The Good News in the Bad Housing Numbers

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Many of the so-called experts persist in telling us that buyers are absent from the market because houses are TOO AFFORDABLE right now, and we need to figure out how to prop up prices to get the market going again. This is an absurd and delusional notion that defies basic economic theory and all common sense. Housing prices doubled and even tripled in some areas in a three or four year period because anyone could walk into a CountryWide office and walk out with a half-million dollar 100% mortgage, no income, assets or documentation required. If prices have fallen by 30% from the peak, it should be obvious to most observers that they need to fall at least another 10 to 20 percent to return to historical norms of affordability. Sellers, realtors and home-builders need to realize that for a few years they enjoyed an aberrant, unsustainable and unrepeatable boom, and now prices must return to sensible levels if there is to be a functioning market again.

Josh of CA 5:25PM September 10, 2010

If you accept the conventional wisdom prior to the boom, you can afford to pay 2 1/2 times your annual income for a house. If that still holds, prices are going to have to come way down, or housing expectations are going to have to come way down, before many people in some parts of the country can afford to buy a home. Bad news for those services (county government, schools, etc.) whose funding is based on property taxes.

James of OK 7:23PM August 28, 2010

In Burbank CA…700 sq ft homes on 3300 sq ft lots…2 bedroom…1 bath...built in 1940 were selling for 195k in 2003…In 2006 some of them sold for 550k…Quote “Home prices need to come down”…YA THINK???? Am I trying to time the market & missing out on buying opportunities for not paying today’s asking price of 400k?... NOT!

Pappy of GA 10:16AM August 27, 2010