Prices are going to continue to fall because of interest rates. It’s a mathematical certainty.

No one knows exactly how far they will fall, but the prices will fall.

You really want to look to economists regarding this, not realtors. A lot of people think realtors have strong, economic backgrounds, or that they are experts in predicting markets. They are not.  [/quote]

I wouldn't trust economists either. (Of course no one should trust real estate agents on this.) But so far prices are not "falling" in the sense that sales prices are markedly lower than last year. They just seem to be going up less and taking longer to sell, and maybe with the usual contingencies in place on the contracts. Maybe things will change next year. I hope so. But given the overall strength of the economy in this area and the lack of supply, I don't see a big decline absent a severe recession.[/quote]

Prices are going to go down because housing is an overvalued asset and the affordability is a huge issue that the Fed is determined to address. If prices don't come down through other pressures, the Fed will continue to increase rates until the bubble bursts. The Fed is trying to control inflation by devaluing overvalued assets, and housing is the most inflated sector of the economy. The Fed is determined to force a housing correction as a mechanism to control inflation in other sectors of the economy. It hasn't hit the tipping point yet, but it will. [/quote]

No way.  The Fed was trying to calm down the market and stop the rapid price increases. [b] That has stopped. [/b]

Powell even referred to the bubble in past tense.  [/quote]

It has stopped for now.  I'm afraid if they lower rates (which no one has said they are doing) - that the frenzy will ramp up again.  There are a ton of buyers on the side lines.  [/quote]

If this is true, it suggests the assets are not overvalued and there is no bubble. A bubble is a speculative rise that is premised on the idea that other speculators ("greater fools") will be there to buy at higher prices. That is why once prices start to decline, they decline rapidly. This is usually the case for products for which there is little inherent value. As mad as I've been about the crazy run up in housing prices, you just can't say that about housing in an area with a strong economy. People need places to live. They want to live in a house that is nice enough for a comfortable life. Absent a destruction of the local economy, a huge change in population, or a massive increase in housing that people want to live in, I just don't see how far the prices can go.[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics