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Description: Irwin Kellner: The end is near (for the US housing correction)
URL: http://www.marketwatch.com/news/story/Housing-appears-nearing-end/story.aspx?gui ...truncated...
Info/Broken?: http://www.bostonbubble.com/link_info.php?id=2141

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[BelmontRenter]

"This implies that by the time home prices bottom out, they will have fallen a total of 30% from their 2006 highs. In those markets where housing really got overheated, prices are already down by as much as 50%!"

So where do we go from here in Newton, Belmont, Brookline, etc? I don't see a 30% drop from all-time highs in these towns.

Is this all the drop we get, or are we just lagging the rest of the country. That's the $640,000 question, right?

[admin]

What Mr. Kellner leaves out is unemployment. Unemployment usually precedes housing price downturns. The fact that it was the other way around this time is highly unusual. Rising unemployment could very well bring about another wave of real price declines which hits everywhere, including the towns that you listed.

I just looked up The Warren Group stats for Newton and prices spiked there just the same as everywhere else. If current prices there are justified and sustainable, then how was there room for such a dramatic spike? Who is it that can actually afford the $760K median, especially when job security is on shaky ground for just about everyone? The bad economy is just now starting to affect some of the higher paid professions in health care and higher ed. Also, the number of sales there is down dramatically from the peak - from 726 in 2004 to 540 in 2008. Declines in volume usually precede declines in price. I can't say with certainty whether substantial price declines will come to Newton, but I can say with certainty that I won't be buying there now given current prices and I'm not sure who safely could.

- admin