bostonbubble.com

john p · Joined: 10 Mar 2006 Posts: 1820

I'd say think about two things (arrange them in your mind like a low end to high end):

The available housing stock (range of location and quality).

The profile of buyers (age, income level, where they desire to live).

If you were to string both available arrays (above) on top of eachother you'd see that there might be bunches of housing types or buyer profiles or locations that don't match up reasonably.

Further, after a certain type of Administration, you see a changing distribution of wealth. This results in a scatter diagram of buying price points (one tracking inflation, and one tracking ownership wealth income rates). These two groups are separating, rich richer, middle class up to their ears in bills.

Lastly, I agree, you're going to see bizarre price point differences due to this widening gap in incomes. Simply put, a $1M home might not be much better than a $500k home, but if the concentration of buyers are either in the $350k-$450k or those that bought in the early 90's who have equity and are now in the $800k-$1M. You might see a gap in incomes and equities that stretch out the price points beyond what they are really worth... Eventually they will have a dialogue, but you need people to be able to afford the price points nonetheless. Typically, people buy what they can afford and want as much as they can afford, but today, there are many people that are trading down so these bizarre airspaces and locations might get populated.

Former Owner · Guest

The tipping point will be a tight credit market and trouble with Banks see - "The value of delinquent loans at community banks based in Central Massachusetts rose by nearly 30 percent in 2007 to $70 million." - the most recent post on this very site. Some Bank failures will becoming as some banks do have Real Estate on their books.

Folks need to remember that this Credit Crisis is still brand new by Credit Crisis terms. Most folks weren't even aware when it started last August. The average Joe didn't start paying attention until the Bears Stearns bail out.

Bottom line - there is less Money To Buy homes today than there was last June. There is likely to be less Money to buy homes for a fairly long-long time - my guess 2-3years or longer. Most Real Estate sellers fail to realize that fewer customers for Real Estate and less Cash in the form of Mortgages means much lower prices.

If you are waiting for the bottom you need to find Financial help that can guide you to investments that will earn money during your waiting. The Many-Many attempts by the Feds to save housing will continue to drive inflation.
In the mean time learn to enjoy life without the burdens of being a home owner - No trips to Home Depot, No painting or Wallpapering, No wasting Money on landscaping upgrades, No worries about Home Owner Insurance price increases, No Snow Shoveling, No leaf pickup responsibilities, No worrying about owning a Depreciating Asset that is illiquid.

Lots of reason to be thankful if you don't own a Home!