Republican neighborhoods are going to fall next. Why? Because they're broke. Ever listen to the ads on conservative talk radio? Talk about targeting a demographic.
Continue reading "Falling home prices, to continue falling ?" »
1987 February to 2009 June, median income and MSA housing price index.
Housing prices grew faster than the income needed to support them.
Comments:
There is one income but 20 cities. Could show some housing/income ratio for each city. Income varies by city.
Histograms should show high water mark, at least after peaking.
Good jazz.
"The conventional view is that housing appreciation is good because it reduces (default) risk. Not according to my theory, which is housing appreciation is bad. It encourages junior-lien borrowing. When appreciation stops, somebody is going to be left in a bad position."
-- Michael LaCour-Little, finance professor at Cal State Fullerton.
YALE ECONOMIST ROBERT SHILLER delivers his forecast for U.S. housing with a scholarly diffidence that only slightly mutes his stark message: The market is in the throes of a bubble of unprecedented proportions that probably will end ugly.
Such unsettling talk is cheap, of course, especially from a tenured academic, and many sources, including Barron's, have wrongly predicted housing's downfall several times in the past few years. But the Ivy League professor's forecasts of coming trouble have been right before. His best seller Irrational Exuberance, predicting a bear market in U.S. stocks, hit the bookstores in March 2000, less than a week before the Nasdaq began a dizzying descent from above 5000 that would destroy 75% of its value in a little over 2½ years.
In the real-estate market, Shiller contends, a price slide could begin at any time with the crescendo of what he describes simply as "talk" -- a word that he uses to cover everything from the recent Time magazine cover story on the vertiginous rise in home prices and the popularity of cable-television shows about rehabilitating and investing in real estate to the breathless newspaper stories of Miami condos being "flipped" for profit a half-dozen times before construction even begins.