I truly believe that the housing prices generally and specially in SD area, are over priced and due for major correction. However, I am confused about the effect of the coming weak dollar on housing. The weak dollar seems to be as inevitable now as the housing bubble.
For example, for SD, I personally think that prices will need to come down by 30%-40%. However, against the back drop of a weak dollar, if the dollar goes down big then housing prices will not necessarily need to go down by 30% or 40%. Maybe housing prices will not go down at all since it will take a lot more dollar money to get the same amount of real assets (housing). I don’t want to buy housing now because now it seems inevitable that in the next year or so, housing prices are bound to come down. However, I feel my dollar savings will lose value as dollar goes down in the next year. The gold bugs say that gold will benefit but I would like to know if real estate (hard asset) will benefit from the weak dollar too? What do people think?
If someone has arguments against weakening of the dollar, then I will be interested to hear that as well. Some folks point to the fact that the rest of the world right now (with their export priented economies), cannot afford a weaker dollar and hence this weak dollar will not happen until they can generate internal consumer spending to replace US consumer spending.
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