Three BIG Words: Revision, Recession, and Intervention

Housing market is completely uneven throughout the country and appears to be totally locally-based. There are areas with NO housing price growth at all (see, Dayton Ohio). There are others---Silicon Valley---where middle class people are just priced out of homes, pure and simple.

I challenge you to find me stats that show that the AVERAGE price of a house in the U.S. has significantly appreciated in the last two years, nationwide.

First, a 200% increase over 20 years (10 % per year) is about average for the American housing market. In the 1970s, housing in many markets was rising at a rate of 10% per year, or higher.

Second, Richard, "location, location, location." Note that NY, MAINE, DEL (dying population states, NY with rent control) had very high housing price increases; but GROWING states (AZ, ID, NM, TX, and so on) have very modest price increases. This is a case of people moving OUT of the "rust belt" and the high taxes, etc., discourage new housing construction, thus driving up the prices.

Now, I agree that ANYONE will tell you that right now your home is your best investment. Is there any serious economist who thinks that housing prices increases are "inflationary?" Nope.

Richard, you are trying to have it both ways: homes are a source of INVESTMENT for most people now, and especially when the market hiccups, people put money into their homes. It's a tangeable asset. So if people are taking on more mortgage debt, IN PART (and I agree, ONLY in part) it reflects the view that homes are investments, not merely "shelter."

Now, I will be the first to admit that it APPEARS that home prices for new middle-class housing have risen so far that NEW middle-class houses are becoming "unaffordable." So why is it that the ONLY homes I see being constructted---either here in Ohio or in AZ where I just visited---are homes in the $175,000-$200,000 range? I keep hearing stories that people "can't afford to furnish these," but this is apparently an urban legend. They are not going EMPTY. People are buying them. So where are the "middle class/working class" living? More than ever, it appears they are going back to what they used to do all the time: starting off in trailers, then going to older 1950s-1960s era housing, then moving up.

I submit it was a false expectation that young marrieds, even with two incomes, would jump into a $200,000 home. When I was growing up, virtually EVERYONE began in a trailer or "older" home, and gradually worked their way up.

BTW, this will amuse you: I had dinner with an old friend. He is a beer truck driver for Bud. BEER TRUCK DRIVER. He sent his kid through expensive private schools, then to U of A---a state (but not cheap) school---has taken vacations to Europe and Asia, has a boat and a "third" sports car. Maybe you are in the wrong profession?

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