Just Wait

Watching a 3 bedroom condo fall in listed price from $610K to $449K I'm inspired to make the obvious point that housing prices will come down until they hit the point where "average" housing units are priced such that typical potential homeowners can afford to make the monthly payments with typical mortgage terms. Duh. - Atrios

I've written quite a few times in the past how I've been perplexed by the seemingly never-ending subdivision after subdivision of very expensive homes in Dallas. I've always wondered who all those people were that could afford them, considering I make a much higher than average living and couldn't even come close to affording it. The answer, of course, was that most of the people that bought those homes couldn't afford them.

Still.. who can afford that $449K condo? You'd have to have a couple, both making 6 figures with no kids to be able to afford that. The mortgage payment is usually about 1k per 100k financed on a 15 year loan, a bit less on 30 year. So.. how many families are going to pay $4000 a month on a mortgage? The answer is, not many.

The question then becomes.. if there are a great many houses in the 500k - 1mil range that are sitting empty.. do the banks let the prices drop until us mere mortals can afford them? Say there's a $700k house, will they let it drop to $300k? Will all these empty houses just sit indefinitely while they pray for the next new mortgage scam?

So.. I'll make a prediction.. The big housing bust hasn't happened yet, despite the large drops in market values in some areas. In a few years, upper-middle class people will be able to buy very nice homes for reasonable money.. Then, you'll see people get crushed yet again because they don't anticipate the much higher energy costs and upkeep.

Oh.. and school districts are going to have big problems with tax revenue.