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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: koan who wrote (77784)4/16/2008 1:53:32 PM
From: Elroy Jetson  Read Replies (1) of 116555
 
. . . In my town and in much of the northwest housing prices haven't fallen all that much.

Prices will fall in "your town" as the down-turn progresses. My parents are commercial property owners and developers in Lafayette (which I believe is very close to your town, unless you have moved further north) so I get constant updates on this, albeit these reports are distorted by their personal "home owners disease". In spite of their hopes, the actual facts speak for themselves. But regardless of where "your town" is located, the laws of economics still apply.

You and I are not talking past each other, we merely disagree completely.

Real estate prices are inextricably linked to incomes. Long-term "same home" appraisals since 1895 have proved this relationship to be the constant to real estate value.

Since 1996 real estate prices have risen many-fold further than incomes have.

This aberration will fully correct - even in your town, even if you don't believe it.

This chart of farm prices and farm incomes illustrates this principle. A chart could be prepared for home prices in "your town" and you could easily see how far prices and incomes have to correct to converge.

The RERC (Real Estate Research Council) a group of appraisers backed by major banks have charts of precisely this for home prices in your area which would give you an upset stomach. Membership is $450. csupomona.edu

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