sorry, i got that line from a trader’s IRC channel that i hang out in during the day when the market is busy. cnn money published a piece yesterday in which dean baker opined that house prices, adjusted for inflation, will *never* recover their recent highs. while i agree that the real estate market will probably get worse, and then stagnate for a loooooong while, when articles this bearish start popping up i start thinking that maybe it is time toÃ‚Â think more seriously about buying. think, mind you, not act on the thought yet.
But Dean Baker, the co-director of the Center for Economic and Policy Research and a leading proponent of the theory that there has been a bubble in housing prices, says that he believes it could take five to seven years before prices get back to their highs on a nominal basis.
If prices are adjusted for inflation, he thinks that prices will never recover their recent highs.
“If you look at historical data, home prices have stayed pretty much flat in real terms, maybe being a few percentage points above inflation or income,” he said. “That’s why the run-up in prices the past eight years was so peculiar. And the run-up is what created the bubble.”