Speculators, Gamblers and Flippers jumped in ...a sure sign of the Death of housing as an affordable place to live since it became an day traders golden goose for awhile (and for realtors, mortgage brokers, appraisers who jumped on the band wagon pumping prices to unrealistic levels).
Plus, the facts show that the average American now moves 1/5 years....so forget your house as a long term "hold."
Some poster said fixed mortgage payments protect against inflation....well, we don't see much of that plus, real estate purchased in the last five years was already severely inflated losing its protection against possible inflation and now actually suffering badly in this deflation.
I have to agree with that economics law professor that it makes no sense to buy right now. If you own, try to keep your job and hang out there for the next 10 years until housing prices MAYBE come back.....gl!
Deflation is correct. Housing has seen a bubble that is the equal of Nasdaq 5,000. For anyone who bought in at that level think of the years spent waiting for a return to those prices where they are without the money that could be used to earn simple interest, even 3%. There is no way those people will come out financially ahead. Same with the housing market, if you bought in at the peak you are probably a net looser for the next 20-30 years. If buying now, you are still probably a net looser for 10-15 years. Either way, renting is superior to owning until inflationary forces begin to gain traction.
I don't know how anyone can even generalize about this subject. There are a couple facts that appear to be givens. That is, that the population will grow and land will be in in shorter supply. Other than that, it is hard to predict what will happen in a particular market. I suspect that the increase in the money supply to have an effect especially if the bailout does not work. Real income is another area which I personally think will come down so it appears to ofset the increase in money supply. What about technological improvements? Maybe there will be less need for labor. I also believe that the laws in this country determine the prices to some extent. will they change? I do not know how to predict all these factors, that's why I read these message boards