Rich addressed this a long time ago – maybe someone else has the link bookmarked.
Basically, if you believe that the ratio of home prices to wages is too high and has to come down to historical levels, then one of two things (or some of both) must happen: home prices drop or wages increase.
So, if home prices don’t collapse, they will have to remain flat until about 2020 to give wages time to catch up to a reasonable level.
For those who do feel the home price/wages ratio is a little high, but don’t look behind the median graph chart and examine rates, sales/inventory ratio, credit markets, the reliance of employment on the housing market, and other factors that hint at what is to come, this is one of many possible scenarios.
For those who do loook at such forward-looking factors, flat pricing until 2020 isn’t all that likely. Pricing will likely give.
