Your Economy (No Politics)

[euterpe1]

BW,

I can't agree with the authors assumption that if supply and demand where in balance, then home prices would appreciate 6-9% per year. If wages are going up at 3% then, it only takes a couple of years and supply would greatly exceed demand.

Like in Chicago, areas in CA will have firm pricing and other areas will be weak. I am surprised that the ytd appreciation number was positive albeit slightly. Also keep in mind that I see inventory continuing to creep higher as the supply of foreclosures continues to increase over the next 18-24 months. I don't see how that does not negatively impact prices or at the least keep prices stagnant for the next 2 years. The one life preserver to the housing market is the big slowdown in new construction. That will help mitigate some of the excess inventory.