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Home Price Bubble, Toil and Trouble

eFInance Directory has a good, and disconcerting, article about "The Dangerous Disconnect Between Home Prices and Fundamentals." They predict that home prices will fall to pre-boom levels. [Link]

Although the disconnect between home prices and home sales was not present during the housing boom, it most certainly is now. The public has either lost interest or simply can't afford to buy into the current housing market. Home sales have slowed nationally, and are down significantly in cities within California, Florida, Nevada, Michigan and Ohio.

As a result, supply has now exceeded demand in most areas. It would take several months, and in some cases years, to sell all of the homes that are currently on the market. Yet, home prices are staying level for the most part - for now. If sales do not pick up soon, home prices will most definitely begin to fall.

jon posted this at 8:50 PM
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Comments

"Several months to sell the homes" would mean it's a pretty hot market. It's probably more like nine months to a year and a half to sell all the homes in many areas of the US, where the market is falling. Prices are not staying level, they've already fallen in the areas mentioned above. They're fairly level in other areas that are doing well, such as Austin.

Posted by: Marsha Lebkowsky | August 24, 2007 8:20 AM