This is news about a month old, so it’s a bit dated, but worth considering.
Donald L. Kohn, the Federal Reserve’s vice chairman, was quoted as saying, at an October 4th conference in New York, that the housing correction might be shorter than past corrections for at least two reasons.
Today’s “unusually low” mortgage loan rate environment “stands in sharp contrast to some past downturns in the housing market that followed actions by the Federal Reserve to tighten credit conditions significantly.”
“Continuing growth in real incomes should underpin the demand for housing, and as home prices stop rising, help erode affordability constraints.”
Yes, inflation eats into any increases in people’s incomes, but he is talking about “real” incomes; after the effects of inflation are factored in.
Hopefully, sellers won’t get the wrong idea from reading the above. Sellers need to drop their prices, if they expect to sell, or, alternatively, be able to offer a product so unique or valuable that buyers will pay top dollar for it.
Source: Is this a housing bust or isn’t it? – By Ken Harney, Washington Post, by way of The Real Deal