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"what's different this time"
100 million people added to the US population by 2050
increased demand from India and China continues to push commodity prices (= new home prices) upwards
access to relatively cheap money continues
rents have started to pick up
most families in desirable areas are dual income which has now been priced into houses ("one spouse can't afford to stay home" "not even an option")
those are a few points in support of continued high home prices. i'm not saying prices won't decline, but i think a crash of greater than 20% is unlikely. particularly in san diego/california, lots of people move in, but home owners tend not to move out, thus the area becomes very crowded, with limited supply, and prices are driven up. at least in boston, the cap rate on rental apartments is still 4.5% plus inflation, and rents continue to rise, which is some kind of supporting fundamental. i think the separation into rich and poor continues... the areas with the most foreclosures are all in the midwest and south, places where the median home price is barely over 100k. not the places where it's 600k. which seems counterintuitive at first.
i think we're likely to just slowly inflate our way out of this mess over a period of 4 or 5 years with some small YOY price declines. then you'll find that your professional level salary has increased by enough to let you slip into one of those 300k condos or 500k starter homes. unfortunately for the americans who don't have a skill set, their jobs will still pay $7.50 an hour, and when they look up they will see a lot of hispanic faces around them, speaking in a language they don't understand...
-devil's advocate
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