Friday, September 4, 2009

Too soon to call housing at a bottom?

Huffington Post's Alan Schram brings a great thought to the bottom theory, "
If you look at historical prices, the housing bubble started in 1997, when housing diverged from a historical range of average price of 12 to 14 times prevailing rents, dating back to 1953. It was 15.2 times by the end of the tech bubble in March 2000. After the Fed's reaction to the events of Sept. 11, 2001, the price to rent multiple of U.S. homes climbed to an unprecedented peak of 25.6 times at the end of 2005.

To revert back to the mean and work off the housing glut, prices will need to fall back to the historical range. We are not there yet."

Sounds good to me! Comments?

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