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Thursday, October 26, 2006

"Affordable Housing," Free Market Style - Chapter 3

The L.A. Times reports, "The nationwide median price of new homes sold in September fell about 9.7% from the same month last year to $217,100, according to the Commerce Department."

"On a regional basis, new home sales in the West fell 13.6% in September compared to same month last year."

Adam Smith, invisible hand, supply, demand and migration -- need I say more?

Here's the rest of the story: http://www.latimes.com/business/la-102606homes,0,2812005.story?coll=la-home-headlines


Anonymous Anonymous said:

Walter, please, the median price and the drop in sales do not equate - as in apples and oranges.

And if you think it is bad now, wait until after the election - no matter who wins.

The markets both housing and stock are so bloated and inflated they remind me of that picture on the Bustamante post.

October 27, 2006 3:46 AM  

Blogger Walter Moore said:

With all due respect, let me lay some Econ 102 on you.

The increasing inventory of unsold units is nature's way of telling sellers: "you're asking too high a price." The increasing number of unsold houses is therefore a prelude to a drop in prices.

The fact that prices are, in fact, dropping, shows that the price drop is already underway.

If I were you, and wanted to make a better argument, I would point out that the decline in prices nation-wide does not necessarily translate into a price drop in our particular market. The response to that, however, is that the ever-increasing inventory locally is the prelude mentioned above.

October 27, 2006 7:20 PM  

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