Fortune magazine predicts home prices five years from now.

They concluded that Boston area single-family homes will drop 5% over the coming five years.

The average single-family home costs $834,000 today; they predict it will cost $793,000 in five years.

The idea is, people won’t pay more to buy a home than it costs them to rent the equivalent, so purchase price has to come down

Of course, this totally ignores a lot of variables, not the least of which is the “cost of borrowing”. If an $800,000 loan ends up costing you less next year because interest rates drop, then it would throw their calculations off.

Meanwhile, Fortune predicts 20%+ drops in single-family home values in over 25 metropolitan areas, over the next five years.

Fun!

Source: Where housing is headed – Fortune magazine

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