If what goes up must come down, is the opposite true?
If home prices go down, will they eventually go back up - or at least level off? The Wall Street Journal's Simon Constable says yes.
He's predicting an end to the housing crisis.... this year.
Let's take a look at what we know. Last week's S&P/Case Shiller index shows prices fell another percent in December. In fact, since the bubble burst in 2006, prices have fallen by 31%, after steadily rising for more than a decade.
But with falling prices comes affordability. An average family would only need 19 months of pay to afford a home - that's the lowest point in 35 years. The national average used to be closer to two years, but that varies depending on where you live.
Five years ago - at the height of the housing boom—a home in Los Angeles would require four and a half years pay. Now it's back to two years. And even though experts predict prices will still fall somewhat this year - they foresee only a drop of 5%.
So now may be the time to jump into the real-estate market. One analyst says, “Pricing is down so much in some markets that when you analyze renting versus owning it makes much more sense to own...”
Another sign of better days to come: investors are jumping back into the game. That gives confidence to a struggling market and pay push a turnaround.
And many of these investors are paying in cash - another great sign.
The paper points out that nationally more than a quarter of homebuyers paid in cash last year. Some regions are even better: in Miami, more than half of all transactions were made in cash. In 2006 it was only 13%.
The same goes for Phoenix, where nearly half of the transactions are now in cash - triple what it was in 2008.
Now I am not going to stand here and tell you in the next few months we'll be back to the heyday of the last decade... nor should we be.
But we need to get people back into the housing market, making sound investments with the right amount of savings...and a turn-around may be just the way to do it.
Continue Reading Below