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To: Carl Worth who wrote (45261)	3/24/2006 3:19:10 PM
From: Newly2b	Respond to of 118717

". . .the strongest areas in terms of housing price increases have/had that strength due to the fact that people keep moving there, so the demand isn't going to just fall of [sic] a cliff . . ." _______________ The problem is not the number of people who want to buy (demand), but rather the number of people who can qualify for a mortgage at these prices (affordability). Rising interest rates combined with rising home prices have created an affordability crisis which is what will stop the growth in the R.E. market. Affordability here in L.A. is at an all-time low. Lots of people want to buy, they just can't afford to unless a) home prices fall, or b) interest rates drop, or c) incomes rise. BTW, I also do not foresee the type of drop in home prices we had in the early '90's, mainly because I expect inflation, perhaps even hyper-inflation, will effectively erode value in dollar terms without tremendous drops in price per se. JMO, of course. Newly