Homestead mailing list

[Gene GeRue <genegerue AT ruralize.com>]

On Sep 20, 2007, at 5:38 PM, Don Bowen KI6DIU wrote:

> At 9/20/2007, you wrote:
> > By the bye, we will see of course, but the same doomsayers who  
> > accurately
> > predicted the housing bubble have also predicted that it will be  
> > ten years or
> > longer before the situation reverses itself.
>
> The housing situation will not right itself until either house  
> prices drop
> to match wages or wages rise to match house prices.  Since almost  
> all wage
> gains over the last 7 years have gone to the already wealthy, don't  
> expect
> any immediate correction.

I expect to see even more innovation in home financing. FHA, which  
was the major source of mortgage funds when I began my real estate  
career in 1969, but did not keep up with conditions, is now being  
primed to help some of the buyers who signed on to ARMS and are in  
trouble as payments increase.

As for prices, while wages are a strong factor, the stronger factor  
is supply and demand. I have always seen the real estate market as a  
humungous pyramid. At the bottom, the foundation holding everything  
up, are the beginner homes, the 1,200 square-foot basic houses that  
young parents buy. At the peak are the multi-million-dollar pads that  
the rich occupy. As family size grows and moms and dad's paychecks  
improve, they sell that starter home and move up to one larger and in  
a better neighborhood. They may well stay there until the kids are  
out of the house. As they can afford it they keep selling the old one  
and moving up.

In Arizona, the market I currently know best, the population is  
increasing very strongly. Some sources say it is number one, some say  
number two in the nation. New jobs are increasing at the rate of  
nearly five percent, again, first or second in the country, depending  
on source. The price range of the housing inventory ranges from well  
below a hundred thousand to many millions. There is something for  
everyone.

And everyone needs a place to live.

And owning one's home is still the compelling American dream.