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Shopping for a House? Consider Waiting 9 Months

 
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Joined: 14 Jul 2007
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Location: Greater Boston

PostPosted: Fri Jan 29, 2010 1:52 pm GMT    Post subject: Shopping for a House? Consider Waiting 9 Months Reply with quote

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Description: Shopping for a House? Consider Waiting 9 Months
URL: http://www.smartmoney.com/Investing/Economy/Shopping-for-a-House-Consider-Waitin ...truncated...
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Fri Jan 29, 2010 3:08 pm GMT    Post subject: Reply with quote

If the unemployment stays high, this guy has a very strong point. If not, and people can afford their current homes and they have a lower current mortgage what incentive do they have to sell, other than say the house they're targetting also drops.

I think this is a velocity game.

Money times Velocity equals Price times Quantity

If you have a lot of pent up demand with people on the sidelines ready to move into the market and you don't have a lot of distressed families who are motivated buyers, prices may be sticky.

If you have a lot of motivated sellers and dont' have many buyers, that slows down velocity.

When you had everyone wanting to sell to get into a cheaper mortgage rate, that really increased velocity because it was essentially adding money to the economy. The price and quanity of homes went up because the money supply and the velocity of transactions skyrocketed.
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