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 December 04, 2008

Economists Debate when Home Prices will Rebound
A survey was recently conducted by the Wall Street Journal regarding the status of home prices in the U.S. The Economists surveyed were in agreement that prices of homes in this country will not "hit bottom" until the third quarter of 2009- at the earliest, with a strong possibility that the current downward trend could continue into 2011 or 2012. At that point prices will likely begin to rise once again, however not at the rate which was seen in the past ten years. Instead, the Economists surveyed feel that prices will increase at a rate hovering around one percentage point higher that the rate of inflation; while others see prices increasing as much as four percent over the next 20 years.
William Frey, a Demographer has predicted continuing population declines in the areas of Western Pennsylvania, Michigan, Upstate New York and Ohio, while coastal and Southern cites will flourish.

The unknown factor Economists cannot predict is the impact that the aging population of Baby Boomers will have on the market overall. In the past, many retirees have opted to relocate to warmer climates and more suburban areas. The retirees of today sometimes opt to remain in larger urban areas to remain near friends and family. This change in behavior could have a significant effect on the future of the market.