Friday, May 4, 2012

Jack Hough: Why U.S. house prices won't recover

An article by Jack Hough at opines that when taking into account the rate of inflation, U.S. house prices are at 1895 levels and will not return to pre-2008 levels.  He also reports that housing is still a good investment historically.

"But consider: After subtracting for inflation, prices are also back to 1986 levels. And 1955 levels. And 1895 levels.

"That’s because the natural rate of price appreciation for houses is zero after inflation. Prices will eventually stop falling. They’ll resume rising. But over the long term, they’re unlikely to resume rising faster than inflation.

"That’s why prospective buyers should stop focusing on the vague hope that house prices will jump from here and focus instead on the functional value houses provide for the money. In most markets, they provide enough of that to make buying a good deal."

No comments:

Post a Comment