Tuesday, March 31, 2009

Home Prices and Credit

Home prices continue their fall.

What really started the descent was when the realization sunk into the mass market consciousness that all of the people who wanted to buy a house had already done so. The market was saturated. There were many investors, both domestic and foreign, pouring billions into these homes, with the expectation that SOMEONE would buy them. These investors were the chief source of revenue for developers. Then once that realization set in that the market was saturated, that was the first domino to fall.

So, if home prices have fallen by almost half, shouldn't the $12 trillion in mortgages that Americans have fall in half too? Shouldn't that be around $6 trillion instead?

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