The “speculative” aspect is simply, “This house will be worth more next month”. That factor is gone. Anyone buying now is buying a house built on quicksand and has my sympathies.

it’s more than the American Dream… it’s the Worldwide Dream… http://bloomberg.com/apps/news?pid=20601109&sid=a0YjZrU.EvNM&refer=home

Think about another factor, interest rates and a weak housing sector are also tied to each other. The Fed is going to have a hard time raising or even maintaining the rates if housing gets any weaker. So then, another obstacle is removed from buyers.

I am going to go into this in another post, but the consensus out there on a macro level is that eventually a majority of the population wants to own their own home. The American Dream and all that. So the people who got married in the past year have been waiting on the sidelines because every relative and friend is telling them they should not buy. When they jump back in at attractive interest rates the game will be on, probably not to the level when the speculators were driving the game, but to a normal level.

Tom

One of the fundamental Housing Bubble arguments is that home prices have run away from rents in the last few years. Therefore prices have to come down to bring it back to equilibrium. Wouldn’t it be a pleasant surprise (for those of us riding this home price wave) if the actual inverse took place? The same argument could imply that rents really continue to adjust up relative to home prices. Just a little food for thought.

Did no housing economist foresee this simple economic concept – rental rates rise while homes maintain their stepped up value -before? I see no economist talking about pentup buyer demand either…it’s all about unsold inventory now… Wouldn’t it be a shocker if buyer pentup demand actually starts another wave of increase in home prices, similar to what happened in 2002 after the Sept. 11 shock effect? No economist would touch that one today, but they didn’t in spring 2002 either.