Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: koan who wrote (77771)	4/16/2008 12:09:33 PM
From: Elroy Jetson	Read Replies (1) of 116555

I have to disagree with your comment and I suspect you will as well after you think about it. If we start running 10% (or high) inflation, I would expect housing prices to float up with inflation sooner or later. I am not sure if anyone will be able to buy them because of higher interest rates, . . . Home prices do not exist apart from actual recorded sales prices. Home prices are actual recorded sales prices, not "asking prices". Homes and commercial buildings, as well as stocks, and commodities often sell far below replacement cost for long periods of time. After an extended credit-bubble induced building boom we are faced with a massive glut of housing. This will take a very long time to work off. When someone says current prices don't reflect "real prices" because they are mostly "foreclosures being sold by banks" or simply "people who have to sell" they are reflecting their own imaginary market rather than the actual market of supply and demand. .

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