Monday, January 26, 2009
Falling Home Prices are Helping
The meteoric rise in home prices in some markets like Nevada, Florida ,California and the coasts the few years preceding the recession are finally coming down to affordable levels. This while painful to the owners who bought at the top or speculated at the wrong time is starting to signal and end to the housing slump. We are not out of the woods yet but affordability due to lower house prices and lower interest rates are putting some light at the end of the tunnel. What amazes me is that people can't realize that homes going up forty to ninety percent a year is not normal or healthy. All the market is doing is bringing prices down to prices that average out those high gain years to a historical average. As inventory rates fall we will reach a point that prices stabilize and we start to go back up. I feel that point will happen late this summer or next spring at the latest. I guess time will tell , but for now the fed has got to keep mortgage rates low or a recovery will be put off.