Malkiel

Is the Normalization of Housing Prices a Realistic Expectation?

Actually, housing prices must, by mathematical constraints, bear some relationship the the range of incomes in a given market. People can only afford so much mortgage at a given income level, even if they're willing to adopt unsafe levels of debt to sacrifice for a better home/investment. Someone needs to do the studies showing whether the creation of a richer upper-middle class is a statistical reality, what percentage of the population in a given market that is, and hence what to expect the range of housing prices in a given market to do. It's kind of surprising to me that so much expensive housing is built on speculation without any market studies of whether an area can actually support the expected asking prices--maybe there's a new profitable line of consulting work out there for anyone who can do this kind of number-crunching and provide it to builders, banks, realtors, and mortgage originators...