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  • From: Gene GeRue <genegerue AT ruralize.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] Morning musing
  • Date: Thu, 20 Sep 2007 18:02:20 -0500


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.





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