Monday, April 11, 2005

From today’s Wall Street Journal – Online Edition (subscription only)

Today’s WSJ has an article titled Let's Get Real About Real Estate, by Kelly K. Spors. It is a basic description about the state of the housing market, here is one of the more “bearish” comments in the article.

"People have gotten caught up in the euphoria" of a stellar housing market, says Steve Murray, editor of Real Trends, an industry newsletter, who forecasts rates will reach 7% by year end. "Everywhere you go people are talking about how much their homes appreciated," he says. "We are going to have to be a little more rational the next few years." Mr. Murray predicts that if mortgage rates reach 7.5%, the number of units sold will drop 8% to 10%.

…and a bullish comment from the same article.

Even in housing's worst years, prices rarely collapse. They usually level off for a while or fall modestly. "Housing booms end with a whimper, not a bang," says Karl Case, an economics professor at Wellesley College. He suggests looking at history. When the housing market dried up in 1990, prices in Boston fell 15% after a long run-up. And that was an extreme case. Less-volatile markets saw prices level off before rising again.


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