Expat

Look What They're Saying About the Housing Market

Housing is generally illiquid (even real estate agents admit this, by saying all housing is local, albeit as an argument to inflate prices) and not a commodity. Most owners feel their homes are special and certainly feel no need to reduce the "value" of their homes if they are not selling or borrowing against them. The market will set a price for the home which they can ignore if they neither want to or need to sell.

Unfortunately, the market will set prices around these dreamers. And in the long term, house prices are determined by wages and affordability (interest rates and access to credit). House prices world wide are inflated well beyond long-term, reasonable measures of affordability, especially now with so many financial institutions insolvent or nearly so. The irony is that even the odd bearish realtor who speaks of reverting to mean values (median prices matching long-term median income multiples like 3.5x income) fails to understand that in order to revert to the mean, the market needs to dip below in a manner which yields an offsetting value to the value (time and ratio) spent above the mean.
All in all, this means a long, painful decline in house prices. Frankly, it is long overdue. If homeowners don't need to or want to sell, then they won't care.

Look What They're Saying About the Housing Market

Housing is generally illiquid (even real estate agents admit this, by saying all housing is local, albeit as an argument to inflate prices) and not a commodity. Most owners feel their homes are special and certainly feel no need to reduce the "value" of their homes if they are not selling or borrowing against them. The market will set a price for the home which they can ignore if they neither want to or need to sell.

Unfortunately, the market will set prices around these dreamers. And in the long term, house prices are determined by wages and affordability (interest rates and access to credit). House prices world wide are inflated well beyond long-term, reasonable measures of affordability, especially now with so many financial institutions insolvent or nearly so. The irony is that even the odd bearish realtor who speaks of reverting to mean values (median prices matching long-term median income multiples like 3.5x income) fails to understand that in order to revert to the mean, the market needs to dip below in a manner which yields an offsetting value to the value (time and ratio) spent above the mean.
All in all, this means a long, painful decline in house prices. Frankly, it is long overdue. If homeowners don't need to or want to sell, then they won't care.