A soft landing for the housing market?
Note that the drop in average sales prices understates the weakness of the market; owners get married to an inflated idea of what their houses are worth, and simply refuse to sell. When a house that was listed for $1.1 million sells after an auction for $530,000, that suggests more than a single-digit decline in values. (That’s a problem for the designers of housing-price futures markets, and for those who try to hedge using those markets.)
David Bernstein of the Volokh Conspiracy, who has been a housing-market bear for more than a year now, has more.
Footnote It seems only fair to warn the reader that I’m not an impartial observer. Not only did I make my own bet by selling my house and moving to a rental unit, hoping to buy back cheaper, but I’m profoundly convinced that high housing prices represent a huge social problem. Moreover, I figure it would take about a 40% drop in Westside real estate to make UCLA competitive in the market for fresh Ph.D.’s.