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.
I'm also curious if this time around, the dollar's continued tumble will mean relative to other currencies. During the last RE bubble burst, did we see the dollar tank in similar percentages to what we're currently seeing now. It's looking pretty ugly.
