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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Don Earl who wrote (58854)8/2/2006 11:43:51 AM
From: ChanceIsRead Replies (2) of 306849
 
>>>Get a clue. Until and unless, costs come down, prices will stay up.<<<

What you say is true, and untrue at the same time.

Consider a brand new automobile. If you drive it off the lot, and decide to sell it next week, take 10% off and don't even think twice about it. Your car is now used. OK for a Mercedes, its preowned. The new automobile price is directly tied to its component costs and what the other new car manufacturers offer. Once it is in the secondary market, its a new ball game.

So it is with housing. If we have a recession, then material and labor prices will drop, and therefore any new house price will also be offered at less, based both on direct costs and the changed market for new houses. If salaries are down, then the price of used houses will drop.
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