Regarding prices in bubble markets I see where it reads…
“Mr. Harris of Lehman expects price declines next year to be confined to “bubble” markets, such as… California. ‘There’s no reason for prices to be falling in areas without a bubble.’”
However, the preceding paragraph states…
“Richard DeKaser, an economist at National City Corp., a big mortgage provider [surprise, surprise] …forecast a 4.4% increase in prices this year and a 1.8% decline next.”
Did he say INCREASE this year? I agree there are differing opinions, but come on, aren’t prices already down from a year ago? I also agree these same people essentially live in denial of the truth, hoping their perceived expertise will have more influence on a homeowner than their mortgage payment that just went up 35%. In short I agree with 4runner.
But I find the most outrageous statement here:
“People say all bubbles end in disaster, but this is a small bubble. Home prices are just about 20% too high. We need to take it seriously, but in the history of bubbles, this will go down as one of the smaller ones,” said Lehman’s Mr. Harris.
Hasn’t this site proven the current bubble to be the largest in history?
Generally, isn’t the bottom line income? Sure, creative lending can alter that, but only temporarily. I hear talk of low unemployment/new jobs, but a Cashier at Wal-Mart can’t afford the average house, at least not in any of the Bubble areas.
“Just about 20% too high”? Last I heard in LA, the average home was about $550k, and income was less than 50% (about $58k/yr) of the $120k/yr needed to pay that.
