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

To: Jim McMannis who wrote (200540)	5/6/2009 12:01:00 PM
From: Think4Yourself	Read Replies (2) \| Respond to of 306849

"Is there a bullish scenario for house prices? Sure. If all the government spending to turn around the economy reignites inflation in a year or two—as some predict—house prices could begin climbing again. But if the current price deflation continues, look for house prices to keep dropping." There is a major, crushing flaw in that bullish argument. If inflation picks up, the incredibly low mortgage interest rates will have to climb. Higher mortgage rates mean less spending power, which equates to home prices not rising to match inflation. In other words, when the eventual inflation comes, home prices will not climb fast enough to match it. Then there are the inevitable rising property taxes to contend with. If you need a place to stay, buying a house might make sense. Housing is still an incredibly bad choice for an investment, and will continue to be a poor choice for years.