Monday, November 23, 2009
For years, I've been saying to watch for a convergence of the blue bars and the red curve in the chart below as an indication that it might be safe to think about buying property again. Well, they've now crossed paths in the latest report on existing home sales from the National Association of Realtors.
Does that mean it's safe to buy a house at current prices?
Sure, if you think that Congress is going to continue to write $6,000 to $8,000 checks for home buyers indefinitely, that the central bank will keep mortgage rates at freakishly low levels indefinitely, that the FHA will continue to guarantee what are essentially no-money-down loans indefinitely, and that the tsunami of foreclosures that are now working their way through the system will somehow be forestalled indefinitely.
If any of these artificial supports are removed, a very different housing market will appear.