Okay, but what about the fact that this is the largest housing boom ever to be recorded in history? If history has proven anything, it is that what goes up must come down. How can values this high be sustained when average incomes have recorded very modest gains over the last 50 years?
The "boom" can be accredited to inflation and easy money. You can thank Alan Greenspan and his 1% interest rates in the past. He pumped way too much money into the economy, trying to over-correct for his excessive tightening in the years prior. This pushed the national median home price above the median income level, making homes unaffordable, on average.
Now, we are seeing a FED chairman who knows what he is doing, and is trying to contain inflation in the 1-2% range. Problem is, the economic-illiterate dems are pushing for easy money and higher taxes, like always, and keep thinking Bernanke is going to lower rates. This is not the case, you can expect the next rate move to be up, not down. This is based on 6 economic indicators that are largely observed by a smart Fed chairman. Last Wednesday's grilling he took from Congress pissed him off IMO. The questions were absolutely retarded, asking for more transparency etc. They basically want to know where interest rates will be going before the Fed even meets.
The market is just making a healthy correction to Greenspan's mess. Sub-prime lending has been going on for decades. It won't spill over into any prime+ lending or other sectors of the economy. That news will go away soon. Mortgage rates are at an all time low. Home prices are declining slightly, but I can gurandamntee you that you won't see a 30-50% price drop anywhere, except maybe in some condo\townhouse markets. Inventories are high, and of course it is a buyer's market. Flippers are crazy to do anything right now, as now is a good time for first time home buyers and investors who plan on renting out. We will see rent prices shift slightly upward in most areas of the country, as well.
Just my $.02
