Friday, October 17, 2008

Housing Market Rebound

Housing market is nowhere near its bottom, per this report. The 1 year rent to price ratio(A surrogate for knowing whether mkt is over or under valued) currently stands at 1:22. For last 20 years its been 1:15. Implying if the credit gets as stringent as it was 10 years ago and if there is no oversupply, then perhaps house prices would have to come down by another 25% before we hit the bottom. Given the oversupply and fears of recession, it might go even lower before it stabilizes.

Am I a pessimist, soothsayer or what?

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