A Buyer’s Market, Sort of

A Buyer’s Market, Sort of

The banks remain the topic du jour as economists and policymakers debate stress testing, nationalization (pro and con), and the zombie apocalypse. We'll take a break from these topics and focus on the sector that propagated much of the mess in the first place: housing. In a previous post I indicated some housing market indicators might be approaching a bottom. New data released this week suggested this may not be the case, with house prices once again plumbing the depths nationwide.

While the deep drop in home values is certainly painful for homeowners with a mortgage (like myself), the decline in prices is a key part of the market-clearing process. Indeed, homeownership has turned into a very affordable option, and in some cases has brought out buyers in search of deals. Even statistical relationships between house prices and rental rates or household income are fast approaching historical norms, after going completely out of whack during the bubble years. Don't expect any significant rebound in the housing market anytime soon, though. All we are hoping for at this point is some stability as unsold inventories are worked off.

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