Wednesday, November 16, 2005

Stupid Rationalization

The article in the Asbury Park Press today about home prices contained this gem.

“One fact that insulates much of Monmouth and Ocean counties against a significant drop in home prices is the limited supply of houses available, because there are few if any large pockets of land east of the Garden State Parkway on which to build, Anlas said.”

As we have seen from the numerous articles posted on this blog and others, house prices in every part of the country apparently can’t go down to far, according to some realtor, because it is insulated by some attribute totally unique to that particular area. In Westchester County, prices won’t fall because of the proximity to New York City. In Washington DC it’s heavy spending by the government. In San Diego it’s the weather. In Las Vegas it’s because the government controls the surrounding desert.

The “reason” the Shore is safe is one of the dumbest I have seen yet. No area is safe if people can’t afford to real estate there. When mortgage rates go from 5.50% to 6.25%, fewer people can afford the Shore and prices have to come down to clear the excess supply. Now that there almost 500 extra homes for sale in Eastern Monmouth compared to this past July, the only way those houses are going to be sold is if prices are reduced.


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