I k now the Bubble Guys will not like me saying this, they are being validated (and in some parts of the country they are absolutely right) that the housing market is slowing and contracting. But it is not falling off the cliff. What we are seeing is that the speculative growth in the market the last two years is being tempered by a logical retraction in the real estate market.

Look at it this way. A 200,000 dollar home 3 years ago has gone up 20 percent each year. So today it is selling for 345,600 dollars. That is one hell of an appreciation. So now the market does not appreciate for two years, housing sales slow, and the market maintains. The homeowner who has owned the home for 5 years still has a 60 percent appreciation in their property in 5 years, not bad.

The  person who bought at the top unless they overpayed significantly will be even or slightly upside down. That is investing where nothing is guaranteed except for government bonds. The only group that is hurt are the real estate agents who spent all their money in the go go days who now have not sold much in 2 years and are  pretty broke.

And life goes on.

We had a hot market, and now it’s going to be back to normal,” said Edward Leamer, an economist at the University of California, Los Angeles. “Sales volumes will continue to decline, although they’ll bottom out sometime in the next year.”
The median selling price for existing homes, which rose at double-digit rates for much of the previous two years, was up only slightly last month. And had home prices not continued to rise in the South, where they gained slightly more than 3 percent compared with a year earlier, the national rate would have fallen.
For the second consecutive month, the median price of an existing home in July rose 0.9 percent from a year earlier, to $230,000.
“Certainly, the housing market is undergoing a measurable adjustment,” Lawrence Yun, senior economist with the Realtor association, said. “It’s a continuing cooling trend.” via the New York Times.

Related posts:

1. Sales Up, Prices Down For December 2008
2. Where Are The Home Buyers?
3. Third Quarter Existing Homes Sales Increase 11.4 Percent, Prices Drop 11.2 Percent
4. Housing Market Shows Stronger June Sales
5. Mortgage Activity At 5 Year High – Refinances Dominate