Your Economy (No Politics)

[Bullwinkle]

eu1, you are more or less preaching to the choir 8^) #msg-22715585 I agree with most of what you have summarized, but there are a couple of points where I feel differently.

>>>The falling median home price is greatly attributed to plummeting prices in CA, FLA, Michigan(which is likely close to bottoming) and Las Vegas. The first 2 candidates on my list will carry a lot of the brunt of the decline in the median home price.<<<

While the Avg Nat'l Median Home Prices reflect an overall dip in price, they are not falling as severely as one might think. I will use CA as an example for two reasons;

1) I live in CA and can make assessments of what's taking place on the ground

2) It is one of the strongest markets

What I am seeing is that prices are not falling as much as they are stagnating. Homes are going up for sale, but they are not selling. The reason behind this is that the sellers are not dropping their prices and buyers are just plain not biting. With the credit crunch at hand I expect this to continue if not get worse, but at this moment basically what we have is a stand off...

I believe this is taking place on both coastlines with the mid-west and south skewing the picture of the Avg Nat'l Home Price Median. I can tell and I am suer you know that you cannot touch much in CA with $228,000 (i.e. Median Avg).


>>> For the rest I expect house prices to decline 5% or so or to just being flat for a couple of years as wages catch up to offset the high price of housing.<<<

I do not see this happening unless a recession takes place, either that or a severe slowdown. Inflation is a double edged sword: Wages are under pressure and have not increased with any vigor in over 7-years mainly due to inflation (a case can be made that they have actually declined) and for that very same reason home prices remain artificially high (most notably in the more desirable of areas to live). I say artificially, but what we are seeing in home prices is the toll of inflation and weakening of the U$D. In the post with which you originally replied (CPI fraud directly linked to subprime credit crisis #msg-22810363 ) all I can say is that as long as the Fed chooses to utilize bogus data, nothing will change from what we have today until the credit/liquidity bubble bursts.

Just imagine what the COLA would be if the Fed were to use real data as opposed to that of the massaged data presented to the masses? Prices of homes would be cut in half, the U$D would rise and so would wages as well as buying power. Some call it deflationary, I call it a return to reality...