Johns

Latest Case-Schiller Report Shows the Sky is Falling

The prices have just started to come down and there is a long and painful road ahead. Even though the demand for housing slowed down in 2006 and 2007 the actual prices have only started coming down in late 2007 as the sellers were unwilling to lower the prices earlier. The housing market is way overpriced due to years of speculative buying and inflation. The current price environment is hardly affordable to most of the population and the buyers are unlikely to enter the market until they are absolutely sure that the prices are more affordable and the prices have bottomed out. The existing credit crunch and rising mortgage rates only make matters worse. I expect that the housing market will go through a painful and rapid correction process in 2008 where prices continue to trend considerably lower and likely to bottom out in 2009. I also expect that we might see a brief and slight upside interest in home buying this spring. However, I do not believe that this will continue into the summer as housing corrections typically last many years.