This article basically parrots the “New Paradigm” model; prices will reset and start a new trendline from this point forward because the old trendline no longer applies. We will henceforth have new relationships between pricing and the underlying fundamentals such as supply, effective demand, wages and population. People will henceforth always be willing to spend in excess of 50% of their gross income for their housing, even when there is no short term upside.
Not.
They used so many assumptions it is mind boggling. They use the historical average increase of 3% but then they apply it to the current price spike rather than to the trendline upon which that average was based. Duhh. They make assumptions about financing continuing on at sub 6% rates when we have always known that to be an historically low rate that is inaccurate as of right now. They make assumptions about price stability that we can now see have been proven to be unfounded.
In a nutshell, if I ever submitted an income forecast for an investment property that relied on so many unsupported and historically unfounded (as in, demonstrated to be false) assumptions my license would be subject to discipline from the state. For the NYT to quote this superficial and incomplete analysis from some minor league academic lightweight in their article puts them on the same level as any local rag.
