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"Based on the latest data, median selling prices for new and existing homes combined now equal 2.9 times median household incomes, nationwide. This is exactly the ratio that prevailed during the halcyon days of the 1980s, when sales and construction of housing were booming."
Nationally, we're at 2.9 times median household income; in NJ we have a ways to go to catch up with that average. Basically some areas have tanked (check out Detroit, where you can buy a house for literally one dollar) while others have not had their due price correction yet.
Not to mention, the 2.9 ratio was during the "halcyon days of the 1980s" (halycon = calm, peaceful, tranquil). We're hardly living through calm, tranquil, or even peaceful times; we're living through the biggest financial crisis this country has seen since the Great Depression. So there's no reason to think that the ration won't fall even lower than 2.9.
But in a normal, sane market, a ratio of 3x income is about right; maybe slightly more for the NYC-area, but no higher than 4x. And that's in good economic times. In these times, the numbers will be even lower before we are through with this mess.
Neither the MSN article nor I are reporting that we are at the bottom. But sometime before we hit the bottom, certain statistics will begin to suggest an improvement.
That is what the MSN article is specifically stating. And that's what the video interview in that article is specifically stating: "Not there yet, further declines necessary to clean out inventory, but light at the end of the tunnel."
I don't have a clue if it's true. But optimism works better than pessimism, so I'm going to run with it!
Neither the MSN article nor I are reporting that we are at the bottom. But sometime before we hit the bottom, certain statistics will begin to suggest an improvement.
That is what the MSN article is specifically stating. And that's what the video interview in that article is specifically stating: "Not there yet, further declines necessary to clean out inventory, but light at the end of the tunnel."
I don't have a clue if it's true. But optimism works better than pessimism, so I'm going to run with it!
-Marc
Optimism doesn't always work better than pessimism. This entire financial crisis we face as a nation was built entirely on optimism. In fact, optimism is the only thing that has ever led to a major financial crisis.
Neither the MSN article nor I are reporting that we are at the bottom. But sometime before we hit the bottom, certain statistics will begin to suggest an improvement.
That is what the MSN article is specifically stating. And that's what the video interview in that article is specifically stating: "Not there yet, further declines necessary to clean out inventory, but light at the end of the tunnel."
I don't have a clue if it's true. But optimism works better than pessimism, so I'm going to run with it!
-Marc
In your corner, Marc. The doom and gloom doesn't get us anywhere and there's certainly nothing wrong with being positive. It's a great change right now.
BUT, if things start looking up, the media will actually have to look for news again. I wonder if they forgot how?
Neither the MSN article nor I are reporting that we are at the bottom. But sometime before we hit the bottom, certain statistics will begin to suggest an improvement.
That is what the MSN article is specifically stating. And that's what the video interview in that article is specifically stating: "Not there yet, further declines necessary to clean out inventory, but light at the end of the tunnel."
I don't have a clue if it's true. But optimism works better than pessimism, so I'm going to run with it!
-Marc
maintaining high price and not letting correction to play out is not optimism. Lower price is good for the health of RE and our economy.
maintaining high price and not letting correction to play out is not optimism. Lower price is good for the health of RE and our economy.
And the same thing goes for the banks, the insurance companies, the auto companies, the stock market, the oil companies, and the rest. They all should be allowed to fail, regardless of the consequences. Propping them up only delays the inevitable and increases the final cost.
The economic downturn is a forest fire, and as everyone knows, forest fires are a positive and healthy phenomenon.
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