Housing prices may or may NOT follow the percentage of inflation, even in a healthy market. There are many factors that cause housing to go up when times are good and inflation is only one of them. I’ve read quite a few posts since I started reading this board where many a poster automatically figures in inflation when trying to determine where a house should presently be priced. I’m not saying that they’re absolutely wrong…..it’s just my opinion that they are. If “X” house was selling for $500k in 2001 and housing returns to 2001 levels, my opinion is that “X” house will most likely return to a price of $500k……NOT $500k plus the cost of inflation for the years between 2001-2008. Reality has no rules and regulations when it comes to housing bubbles bursting and it IS and will continue to BE a buyers market for a long time. There is just way too much inventory and it’s going to get a lot larger and there’s going to be a shortage of good, qualified buyers with down payments and the desire to buy all of these properties unless they’re severely discounted.
