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Strategies & Market Trends : The coming US dollar crisis
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To: Real Man who wrote (27606)3/23/2010 4:09:21 PM
From: GST1 Recommendation  Read Replies (2) of 71477
 
It is not wise to assume that people will buy what they cannot finance -- and they cannot finance what they are deemed to be unable to afford. If houses sell for half the cost of construction, then new houses will not be constructed. Housing prices won't be set by the cost of building a house if people simply cannot afford to pay the price of constructing a new house.

Housing prices depend on income, and leveraging of income. When incomes fall and leveraging is lowered, housing cannot go up. There will be some markets where incomes are stronger, but to assume that a house is cheap because it is down 50% from peak prices will not tell you much about where to buy.
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