Was listening to Marketplace Money today. They spoke w/economist Chris Thornberg.
You can listen here:
MM
This is the gist of it:
Housing market, prices in California are down halfway to where they will end up. Have to see 40-45% decline to get us back to normal levels relative to income.
People are saying it's going to take 2 to 3 years for folks to sell house.
Sellers: If you need to sell, price realistically to get it to move in this market, which may be below level you want.
Even w/drop, prices are high relative to incomes. Housing markets doesn't bounce. They splat. They hit bottom and stay there. You will have a long opportunity to capitalize on low prices once you find bottom.
If you have a reason for buying, be comfortable w/the idea you will probably lose equity in short run.
Not frozen housing market. On the contrary. It's moving rapidly. Just not in the direction most want. Prices will fall to the point that will eventually draw buyers back in again. Not news people want to hear, certainly not real estate agents.
You can make more money on a 500k house than you can on a 250k house, but if the house is only worth 250k, no amount of wishing in the world doesn't make home prices go up again. Value was never there in first place. Not short run situation Not of function of Wall Street troubles causing this to occur. It was not there in the first place.
BTW, this guy said back in August 2005 argued that California and some other parts of the US are clearly in the middle of a real estate bubble
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