The glut of foreclosed homes creates a self-reinforcing cycle. Falling prices lead to more foreclosures. Foreclosures lead to an excess supply of homes for sale. The excess supply then leads to further price declines. Jan Hatzius, the chief economist at Goldman Sachs, says that the “massive amount of excess supply” means that home prices nationwide will probably fall an additional 15 percent. ...Then entire article is interesting, although their measure of home price to median income seems messed up. They say it is 1.9 in the D.C. area. However, the median house price in the area is just shy of $295,100 and the median condo price is $242,100 according to NAR, while the median household income in the wealthiest jurisdictions is just over $100,000. (Median household incomes: $107,207 in Loudoun County, $105,241 in Fairfax County, $94,876 in Arlington County, $91,835 in Montgomery County, $54,317 in Washington, DC.)
They don’t have as far to fall today [compared to a year ago], but the great real estate crash is not over, either. So if you are part of the 30 percent of American households who rent and you’re trying to decide when to buy, relax.
Monday, April 27, 2009
NY Times: For Housing Crisis, the End Probably Isn’t Near
From The New York Times: