(…) You follow housing markets nationwide. What do you see happening?
When supply increases, prices fall: That’s been the trend for 110 years, since 1890. But since 1997, real home prices have increased by about 90 percent. There is no economic fundamental—real income, migration, interest rates, demographics—that can explain this. It means there was a speculative bubble. And now that bubble is bursting.
(…) Will there be a fire sale in the city?
I’d expect prices to be 5 to 10 percent lower a year from now, on average. On the national level, real home prices may fall 20 to 30 percent.
What would you advise buyers and sellers to do?
If you’re a buyer, wait, or at least don’t be buying based on an expectation of increasing values. If you’re a seller, rushing won’t make any difference, because it’s very hard to sell. If everybody rushes to sell, the glut is going to become worse.
So the ride is over?
Not only is it over, it’s going to be a nasty fall.