WSJ article says prices must continue down…but I am not a subscriber so I couldn’t see the whole article..
But the point is shown in this graph:
[img_assist|nid=6342|title=Home_prices_v_rent|desc=|link=node|align=center|width=338|height=500]
Home Prices Must Fall Far To Be In Sync With Rents
By Greg Ip (WSJ)
Word Count: 417
U.S. house prices “likely would have to fall considerably” to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists.
The study, which doesn’t necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly.
The study tracks rents and home prices back to 1960 and found annual …
