When The Sellers Go
An apropo modern day adjunct to this last week's redux, TEN YEARS AFTER the fact, regarding housing price vs income ratios... which can be found here, here and here...
Jeffrey P. Snider makes the following observations in 2015: "The psychology of rising prices is supposed to combine with rising wages to produce a healthy and sustained real estate market which more than contributes to the broader economy's recovery and health. The FOMC's intentions with QE2 and QE3 clearly moved real estate, but only producing a growing dichotomy where "affordability" becomes a primary factor. Prices have badly outpaced wages (not much growth at all) and it is starting to get serious.
The housing market by actual fundamentals is likely so highly imbalanced that if "allowed" to correct for prior redistribution might not lead to a gentle re-establishment of a clearing "equilibrium." Any price adjustment toward "affordability" would be larger and likely more uncontrollable than the NAR or FOMC would like to admit. Either wages will have to actually rise, and do so quickly and sharply, or home prices will have to stabilize far down to wage reality. The latter form of transition, given this subverted state, will have much wider and negative effects on the economy."
The Nattering One mused: Wage/rent equilibrium has been out of whack since 2004. Average Home Price/ Median Household Income should not exceed 3.5X. This is independent of interest rates as prior to 2004, historic norms were always less than 3.5X, which was achieved in the 1980, 2000 and 2005 housing bubbles.
2015 247,900/53,891 = 4.6 still out of whack.
Proving that the more things change, the more they stay the same.
Jeffrey P. Snider makes the following observations in 2015: "The psychology of rising prices is supposed to combine with rising wages to produce a healthy and sustained real estate market which more than contributes to the broader economy's recovery and health. The FOMC's intentions with QE2 and QE3 clearly moved real estate, but only producing a growing dichotomy where "affordability" becomes a primary factor. Prices have badly outpaced wages (not much growth at all) and it is starting to get serious.
The housing market by actual fundamentals is likely so highly imbalanced that if "allowed" to correct for prior redistribution might not lead to a gentle re-establishment of a clearing "equilibrium." Any price adjustment toward "affordability" would be larger and likely more uncontrollable than the NAR or FOMC would like to admit. Either wages will have to actually rise, and do so quickly and sharply, or home prices will have to stabilize far down to wage reality. The latter form of transition, given this subverted state, will have much wider and negative effects on the economy."
The Nattering One mused: Wage/rent equilibrium has been out of whack since 2004. Average Home Price/ Median Household Income should not exceed 3.5X. This is independent of interest rates as prior to 2004, historic norms were always less than 3.5X, which was achieved in the 1980, 2000 and 2005 housing bubbles.
2015 247,900/53,891 = 4.6 still out of whack.
Proving that the more things change, the more they stay the same.
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