GreenHead wrote:
we are very hesitant to jump on anything and pay a high price for a home, but more importantly settle for a lesser home, and perhaps watch nicer homes become available in the near future.
Your hesitance is prudent. Apparently, inventory shortages are a symptom of a bottoming market, but I don't know how this market compares with previous property cycles in that respect, and frankly I'm not clear how relevant it would be any way, since this time is different. Probably what's as important is the effect of low inventory coupled with historically low rates, the latter creating the demand. If you are going to make a comparison, the FTB's buyer tax credit (2009-10) would be more useful, which we know spurred sales and lifted prices. It also brought forward buyers, who may not otherwise have bought, creating a vacuum down the line, causing prices to fall again. The other components at play are a weak economy, tighter lending standards and unemployment. The economy may eventually improve, but there are questions about how much unemployment is structural, and regulation on lending is probably here to stay. So when rates go up (post 2014), and inventory levels return to normal, the economy is going to have to be strong to support a housing recovery. It may happen, barring any untoward catastrophic events, but it's hard to say. I think many will need to adjust to a different kind of housing market over the next decade, but that shouldn't mean blind acceptance. There's more to life than bricks and mortar. There'll always be those who will pay anything for nothing, but there's not rule that should include all of us.
