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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: gregor_us who wrote (27602)	3/23/2010 3:44:16 PM
From: GST	Respond to of 71477

<how much can you charge for houses in a world of scarce credit and now wage growth?> This rules out housing as a hedge against inflation. Some people will confuse this with the probability for inflation -- inflation will not subside just because housing is now a poor hedge against it.

To: gregor_us who wrote (27602)	3/24/2010 12:32:04 AM
From: Lazarus	Respond to of 71477

you nailed it pretty well... Housing prices are probably more based upon the cost and availability of money than anything else, which is why now, in many markets, you will find houses that are priced WAY below the cost of replacement (and sometimes these homes are only a few years old). Home prices are valued on appraisals and in some markets (like ours where about 2/3 of all sales are either REOs or Short Sales) they use the values of properties SOLD to form their appraisal. When foreclosed properties are an exception to the rule appraisers will generally ignore them, but when they make up the majority of sales THEY CANT IGNORE THEM ---> THEY BECOME THE RULE The banks know they need to dribble their inventory out and do everything possible to "prop" the prices because the selling banks want to get TOP DOLLAR (naturally) --- while the bank providing the Buyer's loan does not want to lend a penny over value.