Admittedly, when I read the article, “Don’t Fear Falling Prices”, published in Daily Real Estate News back in February 2008, I had a knee-jerk reaction (although I consider myself rather open-minded). My initial reaction was one of seeing this work as just another suspect notion on the elaboration to justify the “falling” real estate market. However, something prompted me to go ahead and bookmark this piece into My Favorites file allowing me to weigh on its content at a later date. For the last three months, this article has continued to “nag” me like a missed birthday, and I find myself continuing to go back to reevaluate it. You may by now be asking about its content, so let me insert it here for your reading pleasure:
Daily Real Estate News | February 22, 2008
Don’t Fear Falling Prices
Yale Professor Robert Shiller, whose Case-Shiller 20-city home price index has become an industry standard, says people shouldn’t fear gradually falling home prices.”There’s nothing troubling about a gradual correction of home prices. If we keep our incomes at the current level and home prices go down we are richer, we can buy more housing,” Shiller says.But if home prices fall suddenly, Shiller says that could undermine housing as well as consumer confidence and the economy.There has been a misperception that houses will constantly appreciate, Shiller says. “Sometimes people will try to imagine that we can have both high home prices and affordable housing. But I can tell you that doesn’t add up,” he says. “You either have high home prices or lower home prices. And lower home prices are what we want, and people shouldn’t be afraid of that,” Shiller says. “Most of us care about our children and grandchildren, and these people have to buy houses so why would we want high home prices? We want economic growth, we don’t want high home prices.”
Source: Reuters News, Lynn Adler (02/21/08)
Now for my surrender announcement: After talking to agents in both the Park City real estate market and in the markets of the Southern states (where I spend my spare time), I’m finding a variable that basically ties into this article. This variable is the first time home buyer, first time “second” home buyer, and the first time real estate investor into rental property. These are the folks that are emerging onto the “new” real estate scene. The “why” and “how” behind this increase is (you’ve guessed it) lower home prices and the overall lower mortgage interest rate available. There is indeed substance behind what we realtors are seeing as a “slower” market. With that said, if you’re considering your first adventure into the real estate market know that we’re here to serve your needs at http://www.youinparkcity.com . I’ll close by saying, I’d like to thank Professor Robert Shiller, for forcing me to expand my evaluation methods of looking at the glass “half empty/half full” theory, therefore allowing me to become a better real estate professional.
by Cathy Ritchie