The Wall Street Journal published an interested piece on the future of home prices – what experts thought, what the public thought.
Those hoping for a quick rebound are likely to be disappointed. Economists and other pros generally say home prices won’t bottom out before the second half of 2009, and some don’t see a bottom until 2011 or 2012. Even when they stop falling, prices may scrape along the bottom of the rut for years.
Karl Case, an economics professor at Wellesley College whose name adorns the S&P Case-Shiller home-price indexes, has studied U.S. house prices going back to the 1890s. Over the long run, he says, home prices tend to increase on average at an inflation-adjusted rate of 2.5% to 3% a year, about the same as per capita income. He thinks that long-run pattern is likely to continue, despite the recent choppiness. – WSJ.com
My opinion is that home prices will still be a better investment than your savings account due to the tax benefits. Rich people will still have investments in property to write off as much of their taxes as possible in addition to leasing them out to small businesses and home renters.
Conclusion – buy a home by Summer 2009 in a region that is likely to grow as a city. Such cities would include areas where new corporations or universities have opened up or cities where the rich will always dwell – New York and Los Angeles.
