Comments on: Housing Contradiction: Home Prices Down = Sales Up. Any Questions?

By: Al

Al — Wed, 28 May 2008 18:22:35 +0000

Sometimes I have a hard time reading the Docs excellent posts, probably due to lack of caffeine. If I understand correctly, you’re recommending that rents are radically increased to make buying houses at inflated levels more competitive?

By: Andy

Andy — Wed, 28 May 2008 03:59:30 +0000

Kerin where do you work? Its not the alien plant where the aliens go in the new Indiana Jones movie (which is horrible) is it?

By: Richard

Richard — Wed, 28 May 2008 03:03:31 +0000

Kerin- let me see if I can provide an answer. Perhaps I can reprise a higher microeco mark!

The good Doctor refers to elasticity and substitution. With higher end homes( with designer swimming pools, flagstone hearths, granite tops and one off designs, there is significant demand but no substitution available, at least, to date. The supply line is higher up the price axis (less supply) and higher value. Demand is less, but so is supply with no substitution available ( I am not moving into a cookie cutter rancher with stock cabinets- I am not elastic on that at all!!). Of course these homes are the last to feel the downward pressure.

By: Kerin Cantwell

Kerin Cantwell — Tue, 27 May 2008 23:54:58 +0000

Very well supported analysis. Could you comment on micro-markets? There are many areas (including the area in which I work as –gasp!– a real estate agent, where prices have dropped only slightly and well-priced nice homes are still occassionally selling with multiple offers. Given that for most people a home is not only a financial investment, but a place in which to live and build a life, waiting may not be the best option for everyone. And how do you know when you’ve reached the bottom?

By: Richard

Richard — Tue, 27 May 2008 17:35:44 +0000

Another great post. Thank you.

Although it brings back to mind my hoendous experience with micro economics 101 in which I received the lowest mark in my Uni experience( even though I loved the subject)

I now understand elasticity and substitution. (I am currently substituting a 57 foot schooner in the Bay area). I also now undestand that it is not yet a good time to buy.