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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (21777)	6/22/2004 10:26:28 AM
From: Les H	Read Replies (1) \| Respond to of 306849

Leveraged to the hilt research.cibcwm.com

To: Les H who wrote (21777)	6/22/2004 11:39:14 AM
From: deeno	Respond to of 306849

interesting comment within that article "From 1980 to 2001, median incomes in the U.S. rose 138 percent. Home prices rose almost exactly the same amount: 136 percent. A coincidence? Hardly. Over time, homeprices move in lockstep with incomes, because incomes help determine how much a consumer can spend on a home. The relationship isn't always so clear in the short term, as builders add more supply if demand rises, and hold back if demand falls. But in general, if home prices grow faster than incomes, houses will then become unaffordable, and that will force a slowdown in price appreciation until the market balances out." Besides indicating a paltry return, it would indicate that mortgage rates going from around 13% to 5% had no effect vs income growth. Since the reason that the author sites that the relationship between income growth and price rises is "affordablity" the fact that people could "afford" twice as much (or three times as much) mortgage means that prices should have rocketed much faster. So his premice seems wrong on "affordability" therefore Im not sure what value the whole article had.