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

To: Mike Johnston who wrote (32899)	6/8/2005 1:28:47 AM
From: John Vosilla	Respond to of 306849

When prices stop increasing, no additional equity will be created to be used as a down payment on trade up, vacation or investment property. This will remove a big chunk of demand. And the prices will be determined at the margin, by those who will be able to afford the house based on their savings and wages and not on windfall gains from previous appreciation You can imagine how this would play out in bubble markets after appreciation is taken out of the equation when we already have record foreclosures in the Dallas metro area even with one of the lowest values relative to incomes in the country and a fast growing population.

To: Mike Johnston who wrote (32899)	6/8/2005 4:30:07 AM
From: Tradelite	Read Replies (4) \| Respond to of 306849

"Equilibrium" in a real estate market does not refer to price. It refers to a balance between supply and demand. Short-term monetary and fiscal policy have little to do with long-term population and wealth gains which have caused a diminishing amount of land to be sought after by an increasing number of people. Strict immigration and birth control methods might help, though! <<gg>> Seriously, if the federal government hadn't made homeownership a priority and matter of public policy for the U.S. many years ago, we'd probably just have more and more people trying to cram into a diminishing supply of apartment buildings. And we know who to blame for this trend....it was those darn pesky immigrants who started settling in New York, Massachusetts and Virginia several centuries ago. <<With appropriate monetary and fiscal policy, the real estate markets would have been in the state of relative equilibrium, to the long term benefit of the economy. However that was not the case and i would not expect that outcome under current circumstances. No bubble ever resolves itself with a state of equilibrium.>>