For years now, we’ve been hearing about how hot the housing market is. We’ve all seen it. During the great housing bubble of the past few years, economists have been throwing out a whole lot of bull. First, you need to know that existing homes fell 2% during 2006. Here’s a guy who actually gets it, and can explain things in a way that makes sense to the average guy/gal:
Ian Morris, chief economist at HSBC Securities in New York, believes housing sales fell because homes became unaffordable.
SHOCKER!!!
You’re damn right houses became unaffordable! Just look at housing prices across the country for the past few years! Its not too hard to see that teachers, cops, and most other middle class folks can’t buy houses in most major US big cities.
“What worries me is that valuations still look very excessive. You know, prices are too high relative to income, relative to rents, relative to interest rates,” he said. “Even though mortgage rates are still pretty low — around six percent for a 30 year fixed rate — that’s not bad at all. But house prices are still so high that it is stretching affordability even with such low rates.” (VOA)
I’m at least glad that Mr. Morris, unlike many of his peers, actually gets it!
Related posts:
- Another Edition of Real Estate Speedlinking: Friday News Briefs
- Hot Demographic News – Hispanics to Buy 3 Million Homes
- Existing Home Sales Hit 2nd Highest Level Ever
- Housing Starts to Fall to 3 Year Lows
- Economist describes positive outlook for real estate
Article Author: Joshua DorkinJoshua has written 568 articles for us.
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Joshua Dorkin (@jrdorkin, Google+) is the founder and CEO of BiggerPockets.Mr. Dorkin's vision for BiggerPockets has helped to propel it into becoming one of the top real estate destinations online. His vision for the site and its future has brought national press attention to both Mr. Dorkin and to BiggerPockets.
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Thank you! For the simple and direct explanation, the best one I have heard. Hopefully this is the end of the ‘blow out of proportion’ stories.
It’s such a shame that common sense is such a cause for celebration. Those who understand the KISS principle are too often hard to find.
This is a great post. I am going to have a link from my blog to this post. It is a must read for all real estate investors. Thank you for helping everyone!!!