Mazayako hit the nail on the head. You’ll hear and read of those offering up lame-brained excuses of why the prices have gone up, but do not be fooled – it’s simple supply and demand.
Such was the case for the past several years, as speculators bought up a large chunk of the supply of homes. Now there is a huge glut in supply and the speculators have moved on to more fruitful investments. It’s just a matter of time before home prices come down to more realistic, historical mean levels.
Be patient though, it’s like steering an oil tanker. The processes are already in place for a steady decline…they have been at least since August of 2005, the time at which the NAR calls the peaking of prices. Notice that there are many posters here noticing price declines of 15-20% or more declines here in SoCal, not to mention the huge inventory and extended day on the market. Yet the mass media (CNN.com, et al) continue to focus on the NAR who show their stats that home prices have declined only 1-2% nationwide? Such media will also pay heavy mention to many markets that have appreciated in value, such as East Gish, South Dakota or Backwoods, Oregon (made up names). It’s all very misleading if you ask me. Just remember who buys all those ad spaces (realtors, bankers, etc.) with the media and that will tell you all you need to know.
I’ve said it before: there are many, nay a majority, of folks out there that stand to benefit from falsely inflated home prices: local, state, and federal governments, politicians, radio, TV, and print media; realtors, appraisers, bankers, brokers, investors, current home owners, retailers, auto makers, developers, contractors, the list goes on and on. Basically everyone except current non-home owners. Feel free to chime in if there’s any group I left out.
